Adger v. Pringle
11 S.C. 527
S.C.
1879
Check Treatment

The opinion of the court was delivered by

McIver, A. J.

The first question which we propose to consider is, whether the objection raised by the appellant, A. G. Eice, to the making of Mrs. Lide and Miss Gadsden parties, can be sustained. This objection, it is to be observed, was not raised by any pleading, but was for the first time, taken in the argument before the referee. It is based upon the ground that the action was brought simply for foreclosure of the several mortgages mentioned in the complaint, and that to such an action these persons, whose only claim is that of creditors of the ancestor of the mortgagors, could not be made parties. We do not consider, however, that this position can be sustained, for the reason upon which it rests is not, in our judgment, well founded. *544We do not regard the action as brought simply for the foreclosure of the mortgages. The agreement entered into by the several parties, through their attorneys, prior to the commencement of the action, the terms of which were substantially set forth in the complaint, together with the demand for relief, show very clearly that such was not the sole purpose of the action. It is very obvious that the numerous creditors of the Pringles saw that in any attempt to enforce their demands, whether against the ancestor or the heirs, many conflicting claims were likely to arise, which it would be necessary to have determined, and with a view to avoid multiplicity of suits and heavy expenses, they entered into the agreement above referred to. In pursuance of this agreement we find that the complaint states the claims of the various creditors, and prays judgment not merely for a foreclosure of the several mortgages, as in a case brought simply for that purpose, but also that the proceeds of the sales of the mortgaged property, after satisfying the costs and taxes, be applied “ to the payment of the amounts of principal and interest due on the bonds and mortgages held by the plaintiffs, and the claims of the parties defendants, according to their relative priorities, and so far as the same may be established before this honorable court.” Accordingly an order was granted, by consent of the attorneys of the several parties, for the sale of the mortgaged premises, in which it was provided that the proceeds of the sale, after paying costs and expenses, should be turned over to the referee, “ to be distributed by him under the further orders of this court.” This order also provided that until such sale should be effected the property should be placed in 'the hands of certain designated persons, to be planted and managed by them, and, after paying the expenses of such operations and the advances made for cultivating crops, &c., that the net proceeds be held “subject to the orders of this court, and to be distributed among the several parties hereto, as their several rights may appear.”

While, therefore, one of the purposes of the action was to obtain judgment of foreclosure and sale, another was to have the various conflicting claims of the creditors adjudicated in this one action; and while these questions were in process of adjudication, the property, which was represented to be deteriorating in value *545and yielding no returns, was sold by the consent of all parties, and the proceeds representing such property was retained in the hands of the court, to be distributed or applied in accordance with the judgment of the court as to the relative priorities of the several claimants. The action may, therefore, be regarded as more in the nature of a creditor’s bill, though not strictly such, rather than as an ordinary action to foreclose a mortgage of real estate, and so regarded all the grounds upon which it is contended that Mrs. Lide and Miss Gadsden were not proper parties, are clearly untenable. We think, therefore, that the objection raised by the appellant, Rice, even were it originally maintainable, comes too late, for we do not regard it as a question of jurisdiction, but rather as a question of pleading and practice, and, as such, consent of parties operates as a waiver of objections, which, otherwise, might be unanswerable.

But, as the counsel for the appellant, Rice, contended so earnestly against the idea that the agreement, above referred to, should be regarded as a consent on his part to the making of improper parties, we will not rest our decision upon the effect of such agreement. We are satisfied that, even in the absence of any such agreement, Mrs. Lide and Miss Gadsden were proper, though not necessary parties to the action. There can be no doubt that all prior, as well as subsequent encumbrancers, while not necessary are proper parties to an action for the foreclosure of a mortgage of real estate, and in order that the land may produce its full value at the sale sought by such action for foreclosure, it is desirable that such encumbrancers should be made parties, for, if the prior encumbrancers are not made parties, the purchaser takes his title subject to the lien of such encumbrancers; and if the subsequent encumbrancers are not made parties, the purchaser buys subject to the right of such encumbrancers to redeem by paying off the antecedent encumbrances. Now, while a bond creditor of an ancestor cannot be said to have a lien, in the proper sense of that term, upon land in the hands of the heirs, inherited from the ancestor, yet he does have the right, by proper proceedings, to subject such land to the payment of his debt, and this right is called, in Jones v. Wightman, 2 Hill 583, “ a constructive lienin Richardson v. Ghappell, 6 S. C. 155-6, *546“a charge;” and in Rogers v. Huggins, 6 8. C. 362, “an encumbrance.” The same principle, therefore, upon which it has been held that a prior encumbrancer is a proper party to an action for the foreclosure of a mortgage of real estate, would seem to justify the making of a bond creditor of an ancestor a party to an action for the foreclosure of a mortgage on real estate descended, executed by the heir, the object in both cases being the same — to free the land from any lien or “ charge,” or “ constructive lien,” or “ encumbrance,” so that the purchaser, obtaining a perfectly clear title, may be induced to bid the full value of the land.

It is true that it has been held, in the case of Corning v. Smith, 6 N. Y. 85, “that a person who claims title to the mortgaged premises, paramount to that of the mortgagor, cannot be made a party to an action to foreclose the mortgage in order that the validity of such title may be tried in such action.” But whether this decision rested upon the idea which at one time prevailed, that even under the code it would be improper to unite in one action an application for legal relief with one for equitable relief, which, however, has Since been repudiated, (see comments on Reuben v. Joel, 13 N. Y. 488; in the subsequent case of New York Ice Company v. Northwest Insurance Company 359, and Pomeroy on Remedies 95, § 76,) it is necessary for us now to inquire, as the persons who are objected to here as improper parties do not claim title to the mortgaged premises adverse to that of the mortgagor, but only claim a right to subject such premises to the payment of their debt, by reason of the fact that it has descended to the mortgagor, subject to a charge for such debt. In other words, they only claim as prior encumbrancers, as it were, by virtue of their constructive lien, as it has been.called. We think, therefore, that, aside from any agreement among the parties, Mrs. Lide and Miss Gadsden were proper parties to this action.

The fact that the plaintiffs, after the commencement of the action, announced at one of the references that they “ withdrew their claim as against Mrs. Mary A. Lide, B. N. Lide and Miss Anna J. Gadsden,” cannot, in our opinion, have the effect contended for, of dismissing complaint as to these parties. This announcement was, doubtless, designed as nothing more than an *547admission of the validity of the claims of Mrs. Lide and Miss Gadsden, and a declaration that they declined further to contest them, and it can have no other effect, so far as the question we are considering is concerned. What the effect may be, if, as is contended, they are trustees for Rice, so far as their duties and liabilities to their cestui que trust are concerned, we are not now called upon to consider. The plaintiffs certainly could not, of their own motion, at that stage of the case, probably after the land had been sold, dismiss the complaint as to these parties, and thereby imperil, if not defeat, their right to go either upon the land or the proceeds of the sale for the satisfaction of their debts.

The rule in equity is that it is within the discretion of the court to refuse a plaintiff permission to dismiss his bill- if the dismissal would- work a prejudice to the other parties; and whenever, in the progress of a cause, a defendant entitles himself to a decree, either against the plaintiff or a có-defendant, and the dismissal of the bill would subject him to the expense and trouble of bringing a new suit and making his proofs anew, such dismissal will not be permitted. Bank v. Rose, 1 Rich. Eq. 292; Ancker v. Levy, 3 Strob. Eq. 210.

We propose next to inquire whether the bonds held by Mrs. Lide and Miss Gadsden are mere renewals of the original bonds of the ancestor, or whether such original bonds have been paid or extinguished by the taking of the bonds of the heirs. This, in our judgment, is mainly a question of fact. The rule of law is well established that where a creditor takes an obligation of inferior or equal rank, it does not extinguish, ipso facto, the prior obligation, as that only is payment which is intended and accepted as payment. Hence, when a creditor takes a new bond, <c in substitution or renewal ” of a bond previously held by him, which has been lost or destroyed, the original debt or obligation is not extinguished unless it is made to appear that the creditor accepted such new bond in payment, and the burden of proof is upon him who asserts the fact that the new bond was taken in payment. This doctrine is so fully supported by the authorities in this state that it is only necessary to refer to a few of the cases: Kelsey v. Roseborough, 3 Rich. 244; Fraser v. Hext, 2 Strob. Eq. 258. These cases are entirely consistent with the *548subsequent cases of McLure v. Askew, 5 Rich. Eq. 102, ancf Kirkland v. Cureton, 4 S. C. 122, for, though the substituted securities were, in both of the last-named cases, held to have operated as a satisfaction or extinguishment of the original debts, yet in both of them the decision was placed distinctly upon the ground that the evidence showed that the papers substituted were accepted in payment of the original debts. So that so far from weakening, they strengthen the authority of the preceding cases.

The question of fact having been decided by the referee, and his decision having been confirmed by the Circuit judge, theiidecision must be regarded by us as conclusive, unless it is without any testimony to sustain it, or is manifestly against the weight of the evidence, neither of which is the case in the present instance.

The Lide and Gadsden bonds must, therefore, be regarded as representing the debts of the ancestor, and, as was decided in the recent case of Simons v. Bryce, 10 S. C. 354, are entitled to priority of payment out of the funds now in the hands of the court arising from the sales of the Whitehouse and Greenfield plantations. As it appears, from the report of the referee, that these funds will not be sufficient to pay these bonds in full, it is scarcely necessary to consider the questions raised between the plaintiffs and the defendant, Rice, as they are not now of any practical importance. We may say, however, that we are disposed to agree with the Circuit judge in the view which he has-taken of these questions.

The judgment of the Circuit Court is affirmed.

Judgment affirmed.

Willaed, C. J., and Haskell, A. J., concurred.