Rives v. Stanford

• Decision Date: 29 October 1940
• Docket Number: 29658.
• Citation: 106 P.2d 1101,188 Okla. 108,1940 OK 447
• Parties: RIVES et al. v. STANFORD.
• Court: Oklahoma Supreme Court

106 P.2d 1101

188 Okla. 108, 1940 OK 447

RIVES et al. v. STANFORD.

No. 29658.

Supreme Court of Oklahoma

October 29, 1940

Syllabus by the Court.

As a general rule when a mortgagee forecloses and becomes the purchaser at the foreclosure sale, but fails to join the holder of an interest in the premises as a party defendant it does not foreclose such interest, but equity will keep the mortgage alive against the omitted party's interest, and the mortgagee will be entitled to an action de novo to foreclose as against said interest.

Appeal from District Court, Hughes County; Tal Crawford, Judge.

Action by C. C. Stanford, administrator with will annexed of the estate of Lillian (Lillie) D. Walker, deceased, against Dan R. Rives and others to "re-foreclose" a mortgage which had previously been foreclosed in an action in which the defendants were not made parties. From a judgment in favor of the plaintiff, the defendants appeal.

Judgment affirmed.

Pryor & Sandlin, Don Wilbanks, and Marvin Balch, all of Holdenville for plaintiffs in error.

Anglin & Stevenson and O. S. Huser, all of Holdenville, for defendant in error.

NEFF Justice.

The administrator of a real estate mortgagee's estate foreclosed the mortgage. It is said that the foreclosed property was the homestead of the mortgagors, husband and wife, in whole or in part, and it is assumed for the purposes of reasoning herein that all of it was homestead. After the filing of the action, and after obtaining service of summons upon the husband and upon the wife, but before the case went to judgment, the husband died. The plaintiff revived the action as against him in the name of his administrator, and thereafter proceeded to judgment. The property was bid in by plaintiff at the sheriff's sale for the full amount of the judgment, approximating $10,000. The sale was confirmed plaintiff obtained sheriff's deed, the judgment became final, and no portion of the proceedings therein is of interest here except the omission hereinafter related.

That omission consisted of the failure to make the three children of the intestate husband parties to the action upon his death. Two of them were minors. Assuming the land to be homestead, the minors then became necessary parties as a condition precedent to the effective foreclosure of their interests, and the failure to join them resulted in their interests not being foreclosed. Bledsoe v. Green, 138 Okl. 15, 280 P. 301.

So discovering, the plaintiff then filed the present action against the adult child and the two minor children by their guardian ad litem. This action is to "re-foreclose" the mortgage, as the parties term it, as against the interests of said children, who were not parties to the former foreclosure, the idea being to clear plaintiff's title. It resulted in a judgment for plaintiff, adjudicating approximately the same amount as involved in the prior foreclosure action to be a lien against the property, and ordering same sold to satisfy said judgment. The defendants appeal.

The first proposition advanced by defendants is that they were necessary parties to the first cause of action and that the judgment in that case did not foreclose or affect their interests in the property. The plaintiff concedes the correctness thereof (Bledsoe v. Green, supra), and might have added that such was the reason for filing the present action.

The second proposition is that the notes and mortgage sued on and foreclosed in this action had already been merged in the judgment in the former foreclosure, which judgment had been paid and satisfied by the sheriff's sale therein for the full amount of said judgment; that therefore the judgment herein is contrary to the evidence and the law.

Under this proposition the defendants start off with the admission of the general rule that equity will afford relief in such situations where necessary parties have been omitted in the first foreclosure action, but they contend for certain exceptions which will be considered later. The gist of this opinion being the general rule, it is better that we first discuss that rule, in order that the exceptions claimed by the defendants may then be more clearly considered.

The principle involved is the same whether the omitted party be the owner of a fee interest or equitable interest, such as a second mortgage. Our decision in Darks v. Kansas City Life Insurance Company, 181 Okl. 165, 72 P.2d 810, states the general rule: "When the holder of a first mortgage on real estate forecloses his mortgage and becomes the purchaser at his own foreclosure sale, but inadvertently fails to join the holder of a second mortgage as a party defendant, equity will keep the first mortgage holder's mortgage alive against the holder of the second mortgage, and the senior mortgagee will be entitled to an action de novo to re-foreclose his mortgage as to the omitted parties."

See the opinion therein for a full treatment of the question, and also the following: Jones on Mortgages, 6th Ed., vol. 1, section 870, p. 912, and vol. 2, paragraph 1679, p. 636; Bancroft's Code Practice and Remedies, vol. 6, section 5161, p. 633; Yoder v. Robinson, 45 Okl. 165, 145 P. 775.

In Stough v. Badger Lumber Company, 70 Kan. 713, 79 P. 737, a mortgage was foreclosed without the grantee of the mortgagor having been joined as a party defendant. A sheriff's sale of the property was then had. It was held that the purchaser acquired assignment of the liens sought to be foreclosed, by operation of equity principles, and that the right to complete the foreclosure as against the mortgagor's grantee inured to the purchaser in a proceeding de novo.

We have already referred to the decision of this court...