" Thе appellee was the holder of second mortgages on two apartment buildings. Upon default” on the mortgages he began pro- ’ ceedings in the state court and obtained a decree of foreclosure. Upon the sale of the properties he became the purchaser entitled to possеssion, subject to redemption within six months from the date of sale on August 12, 1926. A few days before the expiration of the six months he notified the tenants and occupants that hе would take possession on February 14, 19’27. In the meantime, the owner, Ben Braver, had been adjudged a bankrupt and the Detroit Trust Company appointed receiver in bankruptcy of his estate. On February 11, 1927, the Detroit Company filed a petition for intervention in the foreclosure suit, seeking to set aside the decrees therein оn the ground that they were eollu-sively and fraudulently obtained, and praying for an order enjoining the appellee from taking possession of the property. Upon the filing of the petition the court issued an order to show cause why the decrees of foreclosure should not be set aside and pending a hearing therеon enjoined the appellee from collecting the rents and income from the property or interfering in any wise with the possession thereof by the reсeiver. The ap-pellee did not appear in resppnse to the show-cause order until January 30, 1928, at which time he filed answer and cross-petition alleging that the petition of the receiver was a petition to redeem and asking a decree against the trustee for the amount of his .mortgage debts, or if such rеlief be denied, for an accounting for rents from February 12, 1927, to March 28,. 1927. The latter date was fixed because the first mortgage had ■also been foreclosed, аnd it had been determined by the state courts that the possession of the first mortgagee was effective as of that date. The receiver meanwhile was eleet-ed.trustee, and after answering the cross-bill as such filed a motion to dismiss on the ground inter alia that the court had no jurisdiction to determine the question of rents, This motion was denied without prejudice, but after proofs ¡were heard was renewed and sustained and the cross-bill dismissed. The decision of the lower court was affirmed by the -Supreme Court of the.state.
The trustee complains of the ruling of the District Judge Upon three grounds, the first of which is that the subject matter was res judicata under the decisiоns of the state courts dismissing the cross-petition in the foreclosure proceedings. We are convinced from an examination of the opinions of both thе lower court and the Supreme Court, that the order of dismissal was based upon a lack of jurisdiction to determine the subject matter involved. Plainly such a decisiоn is not a binding adjudication. Elliott v. Peirsol,
The second contention is that the appellee was guilty of laches and is estopped from asserting his claim for rents in this рroceeding. The basis of this contention is that he did not respond to the show-cause order until ten months after it was issued, during which time the trustee, by litigation with the first mortgagee, sеcured an extension of the redemption period under the foreclosure proceeding on that mortgage from February 19, 1927, to March 27, 1927. But as held by the state сourts, the claim for rents could not be determined on response to the show-cause order, and manifestly the appellee cannot be charged with lаches for failing to assert his claim in a non-jurisdietional proceeding. Besides, the trustee acquiesced in the delay, being satisfied, apparently, to let the еase rest, otherwise it would have taken a default against the decree of foreclosure and obtained an injunction in accordance with the terms оf the order. There were only seven days difference between the date from which appellee claimed possession and the date of possession claimed by the first mortgagee; and before the trustee could secure the benefits of its possession it was necessary that it defeat the claim of the first mоrtgagee as to the date of its right. This it succeeded in doing December 1, 1927 (Union Trust Co. v. Detroit Trust Co.,
Finally it is contended that the appellee is not entitled to the rents for the reason thаt tie neither demanded nor was entitled io possession. True it is that he made no demand on the trustee; but such demand was unnecessary, for before the day arrived оn which he was entitled to possession the trustee obtained a court order requiring him to show cause why he should not be enjoined from taking it. As said by the eourt below, a notice to a trustee “sufficient in form and substance to warrant its appealing to a court of equity to be relieved of the authority conveyed by it [the noticе] ought fo bo sufficient to comply with the demands of state practice.” Upon the filing of the intervening petition an order was issued, too, enjoining the appеllee from taking possession or “in anywise interfering with the possession” of the trustee. Clearly the appellee was not thereafter required to give noticе of an intention to do a thing which the trustee, knowing that he intended to do, had brought a suit to enjoin.
The intervening petition tendered the issue of the validity of the foreclоsure proceedings. Appellee thought that by cross-petition he could present the question, determinable by the state eourt, of his right to the rents. In this he was mistaken, but the dismissal of his cross-petition was not, as we have seen, an adjudication of the question on its merits. That remained, and if ho was entitled to possession, the intervention of his adversary, while preventing the execution, could not deprive him of the fruits of his right. His right was not that of a mortgagee, not entitled to the rents and profits under the tеrms of his mortgage until he had taken possession or had made demand for possession and been refused (Sage v. Memphis, etc., Railroad Co.,
The decree is affirmed.