Munger v. T. J. Beard & Brother

• Decision Date: 19 September 1907
• Docket Number: 14,826
• Citation: Munger v. T. J. Beard & Brother, 113 N.W. 214, 79 Neb. 764 (Neb. 1907)
• Parties: IRA C. MUNGER, APPELLEE, v. T. J. BEARD & BROTHER ET AL., APPELLANTS
• Court: Nebraska Supreme Court

113 N.W. 214

79 Neb. 764

IRA C. MUNGER, APPELLEE, v. T. J. BEARD & BROTHER ET AL., APPELLANTS

No. 14,826

Supreme Court of Nebraska

September 19, 1907

APPEAL from the district court for Douglas county: HOWARD KENNEDY JUDGE. Reversed.

REVERSED.

John O Yeiser, for appellants.

C. E Herring, contra.

DUFFIE, C. EPPERSON and GOOD, CC., concur.

OPINION

DUFFIE, C.

The following facts appear from the record in this case: One Anna J. Fitch, being the owner of lots 12 and 13, in block 99, in Dundee Place, an addition to the city of Omaha, executed a mortgage thereon to the Patrick Land Company, which mortgage was duly recorded August 31, 1888. The note which the mortgage was made to secure was sold and delivered to Ira C. Munger, and the mortgage duly assigned to him by the Patrick Land Company. January 17, 1894, Munger commenced an action to foreclose this mortgage, at the same time filing a lis pendens notice with the recorder of deeds of Douglas county. This action resulted in a decree of foreclosure, upon which a sale was made and a deed issued to the plaintiff, Ira C. Munger, of date March 9, 1896, and this deed was recorded August 26, 1899. In said foreclosure action T. J. Beard & Brother, the appellants herein, were made parties defendant, being the owners of a judgment against Anna J. Fitch, the mortgagor, and which judgment they are now seeking to enforce against the mortgaged property. They made a personal appearance in the foreclosure action, but failed to answer or plead therein, and their default was duly entered. The foreclosure decree found $ 2,100 due on the mortgage, and the sale realized the sum of $ 1,200. The decree found that the mortgage was a first lien upon the premises, and foreclosed all the parties defendant of all equity of redemption or other interest or claim in the mortgaged premises. Anna J. Fitch, the mortgagor, was not served with summons in the foreclosure proceedings. It appeared that she had deeded the property to R. C. Patterson, who held the legal title at the commencement of the foreclosure proceedings, and who was made a party defendant. In his answer in that action, Patterson alleged facts showing that his deed from Mrs. Fitch was taken as security for money due from her, and it is upon this phase of the case that the appellants base their claim. Long after sale and recording of the deed growing out of the foreclosure proceedings, and some time prior to March 15, 1904, the appellants revived their judgment against Mrs. Fitch, caused execution to be issued thereon, and the mortgaged property, foreclosed in the above mentioned action, levied on by the sheriff of Douglas county, Nebraska, as the property of Mrs. Fitch, and the sheriff advertised said lots to be sold on March 15, 1904. The appellee brought this action to enjoin the sheriff and the defendants from proceeding with the sale, their petition setting up the facts above recited. The answer of the appellants admits the facts above set forth, but alleges that it was disclosed by the answer of R. C. Patterson in the foreclosure proceedings that the deed taken by him from Mrs. Fitch was taken as security and was, in fact, a mortgage; that Mrs. Fitch was the real owner of the lots in question at the time of the foreclosure proceedings; that, not being served with summons and not appearing in the action, her interest in the property was not affected by the foreclosure decree, and that she is still the owner of the fee, which is subject to levy and sale to satisfy the appellants' judgment. The district court sustained a demurrer to this answer, and entered a decree finding that Munger is the owner in fee of the lots in question; that the defendants are attempting to sell the property at sheriff's sale, and asserting a lien against the property by virtue of their judgment against Anna J. Fitch; that their judgment is not a lien upon the lots, and that they are precluded and estopped from asserting any lien against said property by virtue of their said judgment and levy. A perpetual injunction also issued against the defendants enjoining them from asserting in any manner a lien against said real estate or from selling the property at sheriff's sale.

The appellants assert with great confidence that, R. C. Patterson having disclosed in his answer in the foreclosure proceedings that his deed from Mrs. Fitch conveying the lots in controversy was taken as security, and not as an absolute, unconditional conveyance of the lots, the court had no jurisdiction of the property in the foreclosure proceedings, Mrs. Fitch not being served with summons and not appearing in said action to assert her claim in any manner. The fact that a notice of lis pendens was filed at the commencement of the foreclosure proceedings requires us to again examine our lis pendens law in connection with the decision of Sheasley v. Keens, 48 Neb. 57, 66 N.W. 1010. Prior to 1887 the statute read as follows: "When the summons has been served, or publication made, the action is pending, so as to charge third persons with notice of its pendency, and while pending, no interest can be acquired by third persons in the subject matter thereof, as against the plaintiff's title." Code 1885, sec. 85. Experience has demonstrated that this statute was defective, and that many decrees affecting title to real estate were wholly ineffective because intermediate the filing of a petition and the service of summons the holder of the legal title had transferred the property, or an interest therein, to some third party whose rights could not be affected by the decree. A second class of persons were also beyond the reach of the original statute. They were parties who had taken title or acquired an interest in the property in litigation prior to the commencement of the action, but who had failed to record their conveyances, and who would therefore be unknown to the plaintiff, who could not on that account implead them in the action to cut off whatever interest they might have. To meet these difficulties, the legislature in 1887, and prior to the making of the mortgage in suit, amended section 85 by providing that, in all actions wherein the title to real property was brought in question, the plaintiff, at the time of filing his petition, or afterwards, might file a notice of lis pendens in the office of the register of deeds, the notice to contain the names of the parties, the object of the action, and a description of the property to be affected by the suit. A defendant who sought for any affirmative relief by way of cross-petition might also file such lis pendens notice, and it is provided that "from the time of filing such notice shall the pendency of such action be constructive notice to any purchaser or incumbrancer to be affected thereby, and every person whose conveyance or incumbrance is subsequently executed or subsequently recorded shall be deemed to be a subsequent purchaser or incumbrancer and shall be bound by all proceedings taken in said action after the filing of such notice, to the same extent as if he were made a party to the action." Code 1887, sec. 85. The effect of this amendment was before the court in Sheasley v. Keens, supra, and it was there held that the amendment was unconstitutional and void so far as it sought to bind a party who had taken title to property involved in an action prior to the commencement of the action, but who had failed to record his conveyance or incumbrance upon the property. The reasoning upon which this conclusion was reached is found at page 64 of the opinion. The argument adduced is that the holder of an unrecorded deed or mortgage affecting the real estate involved in the litigation, though such deed or mortgage was executed long prior to the time of filing a lis pendens, is, by the amendment, in effect, made a party to the suit in which the lis pendens is filed, and declared to be bound by the judgment rendered in that action in the same manner as if he was in fact made a party to the suit and served with notice by publication. It is then said that this constitutes an amendment to section 77 of the code, providing for constructive service upon the parties to an action; and, because section 77 was not referred to or amended by the act, it was in violation of section 11, art. III of the constitution, which declares that "no law shall be amended unless the new act contain the section or sections so amended and the section or sections so amended shall be repealed."

If it be once established that it was not the object or purpose of the amendment to section 85 to make the holders of unrecorded conveyances or interests parties to the suit, or to summon them into court to have their interests adjudicated in the action in which the lis pendens notice is filed then the reasons urged in Sheasley v. Keens, supra, for holding the act unconstitutional have nothing to rest upon. No court, so far as our investigation has extended, had, before the case of Sheasley v. Keens, in holding that parties were bound by the decree because of a lis pendens filed, put it upon the ground that such persons were parties...