Martin v. Raleigh State Bank

• Decision Date: 28 February 1927
• Docket Number: 26316
• Citation: 146 Miss. 1,111 So. 448
• Court: Mississippi Supreme Court
• Parties: MARTIN et al. v. RALEIGH STATE BANK. [*]

111 So. 448

146 Miss. 1

MARTIN et al. v. RALEIGH STATE BANK. ^[*]

No. 26316

Supreme Court of Mississippi

February 28, 1927

Division B

CASES ARGUED AND DETERMINED IN THE SUPREME COURT OF MISSISSIPPI AT THE SEPTEMBER TERM, 1926. (Division B.)

1 ESTOPPEL. Title reacquired by grantors after foreclosure of first deed of trust inures to beneficiary of second deed of trust subordinate to first.

Where a property owner gives a deed of trust reciting on the face of it that it is a second deed of trust and subordinate to a prior existing deed of trust, and where the foreclosure of the first deed of trust is had and the property purchased by a third person, and through mesne conveyances is reacquired by the grantors, the title so reacquired inures to the beneficiary of the second deed of trust.

2. MORTGAGES. Failure to make holder of deed of trust by original grantors purchasing after foreclosure party to suit by beneficiary of second deed of trust against original grantors does not affect his rights.

Where a holder of a third deed of trust on property purchased from a party who had purchased the legal title at the foreclosure sale of the first deed of trust and resells to the original grantors, taking a deed of trust to secure the purchase money, and a suit is filed against the original owners by a beneficiary of the second deed of trust to get possession of the premises upon which the deeds of trust were given, the holder of the last deed of trust given by the original grantors is not a necessary party to such suit and the rights of such party are not affected when he is not made a party thereto.

3 ESTOPPEL. Mortgages. Second mortgagee has no duty to pay first mortgage or bid at foreclosure sale; right of second mortgagee is not affected by foreclosure of first mortgage where original grantor subsequently acquired title.

Where a second mortgagee takes his mortgage subject to a prior one, and his mortgage recites the existence of a prior mortgage, and provides that the second mortgage is subject to the first, the second mortgagee is under no duty to the grantor to pay off the first mortgage, or to appear at the sale and bid thereon. The grantor in the second deed of trust in such case is under duty to discharge the first mortgage when it is due, and the right of the mortgagee against the mortgagor is not affected by the sale where the original grantor subsequently acquired title to the property so sold.

HON. T. P. DALE, Chancellor.

APPEAL from chancery court of Simpson county, HON. T. P. DALE, Chancellor.

Suit by the Raleigh State Bank against E. B. Martin and others to secure possession of certain land. From an adverse judgment, defendants appeal. Affirmed.

Judgment affirmed.

R. C. Russell, for appellants.

I. Certainly it cannot be said that this was after-acquired property when it was included in the deed of trust. No one ever contemplated or made any such contract, and the after-acquired property clause in the deed of trust was never intended to cover the after-acquiring of the property therein embraced, when the property was sold according to the terms of the deed of trust, and this is true whether it was sold under that particular deed of trust or not, since it was sold under or by any lien or contract that was contemplated by or mentioned in the deed of trust. Furthermore, it was not a question of buying an outstanding title to the land adverse to appellee's, because it took the deed of trust subject to this deed of trust of Foreman, and the after-acquired property clause was, therefore, written out of appellee's deed of trust so far as it applied to the property therein embraced in the hands of anyone claiming through the Foreman deed of trust.

II. It is contended that appellee should have appeared at the foreclosure sale of the land made under the Foreman deed of trust and bought it, or made it bring its value at this foreclosure sale, which would have been about four thousand dollars according to the testimony.

This was the intention of taking a second lien, to make the land pay both debts, and appellee know this when it took this second deed of trust, that it might be necessary either to pay off the Foreman indebtedness, buy it in at the Foreman sale, or make it bring enough to pay both debts or bring its value at least, and this was appellee's remedy, but it owed that much to appellants to take care of their property. When it failed to do this, it certainly has not much standing in a court of equity.

III. Another ground of the demurrer challenges the amended bill on the ground that Mims Williams with a prior deed of trust for the full value of the land was not made a party to the suit. He certainly was a necessary party to the suit, because he has an admitted prior lien on the land for more than the land has ever brought at public or private sale. Yates et al. v. Council et al., 102 So. 176; Rodd v. Durbridge, 53 Miss. 694; Champlin v. McLeod, 53 Miss. 484; and Whitney v. Cotton, 53 Miss. 689.

IV. We contended in the court below and assert here that when appellee accepted their deed of trust with the written provision therein that it was a second deed of trust on the land, that this exception wrote the general warranty clause out of appellee's deed of trust, so far as the rights of any person claiming under the first deed of trust are concerned. See 27 Cyc. 1503, article 2, and citations thereunder.

V. After appellants had excepted this land in appellee's deed of trust from the prior rights under the senior deed of trust, they had as much right to come finally into the possession of it as anyone else. Huzzey v. Hefferman, 143 Mass. 232, 9 N.E. 570. Our own state has never decided a case similar to the one here under consideration, so far as we have been able to find.

VI. Our ninth assignment challenges the chancellor's decree for granting a writ of possession without first requiring appellee to discharge Williams' prior lien. See Hawkins v. Harlan, 68 Cal. 236, 9 P. 108.

VII. We contend, finally, that the decree in its present form impairs the obligation of a contract, in this, that Williams' contractual rights are superseded, and that too without giving him a hearing, or preserving his contractual rights. 8 Cyc. 1002; F. T. Leak v. W. W. Cook, 52 Miss. 799; and Hazard et al. v. I. C. R. R. Co., 7 So. 280.

VIII. The court should give judgment here for appellants as they are not claiming through any title or rights that they had, in their junior lien to appellee, covenanted to defend; but, on the contrary, they expressly covenanted in their junior mortgage not to defend against the title through which they are now claiming their rights to purchase the land. Vary v. Smith et al., 50 So. 187; McInnis v. Pickett et al., 3 So. 660.

Hughes, Nobles & Lane, for appellee.

I. Counsel contends that Mims Williams should have been made a party to this suit, or that appellee should have been required to do equity by tendering the purchase price of the land to Williams. This position of counsel is not correct.

Appellee recognized Williams' purchase money lien and asked only that it be declared the owner of the land subject to this purchase money lien. The court so decreed. If this case should be affirmed by this court, Mims Williams would be in exactly the same status he was in the day he sold the land to W. T. and E. B. Martin and took the deed of trust for the purchase money.

II. There runs through appellants' brief the suggestion that appellee wash guilty of laches in that it did not appear at the trustee's sale when the senior deed of trust was foreclosed, and, again, that it did not close out the deed of trust assigned to it by the Martin boys, known as the Patterson deed of trust. We cannot understand just how appellants can be heard to argue laches in this case when they failed to meet any of their contracts or obligations.

III. The greater number of the assignments of error go to the main proposition that appellee acquired no title to the land in question. Or to state it differently, appellants could buy the outstanding title and set it up in derogation of appellee's title. In arguing the demurrers to this case and in arguing the case on its merits, the question as to whether or not when appellants bought the outstanding title from Mims Williams it inured to the benefit of appellee, was the principal proposition argued and considered.

It is well settled in Mississippi that where one makes a warranty deed to property and afterward buys in an outstanding title it eo instante vests in the grantee. Section 2271, Hemingway's Code; 19 R. C. L., page 394, sections 169, 170. So, we submit, that the appellants could not make and execute a second deed of trust on the land in question and permit the lands to be sold under the first deed of trust to Foreman and then buy in the outstanding title thus conveyed through Foreman's trustee and assert this adverse title.

Appellants insist that the writing in to the deed of trust that it was a second deed of trust wrote out of it any warranty. In the first place, we do not agree that this was done. The actual facts made the contract and fixed the liability of the several parties in the two deeds of trust. Now as to whether or not the grantor could buy in the title to the property from and through the senior deed of trust and set it up against the appellee, see: Harris v. Byers, 112 Miss. 660, 73 So. 614; Bush v. Cooper, 26 Miss. 599.

In the case at bar there was a conveyance and a warranty of the entire fee. But counsel says the warranty was written out of the deed of trust when the words showing that it was a second deed of trust were written in. This we do not at all concede but seriously contend that the warranty clause had the same force and...