Morris v. Buchanan

• Decision Date: 19 October 1942
• Docket Number: 27731.
• Citation: 44 N.E.2d 166,220 Ind. 510
• Parties: MORRIS et al. v. BUCHANAN et al.
• Court: Indiana Supreme Court

44 N.E.2d 166

220 Ind. 510

MORRIS et al. v. BUCHANAN et al.

No. 27731.

Supreme Court of Indiana

October 19, 1942

Appeal from Superior Court, Lake County; Harold L strickland, judge.

Oscar Thiel and Parasco E. Volo, both of Gary, for appellant.

Wilson Crites & Wilson, of Hammond, for appellee.

RICHMAN Judge.

This appeal involves land in Lake County which was mortgaged to secure a series of bonds. The owner conveyed subject to the mortgage. There was no agreement by the grantees John and Franciska Milevsky to pay the mortgage. After an appeal (see Metelmann v. Buchanan, 1935, 101 Ind.App. 150, 198 N.E. 460) a decree was entered in the Porter Superior Court foreclosing the mortgage and establishing the priority of two bonds which matured earlier than the others. The amounts found due, exclusive of costs, were to Fannie Metelmann $1,468.50, declared to be a first lien, and to appellees herein the total sum of $11,159.60 which includes $734.25 in favor of Fannie Metelmann later assigned to appellees. Personal judgment was entered against the original mortgagors but not against the Milevskys. On an order of sale procured by Fannie Metelmann the sheriff of Lake County sold the property to her for $1,623.54, the amount of her first lien, interest and costs, leaving appellees' judgments wholly unsatisfied.

Within the year after the sale the Milevskys consulted their attorney, Oscar B. Thiel, 'about the process of redemption to get their property back' and 'after examining the law, and approximately four days later, he advised the Milevskys that if they redeemed the property it could be again exposed for sale; that they had a right to occupy the property until August 12, 1937, and redeem it if they could raise the money; also that they had a right to mortgage the property and that if the property was mortgaged, and the mortgagee redeemed from sheriff's sale, that the property could not be sold again.' His clients told him 'to proceed with the necessary arrangements.'

Pursuant thereto the Milevskys executed a note and mortgage on the real estate to appellant Morris for $6,500 which mortgage was dated June 21, 1937, and recorded June 30, 1937. Morris delivered a check for $3,500 to his attorney P. E. Volo. This check was cashed and the proceeds deposited to the credit of O. B. Thiel and Parasco E. Volo, trustees, in a Gary bank. From this account the following payments were made: $750 to Thiel for attorney fees; $400 to Galasini as a commission for procuring the money from Morris; $16.25 for intangible tax stamps; $2 for recorder's fees; $1 for a cashier's check; $5.73 for Volo's traveling expenses; $1,746.04 to the clerk of the Lake Circuit Court in redemption from the sale. This left a balance of $578.98 which was returned to Morris. In all there was advanced $2,921.02 on a note and mortgage purporting to be for $6,500. Redemption was made upon the affidavit of Morris as mortgagee and certificate of redemption was issued in his name. All these things except the payment of said balance to Morris occurred during the year for redemption which expired August 12, 1937. In January, 1939, the Milevskys executed a quitclaim deed for the property to appellant Sarantis.

Thereafter appellees filed their complaint in the Lake Superior Court charging that the redemption was fraudulent and while made in the name of Morris was in fact the redemption of the Milevskys and by reason thereof appellees were entitled to resale to satisfy their judgments. The prayer was for vacation of the foreclosure sale and order of resale free from the mortgage to Morris and other proper relief. Appellants demurred on the ground that the Lake Superior Court was without jurisdiction of the subject matter because the Porter Superior Court had acquired and retained jurisdiction by virtue of the foreclosure proceedings and decree therein. The demurrers were overruled and answers were filed. There was a trial without a jury, a general finding and decree for appellees vacating the foreclosure sale and declaring the real estate 'subject to sale on execution, as if said sale had not been made * * * to pay and satisfy the judgments' of appellees.

While the complaint contains allegations of fraud and is designated by appellees as a suit to remove a fraudulent obstruction to their right of resale, we think essentially it is an action for the determination of rights or interests in real estate, venue of which by § 2-701, Burns' 1933,§ 75 Baldwin's 1934, is declared to be in the county where the real estate is situated. Appellants' cases are not in point. There was no interference with the process of a court of concurrent jurisdiction as in Morgan v. Amick, Sheriff, 1936, 102 Ind.App. 603, 4 N.E.2d 51; Hofmann v. State, 1935, 207 Ind. 695, 194 N.E. 331, and cases cited therein. Habeas corpus cases like State ex rel. Kunkel v. Circuit Court of La Porte County, 1936, 209 Ind. 682, 200 N.E. 614, involve a collateral attack on the validity of a judgment of a court of co-ordinate jurisdiction. Here there is no attempt to assail the validity of the foreclosure decree. Brown v. Doak Co., 1922, 192 Ind. 113, 135 N.E. 343, deals with the subject of pleas in abatement where there are two pending actions asking the same relief. Hack, Receiver, v. Bolint, 1934, 101 Ind.App. 133, 191 N.E. 177, holds that where one court has appointed a receiver for a bank another co-ordinate court has no jurisdiction to appoint a trustee for some of the assets in the custody of such receiver. Here possession of the real estate was not in the court but in the owner by reason of his legal title. The right to resale was not controlled by the decree of the Porter Superior Court but by the statute. If the owner desired to redeem, he could not be prevented by any order of that court. And the effect of his redemption likewise is controlled not by the decree but by the statute. When a foreclosure suit is instituted, the court in which it is pending has jurisdiction of the foreclosure, which is the subject matter, but that suit does not clothe the court with exclusive jurisdiction of the real estate. We think under § 2-701, supra, the action was properly filed in the Lake Superior Court. See McMannus v. Bush, 1874, 48 Ind. 303; McAfee v. Reynolds, 1891, 130 Ind. 33, 28 N.E. 423, 18 L.R.A. 211, 30 Am.St.Rep. 194.

The only other question presented is the sufficiency of the evidence to sustain the finding. The main issue raised by the complaint is whether or not the redemption in the name of Morris, the mortgagee, was in fact the redemption of the Milevskys, the owners of the real estate. § 2-4003, Burns' 1933, § 626, Baldwin's 1934, provides that if the owner redeems, the sale is vacated 'and the real estate [is] subject to sale on execution, as if such sale had not been made * * *.' Our inquiry therefore is whether there was evidence from which the trial court might reasonably have found the fact of redemption by the owners.

We think there are two theories upon which the finding may be supported. The first is that Milevskys furnished the money for the redemption and the use of Morris' name was but a cloak to hide the source of the money.

From the inception of his employment by the owners 'to get their property back,' Mr. Thiel constantly kept his guiding hand on the proceedings initiated by him. He wrote the note and mortgage which were executed June 21, 1937, eight days later helped open the trust account, signed all the checks for payments out of that account, prepared the affidavit of redemption, dated July 16, 1937, and delivered it to the clerk of the Lake Circuit Court, prepared and as notary took the acknowledgement of the Milevskys to their quitclaim deed to Sarantis dated January 3, 1939. He alone appeared for Morris in his ante trial examination, and he tried the case below as attorney for all defendants with Mr. Volo named as co-counsel but apparently taking no part except as witness.

It has already been noted that the mortgage was for $6,500, almost twice the consideration of the alleged loan. This fact is enough to cast suspicion on the bona fides of the transaction. Mr. Thiel's explanation was that there were delinquent taxes of $1,300 or $1,400 which might increase to as much as $1,600, so he thought 'the better way would be to make a note for $6,500.' Adding $1,600 to $2,921.02 makes $4,521.02, which still is $1,978.98 short of the face of the mortgage. He thought also it might be necessary to foreclose the mortgage, with the expense of a receiver, and further that the Milevskys would want to live in the house a couple of years. The latter was also Mr. Volo's idea as appears from the following:

'The Court: Why was the mortgage made for $6,500? A. Well, as I said before, we thought we would include the $1,600 in taxes.

'The Court: What were the Malevskis to get out of this $6,500 mortgage, were they to have an opportunity to redeem this property from Morris? A. Well, we allowed them to stay there.

'The Court: O, you allowed them to stay there, for how long? A. two years.

'The Court: And they obligated themselves for $6,500? A. Yes.

'The Court: $3250.00 rent a year, is that what you thought you were giving to the Malevskis? A. Since they was collecting the rent.

'The Court: How much was the rent they were collecting? A. I think thirty.

'The Court: Thirty dollars a month for two years would be $720.00; and the mortgage was made for $6,500.00 and they got no part of that money in their hands, you said? Now, wasn't the Malevskis to have an opportunity to get this property back, you say you had some expenses? A. I think we had traveling expenses on and off.

'The Court: That is all I want to know.'

The record shows that on June 29, 1937, the $3,500 appeared in one sum...