Motor Equipment Co. v. Winters

• Decision Date: 12 June 1937
• Docket Number: 33409.
• Parties: MOTOR EQUIPMENT CO. v. WINTERS et al.
• Court: Kansas Supreme Court

69 P.2d 23

146 Kan. 127

MOTOR EQUIPMENT CO. v. WINTERS et al.

No. 33409.

Supreme Court of Kansas

June 12, 1937

Syllabus by the Court.

Foreclosure and purchase of mortgaged property at sheriff's sale by senior mortgagee and redemption thereof by owner during owner's twelve months' exclusive period of redemption without junior mortgagee having been made a party to proceedings or having had actual notice of pendency thereof until after redemption held not to affect junior mortgagee's right to foreclose its lien after redemption (Gen.St.1935, 60-3440, 60-3460).

The words "liens inferior thereto," as used in statute barring enforcement by sale of such a lien after one sale of realty where lienholder has had right of redemption, mean liens adjudicated as such rather than unadjudicated liens (Gen.St.1935, 60-3460).

A court is not obliged to adhere to literal construction of statutes when such construction is not in harmony with lawmakers' intent and is inimical to doctrine of due process of law.

Essential elements of term "due process of law," said to be synonymous with "the law of the land," are notice and an opportunity to be heard and to defend in an orderly proceeding adapted to the nature of the case. "Due process of law" means a law which hears before it condemns, which proceeds on inquiry, and renders judgment only after trial.

Property may not be sold to satisfy second mortgage unless a judgment so provides (Gen.St.1935, 60-3107).

In determining legislative intent, court must consider statutes in existence when statutes involved were enacted.

In construing statute precluding enforcement by sale of an inferior lien after realty has once been sold to satisfy a superior lien, court was required to assume that Legislature in enacting such statute had in mind statute requiring trial court to bring in additional parties when their presence is necessary for determination of controversy, and that it intended that such inferior lien should have been adjudicated (Gen.St.1935, 60-416, 60-3460).

In view of statute under which recording of an inferior lien imparted notice of contents of record, holder of such an inferior lien should be made a party defendant to a foreclosure action (Gen.St.1935, 67-222).

On junior mortgagee's appeal from judgment precluding it from enforcing its mortgage after foreclosure of first mortgage and redemption by owner, reviewing court in determining that junior mortgagee's right of foreclosure had not been affected, would not determine whether its lien could be enforced as a first lien, where it did not seek to so enforce its lien.

1. Where a senior mortgagee brought suit, foreclosed its mortgage, and purchased the property at sheriff's sale not having made the junior mortgagee a party, although the junior mortgage was properly recorded and a grantee of the owner redeemed during the owner's twelve months' exclusive period of redemption, and where it was agreed the junior mortgagee had no actual notice or knowledge of the pendency of the foreclosure action or of any other step in the proceedings until after redemption, held, the right of the junior mortgagee to foreclose its lien after redemption was not affected.

2. Under circumstances narrated in the opinion, the question of whether the junior mortgage has become a first lien is not now decided.

Appeal from District Court, Sedgwick County, Division No. 1; Ross McCormick, Judge.

Action by the Motor Equipment Company against Julia M. Winters and others. Judgment for defendants, and plaintiff appeals.

Reversed and remanded.

W. D Jochems, J. Wirth Sargent, Emmet A. Blaes, and Roetzel Jochems, all of Wichita, for appellant.

C. A Matson, I. H. Stearns, and E. P. Villepigue, all of Wichita for appellees.

WEDELL Justice.

This action was brought to foreclose a second mortgage on real estate after a first mortgage had been foreclosed without joining the second mortgagee as party defendant. Judgment was for defendants, and plaintiff appeals. The action was tried on an agreed statement of facts. The portions thereof pertinent to this appeal may be briefly stated as follows:

The defendant Julia M. Winters defaulted below. Defendants Jasper W. Harrison and Mabel Harrison, his wife, are the appellees. Julia M. Winters was the owner of certain real estate in Sedgwick county, and on October 1, 1930, executed and delivered a note and first mortgage thereon to the Equitable Life Assurance Society. On November 8, 1933, she executed and delivered a second mortgage to plaintiff, and one, McLaughlin, which was duly recorded. The interest of McLaughlin was assigned to plaintiff and plaintiff became the owner of the entire second mortgage. The second mortgage is the subject of this appeal. "The Equitable" filed its foreclosure action on February 11, 1935, but through an error on the part of the abstracter, in omitting the second mortgage from the abstract, it had no actual knowledge of that mortgage and did not make the plaintiff in the present action a party to its foreclosure suit. On March 30, 1935, "The Equitable" obtained a judgment of foreclosure, had the property sold, and purchased it at sheriff's sale on May 1, 1935. "The Equitable" received a certificate of purchase. In March of 1936, Julia M. Winters sold her interest in the property to the defendant Jasper W. Harrison. The abstract was extended to March 31, 1936, by a bonded abstracter, but again the second mortgage was omitted from the abstract and Harrison had no actual knowledge of the mortgage. Before the owner's twelve-month period of exclusive redemption expired, and on April 6, 1936, appellee Harrison redeemed. The plaintiff in the instant case had no actual notice or knowledge of the pendency of the foreclosure suit, judgment, sale, confirmation of sale, decree fixing the period of redemption, the issuance of certificate of purchase, the purchase by Harrison, or the redemption by him until on or about May 1, 1936.

The ruling of the trial court denied the foreclosure of the second mortgage. Appellees contend G.S.1935, 60-3460, and the decisions of this court construing that statute, require affirmance of the judgment. The decisions of this court relied upon mainly by appellees are: McFall v. Ford, 133 Kan. 593, 1 P.2d 273; Union Central Life Ins. Co., v. Reser, 134 Kan. 876, 8 P.2d 366; Frazier v. Ford, 138 Kan. 661, 27 P.2d 267; Prudential Ins. Co. v. Foster, 139 Kan. 112, 30 P.2d 104. G.S.1935, 60-3460, provides:

"Real estate once sold upon order of sale, special execution or general execution shall not again be liable for sale for any balance due upon the judgment or decree under which the same is sold, or any judgment or lien inferior thereto, and under which the holder of such lien had a right to redeem within the fifteen months hereinbefore provided for." (Italics inserted.)

Did the Legislature intend to bar an inferior lien, a second unadjudicated mortgage, from being foreclosed where the second mortgage was of record when the first mortgage foreclosure action was filed and where the second mortgagee was not made a party defendant, and had no actual notice or knowledge of any part of the proceeding whatsoever until after redemption by the owner, and thus enable the owner to redeem within the twelve-month period of exclusive redemption prescribed by G.S.1935, 60-3440, and thereby preclude enforcement of the second mortgage? We think not.

This court by unanimous decision in Stacey v. Tucker, 123 Kan. 137, 254 P. 339, declared that in its opinion the Legislature contemplated by the use of the words "lien inferior thereto," not merely liens, but "liens adjudicated as such." To that interpretation we adhere in the instant case. The lien in the present case was not an adjudicated lien and we hold was not barred by the provisions of G.S.1935, 60-3460, or by other pertinent statutes, all of which were fully considered in both the majority and dissenting opinions in the McFall Case, supra. The first paragraph of the opinion in the Stacey Case clearly indicates this court had before it then the identical question presented now and at that time understood exactly what was confronting it. In disposing of the question, it ruled:

"Where a senior mortgagee brought suit, foreclosed his mortgage, and purchased the property at sheriff's sale not having made a junior mortgagee a party, held: (a) The junior mortgagee's rights were not affected by the proceedings; (b) the junior mortgagee was not barred for failure to redeem the land, and an action by the senior mortgagee afterwards to quiet title against the junior mortgagee was of no avail." (Syl. 1.)

Appellee insists the opinion in the Stacey Case was overruled by the McFall Case, supra. The statement is too broad. True, the McFall Case was concerned with an inferior lien, but it was an adjudicated lien. Moreover, it was adjudicated in an action to which Mrs. Thomas, the holder of the inferior lien was made a party defendant and was adjudicated on the same day the plaintiff in that case, the holder of three mortgages, took foreclosure judgment in all three of its actions. Mrs. Thomas did not have a mortgage on the land involved in either of the other two cases and in them was, of course, not made a party defendant. On the sale of the land on which she did have a second mortgage, she realized nothing. By virtue of G.S.1935, 60-3126, her personal judgment against the owner of the lands, however, became a lien on the lands of the judgment debtor, as of the first day of the term on which it was rendered. That lien, of course, was inferior to plaintiff's mortgage liens. It was this inferior adjudicated lien of Mrs. Thomas, with which the McFall Case was concerned. It was held the lands of the debtor were not again liable to...