Leonard v. Groome

• Decision Date: 20 February 1878
• Parties: JOHN E. LEONARD v. JAMES BLACK GROOME, Trustee.
• Court: Maryland Court of Appeals

47 Md. 499

JOHN E. LEONARD v. JAMES BLACK GROOME, Trustee.

Court of Appeals of Maryland

February 20, 1878

SALES.

APPEAL from the Circuit Court for Cecil County, in Equity.

Thomas H. P. Murphy and wife by deed of mortgage conveyed to Martha E. Hudson certain real estate situated in Cecil County, Md.

On default of the mortgagors, proceedings were had in the Circuit Court of said county for the sale of the said mortgaged real estate, a decree therefor was passed and James Black Groome was appointed trustee to make the sale.

The property was sold by the trustee to the appellant, and the report of the sale having been filed, an order nisi was passed. The appellant filed the following objection to the ratification of the sale by the Court:

"The undersigned, who was purchaser at the sale of the real estate in the proceedings in this cause mentioned, prays the Court not to ratify the said sale, but to set the same aside, and assigns as reason:

That he has discovered, since said sale, that he cannot have a free and unencumbered title for the same, but that the said title is defective.

And first, in this, that he has found out what he was ignorant of at the time, that a number of persons having liens to a large amount subsequent to the complainant in the bill have not been made parties, whereby if said sale should be confirmed the undersigned is informed that he is likely to be subjected to great loss."

The Court overruled the objection and passed the final order of ratification; and from this decision of the Court, overruling the objection and ratifying the sale, the present appeal was taken.

The cause was argued before BARTOL, C.J., BOWIE, BRENT, MILLER STEWART and ALVEY, J.

Alexander Evans, for appellant.

(1.) It is a general principle that no one is to be bound by a proceeding, legal or equitable, to which he is not a party.

The fee in the land at law would pass to the mortgagee, but it is not so in equity.

Nor can it be said that the fee is in the mortgagor, who has made conveyance, and who has but an equity of redemption, which has been conveyed to the subsequent mortgagees, and these subsequent mortgagees, when not made parties, might claim the right to come in and redeem the land by paying the first mortgage.

"All persons whose interests are to be affected by the decree ought to be made parties, with the exception that a subsequent need not make a first mortgagee a party."

"If indeed any encumbrancers, (whether prior or subsequent,) are not made parties, the decree of foreclosure does not bind them, as also a decree of sale would not.

The prior encumbrancers are not bound, because their rights are paramount to those of the foreclosing party.

The subsequent encumbrancers are not bound, because their interest would otherwise be concluded without any opportunity to assert or protect them."

And Judge STORY quotes at the end of sec. 193, a number of authorities, which, with the note in which they are contained, are hereby referred to, as are also Lucas vs McBlair, 12 G. & J., 1; Tongue vs. Morton, 6 H. & J., 23, 24; Worthington vs. Lee, 2 Bland, 678.

Barroll, at page 38 of his Chancery Practice, says:

"The general rule is, that all encumbrancers shall be made parties, whether prior or subsequent, and though cases may be found where it has been held that a prior mortgagee need not be made a party because his rights are paramount, it would not be safe in the face of opposing authorities of the highest respectability, to say that such is the established law of the Court of Chancery." Wylie vs. McMakin, 2 Md. Ch. Dec., 413.

(3.) To hold that subsequent encumbrancers, who are not made parties, are bound, might work great injustice. The mortgagor has already sold to them all that he had remaining after his first mortgage--his right to redeem; and of this, they are to be deprived by a proceeding against him alone.

If they had been notified by having been made parties, they might have been present at the sale, and in such case could have seen that the property brought a price such as to protect them from loss.

(4.) But it is contended that Brawner vs. Watkins, 28 Md., 217, establishes the point that subsequent mortgagees and other lien-holders need not be made parties.

In that case there was a prior mortgage and decree; then a third party having paid the amount of this decree took a transfer of it, and had also from the mortgagor another mortgage. A fourth party obtained a judgment against the mortgagor.

The mortgagor died, and a creditor's bill was filed for the sale of the land. Notice was given to creditors to bring in their claims; the judgment creditor did not bring in his claim; the mortgages were paid in full, and a surplus was paid to the heirs of the mortgagor; it was held that the judgment creditor should have claimed this surplus, and not having done so, could not look to the land.

Now a decree in a creditor's bill is in the nature of a judgment in favor of all creditors. Brooks vs. Dent, 4 Md. Ch. Dec., 473.

After the decree on the creditor's bill in Brawner vs. Watkins, an injunction would have been granted against the judgment creditor, if he had attempted to enforce his judgment by execution, Brooks vs. Dent, 4 Md. Ch. Dec., 473.

In the case of Brawner vs. Watkins, there was a specific mode of notice by publication given to the judgment...