Sidney Stevens Implement Co. v. South Ogden Land, Building & Improvement Co.

• Decision Date: 07 October 1899
• Parties: SIDNEY STEVENS IMPLEMENT COMPANY, A CORPORATION, APPELLANT, v. SOUTH OGDEN LAND, BUILDING & IMPROVEMENT COMPANY, A CORPORATION; SOUTH OGDEN WATER COMPANY, A CORPORATION; F. W. LA FRANTZ, JOHN PINCOCK, SIDNEY STEVENS, WILLIAM F. GARNER, JAMES A. STEPHENS, DAVID H. STEPHENS, JAMES BEUS, MARIAN BEUS, ANN BEUS, PAUL BEUS, MAGDALENE BEUS, MARY BEUS, JOHN BEUS, AND JAMES R. BEUS, RESPONDENTS
• Court: Utah Supreme Court

58 P. 843

20 Utah 267

SIDNEY STEVENS IMPLEMENT COMPANY, A CORPORATION, APPELLANT, v. SOUTH OGDEN LAND, BUILDING & IMPROVEMENT COMPANY, A CORPORATION; SOUTH OGDEN WATER COMPANY, A CORPORATION; F. W. LA FRANTZ, JOHN PINCOCK, SIDNEY STEVENS, WILLIAM F. GARNER, JAMES A. STEPHENS, DAVID H. STEPHENS, JAMES BEUS, MARIAN BEUS, ANN BEUS, PAUL BEUS, MAGDALENE BEUS, MARY BEUS, JOHN BEUS, AND JAMES R. BEUS, RESPONDENTS

Supreme Court of Utah

October 7, 1899

Appeal from the Second District Court, Weber county, Hon. H. H Rolapp, Judge.

Action by plaintiff for a decree directing the sale of certain real estate described in a deed of trust executed by the defendant South Ogden Land, Building & Improvement Company, as security for the reimbursement of any sum which the other defendants might be obliged to pay on certain accommodations described in said deed of trust, which deed, together with the claim of defendant Sidney Stevens, had been assigned to this plaintiff. From a judgment for defendants, plaintiff appeals.

Case remanded.

1 Dupre v. Rose, 10 Utah 305; Thompson v Cheesman, 15 Utah 51; Peck v. Girard F. & M. Ins. Co., 16 Utah 121.

2 Turngren v. Henderson, 9 Utah 432.

3 McKay v. Farr, 15 Utah 261.

4 Lees v. Freeman, 19 Utah 481.

Thos Maloney, Esq., and A. J. Weber, Esq., for appellant.

"Omission to make trustee a party in a proceeding to foreclose a trust deed is a fatal omission." Hayes v. Ovrum, 69 Ill.App. 553; Blackburn v. Clarke, 1 Pickle (Tenn.) 506; Helue v. Barnes, 1 Lea. (Tenn.) 338; Dunn v. Waggoner, 1 Yerger, 59; Gardner v. Brown, 21 Wallace, 36; Hayes v. Lewis, 21 Wis. 663; Wiltse on Mortgages, Sec. 112; Tucker v. Silver, 9 Iowa 261.

This general rule is recognized by the following authorities Story Eq. Pl. Secs. 207, 209; 1 Daniel Ch. Pl. & Pr., Sec. 293; McKinley v. Irvine, 13 Ala. 681; Cassady v. McDaniel, 8 B. Monroe, 519.

"The acts of a party, whatever they may be, will not estop him to deny fraud of which he was at the time ignorant, when claims under such fraud are attempted to be enforced by the guilty party or one having notice thereof." Sinnett v. Moles, 38 Iowa 25.

Under the well settled rules of equity, it is a very narrow channel through which the well known doctrine of equitable subrogation can be invoked. Bispham's Equity, Sec. 337; Mather v. Jenswold, 32 N.W. 512; Weidner v. Thompson, 28 N.W. 422.

Subrogation will not arise in favor of a stranger, but only in favor of a party who, on some sort of compulsion, discharges a demand against a common debtor. Webster's Appeal (S.Ct. Pa.) 5 W. N. 486; Bispham's Equity, Secs. 27-335.

L. R. Rogers, Esq., for Respondent David H. Stephens.

On the question of estoppel respondent invokes the salutary rule expressed in the well considered case of McKay v. Farr, 15 Utah 261 (264). Stahn v. Hall, 10 Utah 400; Mining Co. v. Haws, 7 Utah 515; Dooly Block v. Transit Co., 9 Utah 31; Whitesides v. Green, 13 Utah 341; Wells v. Wells, 7 Utah 68.

A mortgagee has an unquestionable right to waive his priority in favor of a subsequent mortgagee; and this was what Sidney Stevens did, and he was moved to do it because the subsequent mortgagee's money would be paid over to him in satisfaction of the so called Armstrong note; and upon the trial he testified that at this time he "was awfully hard up for ready money." Clason v. Shepherd, 6 Wis. 366; Taylor v. Wing, 84 N.Y. 471; Mutual L. Ins. Co. v. Sturgis, 33 N.J. Eq. 328; Poland v. Lamoille V. R. R. Co., 52 Vt. 144; Darst v. Bates, 95 Ill. 493.

BASKIN, J. BARTCH, C. J., in the judgment, and MINER J., concur.

OPINION

BASKIN, J.

This is an action in which the plaintiff, who is the appellant, prays for a decree directing the sale of certain real estate described in a certain deed of trust, executed by the defendant, the South Ogden Land, Building & Improvement Company, on the 13th day of March, 1893, and conveying said real estate to F. W. La Frantz, trustee, as security for the reimbursement of any sum which the defendants Sidney Stevens, S.C. Stephens, W. J. Stephens, and Paul Beus, or either of them, might be obliged to pay on certain accommodation notes, described in said deed of trust, executed by said defendants, at the request of said defendant company, for the sole use and benefit of said company, and which said deed of trust, together with the claim of the said Sidney Stevens for the sum which, the complaint alleges, he was obliged to pay on said accommodation notes (his co-makers of said notes having paid nothing thereon) was assigned by the said Sidney Stevens to the plaintiff.

The said defendant, David H. Stephens, in his answer, after denying certain allegations of the complaint, and making certain allegations, which, in the decision of the case it is not necessary to specially mention, by way of cross complaint alleged that, on the 3d day of May, 1893, the defendant, South Ogden Land, Building & Improvement Company, executed and delivered to the defendants William F. Garner and James A. Stephens, a certain deed of trust, set out in said cross complaint, conveying to said Garner and Stephens, as trustees, certain real estate described in said deed to secure the payment of a promissory note for $ 4,344.85, with interest at the rate of eighteen per cent. per annum, from date until paid, both before and after judgment, and in case of suit for its collection, ten per cent. attorney's fees was to be paid, executed and delivered by said company to the defendant, David H. Stephens. Said deed of trust authorized the trustees therein named, or the survivor of either of them, their successors or assigns, in case default should be made in the payment of said note, upon the application of the payee of said note, or his assigns, to sell said real estate, or so much thereof as, in their discretion, they might find necessary to sell in order to accomplish the object of their said trust; that said trust deed was duly recorded in the office of the county recorder, Weber County, Utah; that said Wm. F. Garner is at present a non-resident of the State of Utah and therefore unable to act and carry out the provisions of said trust deed; that no part of said note has been paid, and that there is due thereon the sum of $ 4,344.85, with interest from May 3, 1893, at the rate of 18 per cent per annum; that a reasonable attorney's fee as provided in the said deed is $ 450; that plaintiff and all of the other defendants herein have or claim some interest in and to the premises mentioned in the said deed of trust, but that said interests are subject and subsequent to the mortgage and trust deed of this cross complainant.

The cross complaint also alleged the same facts as those specified in the 7th, 8th and 9th findings hereinafter set out.

The fourth finding is as follows: "That the defendant William F. Garner, named in said deed of trust, as one of the trustees thereof, was at the time of the commencement of this action, ever since has been, and still is, a non-resident of the State of Utah and by reason thereof is unable to act and carry out the provisions of said trust."

The said William F. Garner was named in the complaint as a party defendant to the suit, but was not served with summons and made no appearance. The said James A. Stephens was also named therein as a party defendant, and in connection with other defendants, answered the complaint. Neither of said trustees were made, in terms, parties to the cross complaint. No objection was made by the plaintiff and appellant, on the ground of a non-joinder of necessary parties, either by demurrer, or in the answer to the cross-complaint, or on motion for a new trial.

Notwithstanding the foregoing finding and the facts just stated, the appellant, for the first time, makes the objection, in this court, that the trust deed set out in the cross complaint cannot be foreclosed without the trustees named therein being parties to the action.

The leading case quoted by counsel for the appellant, in support of this objection is Hayes v. Owen, 69 Ill.App. 553, which was an action to foreclose a trust deed. The trustee was not made a party to either the original, amended or supplemental bill, and the court on the authority of Lambert v. Hays, 22 Ill.App. 616, held that the omission was fatal.

In the latter case the court said: "In a suit in chancery to foreclose a trust deed in the nature of a mortgage, the grantee in such deed, in whom the legal title is vested, is an indispensable party."

In Gardner v. Brown, 88 U.S. 36, 21 Wall. 36, 22 L.Ed. 527, Mr. Chief Justice Waite in the opinion said, "the bill prayed a foreclosure of the mortgage by sale of the land. This required the presence of the party holding the legal title. The complainant has only the equitable title. Walker held the legal title. The final determination of the controversy, therefore, required his presence."

In the case of S.W. M. Tucker v. Silver , 9 Iowa 261, upon which much stress was laid by appellant's counsel, because the case was considered in the light of the Iowa Code, the court says: "The trustee holds the legal title in the thing demanded, and he must be before the court says Mr. Daniels, page 259, on account of the impossibility of otherwise preventing the assertion of the legal right in courts of law.' And in all cases in which the legal estate is vested in the trustee, or if he has no estate, when the circumstances are such, that in the event of the success of the complainant, the defendant may have a demand over against him, the trustee is a necessary party. Daniels, 300. Has this rule been changed by the code? The legal title, now as heretofore vests in the trustee. Let us look then at the provisions which appellant claims, changed the rule." The court held that the rule was not...