Hyatt v. Mcburney, CASE No. 1053.

• Citation: 15 S.C. 393
• Decision Date: 01 July 1881
• Docket Number: CASE No. 1053.
• Court: United States State Supreme Court of South Carolina
• Parties: HYATT v. MCBURNEY.

15 S.C. 393

HYATT

v.MCBURNEY.

CASE No. 1053.

Supreme Court of South Carolina.

Jul. 16th, 1881.

1. At the suit of C., owner of a prior mortgage, the Supreme Court of the United States held such mortgage unsatisfied, and directed a foreclosure and sale against the purchasers of the mortgaged land, who were parties to that cause; but H., a mortgagee of the purchasers, was not a party, and his rights were reserved; H. then brought his action in the state court upon the bonds and mortgage held by him, making parties defendant his mortgagors, and also C., who, after action brought, but before answer, became, at the marshal's sale, the purchaser of the lands in dispute. The State Circuit judge decreed that the prior mortgage was fully paid and satisfied as to the plaintiff here, (to which finding of fact no exception was taken by C.,) but, in deference to the contrary decision in the United States court, binding the other parties to this action, directed an inquiry whether the plaintiff might not, without difficulty, realize on his bonds, so as to save to C. the land in dispute. Held, that the court could not require the plaintiff to pursue any other remedy than the foreclosure, to which he was primarily entitled, under his mortgage contract.

2. Equities between co-defendants may sometimes be adjusted and enforced, but not in disregard of the legal rights of the plaintiff.

Before PRESSLEY, J., Charleston, March, 1880.

This action was commenced October 15th, 1879, by Mary A. Hyatt and Joaquin Delmonte as executors of Edmund Hyatt, deceased, and Mary A. Hyatt, Mary E. Hyatt and Julia Delmonte, devisees and heirs-at-law of said Edmund Hyatt, against William McBurney, William Hasseltine, Alfred L. Gillespie and Thomas R. McGahan, members of the late firm of Hyatt, McBurney & Co., and Caroline Carson.

In 1856 William A. Carson died, leaving of force a last will and testament, whereby he directed his executors to sell the residue of his estate, and to hold the proceeds in trust for his wife and children, according to the shares as therein specified. By virtue of this power Alexander Robertson and John F. Blacklock only qualified executors, sold a plantation called Dean Hall, in Charleston district, to Elias N. Ball, on March 3d, 1857, for $50,000, of which $35,000 was on credit, secured by bonds and a mortgage to the executors of the premises. In June, 1857, the debts of the estate being paid, the executors transferred these bonds and the mortgage to themselves as trustees of Mrs. Carson and her two children, under the will.

In 1861, Mrs. Carson and her eldest son, (who attained his majority in 1863,) and Blacklock, the trustee, left Charleston, and were beyond the limits of the Confederate States until after the war. The younger son of Mrs. Carson did not attain his majority until after the war.

On May 7th, 1863, Elias N. Ball, for $100,000, conveyed the Dean Hall plantation to Edmund Hyatt, William McBurney, William Hasseltine, Alfred L. Gillespie and Thomas R. McGahan, in proportion to their interests in the capital and profits of the copartnership of Hyatt, McBurney & Co. On May 8th, 1863, Edmund Hyatt released his interest and title to Dean Hall to the partners, and on the same day sold his interest in the firm to the other partners, receiving in payment their bond for $40,000, secured by a mortgage of Dean Hall. About the same time Ball paid to Robertson, trustee, the balance due on his bonds, and the mortgage of Ball was afterwards marked satisfied by Robertson. All of these payments in 1863 were in Confederate treasury notes.

Mrs. Caroline Carson, after the war, being then a citizen of New York, and having purchased her sons' interest in the Ball bonds and mortgage, brought her action against McBurney, and afterwards against the other partners and Ball, for a foreclosure of the Ball mortgage, and to have its satisfaction canceled. See Robertson v. Carson, 19 Wall. 94, and McBurney v. Carson, 9 Otto 569. Hyatt (a citizen of New York) was not made a party to this action, and in holding the mortgage unpaid, and its satisfaction fraudulent, the court say that its decree would not affect Hyatt's right. Decree of foreclosure was rendered.

In 1876 Edmund Hyatt died, and this action was commenced by his executors, heirs and devisees. After complaint filed, but before answer put in, Dean Hall was sold by the marshal under the order of the United States Circuit Court, and purchased by Mrs. Carson, for $5000.

By order of Judge Aldrich, it was referred to Master Clancy to take testimony, and upon his report Judge Pressley rendered the following decree:

In this case plaintiffs seek to foreclose their mortgage on Dean Hall plantation, which secures a debt due them by McBurney & Co. Their co-defendant, Mrs. Carson, held an older mortgage on said plantation, which one of the executors to whom the mortgage was given, satisfied during the late war. That satisfaction was set aside as fraudulent and void by the Supreme Court of the United States, in a case to which McBurney & Co. were parties, but plaintiffs here were not parties to that case. I find here not a shadow of fraud, either in the circumstances attending the said satisfaction, or in the nature of the payment, and the very high character of all parties to that transaction, would rebut even strong proof of fraud, if such had been produced in the case. In the absence of all proof in that respect, I follow the decisions of the Supreme Court of this state, and hold that plaintiffs have a valid mortgage on said plantation, discharged of the said older mortgage.

But the obligors of the bond which plaintiffs' mortgage secures, being parties to the decision of the United States court, are bound by it. It is a final adjudication of their rights, and I am bound to respect it. In doing so I must give it full effect if that can be done without impairing the lien of the plaintiffs. They are not entitled to enforce payment of their bond out of property which the said decision gives to Mrs. Carson, if they can, without difficult or expensive litigation, enforce payment by the obligors, who are bound by the said decision. Were I to decree that, my profession of respect for that decision would be only a flimsy pretence.

It is, therefore, ordered that this case be re-committed to Master Clancy, to take testimony and report whether the plaintiffs can, without difficult or expensive litigation, procure payment from the obligors of said bond otherwise than by the foreclosure of their said mortgage.

The code, as construed by the Supreme Court of this state, requires that every case, without regard to the pleadings, be decided according to right. To that end leave must be granted to amend the pleadings, even after the hearing. If Mrs. Carson be advised that amendment of her answer be necessary, leave to amend it according to the claim set up by her at the hearing, is hereby granted.

From this decree the plaintiffs appealed to this court upon the grounds-

1. That his Honor was in error in holding that the plaintiffs are not entitled to foreclose their mortgage until it is ascertained that they cannot in some other way make their money, for such ruling in effect alters and changes the contract between the partiesand deprives the plaintiffs of the benefit and advantage of their security.

2. That such a defence, if it could have been entertained at all, came too late upon the hearing of the cause upon the merits, and that his Honor erred in allowing Mrs. Carson leave to amend her answer “ according to the claim set up by her at the hearing.”

Upon the points decided by this court, an abstract of the arguments is given.

Messrs. McCrady & Son, for appellants.

1. The United States court did not give this property to Mrs. Carson; it only held her mortgage to be a subsisting lien. She is now a purchaser and has only such title as the United States courts could give. That decree was understood to be at variance with the decisions of this state, and she was warned what Hyatt could do, and our mortgage being held valid, we clearly have right to foreclose. The Circuit decree permits Mrs. Carson to amend her answer by asserting a claim to a decree against McBurney for that debt to Hyatt, which her land is compelled to pay. But Mrs. Carson has no warranty from McBurney and others, she takes no title through them, and can have no protection in a court of equity as against them. 3 How. 333;11 Wall. 232. Her authority ( Dixon on Subrog. 28) does not sustain her position, Mrs. Carson is not a subsequent creditor, and see Id. 29, and Spears Eq. 37. But the defendants here have not answered and Mrs. Carson, a co-defendant, can have no relief not demanded in the pleadings. 1 Hill Ch. 147; 2 Sch. & Lef. 690. Nor can a decree be made between co-defendants here, because no such decision is required to give the plaintiff his rights. 3 Hare 637; 5 Russ. 45; 27 Beav. 515; 11 Cl. & Fin. 661.

2. But the defence came too late. 9 S. C. 334;5 S. C. 285. It would make a new case.

Mr. A. G. Magrath, contra.

Hyatt standing simply as a junior mortgagee was no proper party to the case of Carson v. McBurney. The nature of the title of McBurney and his partners has been adjudicated. That is the title which was mortgaged to Hyatt. His rights were reserved, but they were only the rights of a junior mortgagee- to redeem, &c. It is really the old case in Hyatt's name. The property was purchased for the partnership, and as such is bound by the former decree, all the partners in the state being parties. The comity due to the United States court should prevent a different judgment. But Hyatt should be forced to proceed on his bonds, as Mrs. Carson would be entitled to recover from McB. what Hyatt obtained from her land. Dixon on Subrog. 22, 28; 1 Strob. Eq. 52;1 Hill Ch. 35, 228;12 Wheat. 594;93 U. S. 96. And such decree may be awarded between co-defendants. 1 Hill Ch. 147; 2 Sch. & Lef. 710.

The opinion of the court...