¶ 1. In this foreclosure action, plaintiff Nancy Myers appeals from the decision of the Bennington Superior Court vacating a previous order granting summary judgment in her favor and granting summary judgment for defendants J ames and Marie LaCasse. Plaintiff argues that the court erred by (1) reopening and vacating the prior summary judgment decision based on arguments not raised in connection with the initial motion for summary judgment, and (2) ruling that a mortgage
¶ 3. In 1996, defendants defaulted under the terms of the third mortgage, and First Vermont subsequently brought a foreclosure action and obtained a decree of foreclosure. The decree provided that if defendants failed to redeem they would be “forever foreclosed and barred from all equity of redemption in the premises and the plaintiff on such date [would] be entitled to title, possession and ownership of said lands.” Defendants also defaulted under the terms of Merchants’ first and second mortgages, and Merchants commenced its own foreclosure action. However, Merchants voluntarily dismissed this action and instead took an assignment from First Vermont as to all rights under its decree of foreclosure. When defendants failed to redeem in the First Vermont action, Merchants obtained a certificate of nonredemption and title to the property subject to the first two mortgages which, at that point, Merchants continued to hold as mortgagee. As a result of these events, defendants lost title to Parcel I, and Parcel II became completely landlocked. Defendants did not appeal the decree of foreclosure or the writ of possession issued pursuant to it.
¶ 4. Later.in 1996, Merchants quitclaimed Parcel I to Atlantic Bank and Trust Company (Atlantic) and assigned to it the outstanding mortgages on the property. Atlantic sold the parcel to plaintiff in 1998, also assigning to her the first and second mortgages given by defendants to Merchants, together with the related notes. The deed specifically provided that the title in the property would not merge with the mortgages so that the mortgages would remain in effect.
22. In the event LaCasses’ legal title to the mortgaged premises is deemed already foreclosed and to have succeeded to plaintiff by virtue of her succeeding to the interests of the other banking institutions mentioned herein, or as a result of judgment in this instant action, defendants submit that an easement or right of way by necessity or implication nevertheless burdens the mortgaged premises and benefits the other 4.6 acre parcel owned by LaCasses. Furthermore, LaCasses submit that this easement is an independent and separate property right and not one which was, or would be, considered a part of the property secured by the Merchant’s mortgages, but rather one encumbering it, and therefore not subject to this foreclosure proceeding for any proved breach of Merchants’ notes and mortgages.
In its prayer for relief, defendants requested the court to lay out “defendants’ recordable rights of access over the mortgaged premises to their other parcel.”
¶ 6. After discovery, plaintiff moved for summary judgment pursuant to V.R.C.P. 80.1(c). In an August 4, 2000 opinion, the superior court rejected all of defendants’ defenses and granted plaintiffs motion. The court also dismissed defendants’ counterclaim on res judicata grounds. Regarding the defense that the claimed way of necessity could not be foreclosed, the court concluded that anyway of necessity that may have arisen as a result of the first foreclosure was necessarily junior to the outstanding mortgages and therefore was subj ect to the present foreclosure. Defendants attempted to take an appeal from this decision, but permission to do so was denied by the trial court because no judgment of foreclosure had yet been entered.
¶ 7. Plaintiff then moved for an accounting, as provided in 80.1(f), and the matter was set for hearing in order to determine the equity of redemption. Prior to the hearing, the superior court — now with a new trial judge presiding — issued an entry order in which it raised sua sponte a number of issues that the court concluded were important but had been left unresolved by the August 4,2000 order, and requested that
¶ 8. On August 10,2001, the court issued an opinion and order granting defendants’ motion to vacate as well as their motion for summary judgment. The court concluded that it could review the earlier summary judgment order pursuant to Morrisseau v. Fayette,
¶ 9. Plaintiffs first argument on appeal is that the trial court erred by reopening and vacating the prior grant of summary judgment, and doing so on the basis of arguments never raised in connection with the prior grant. Plaintiff contends that allowing the trial court to overstep the bounds of its plenary authority to revise interlocutory orders in this “horizontal appeal” undermines the finality of orders granting summary judgment, encourages judge shopping, and inserts unreasonable delay into the foreclosure process.
¶ 10. Plaintiff acknowledges that the trial court’s action violates no explicit command of our procedural rules. Indeed, the grant of a motion for summary judgment by itself is an interlocutory order and not a final judgment. See Powers v. Hayes,
¶11. The court had the discretion to modify an interlocutory order. See Dudley v. Snyder,
¶ 12. Plaintiff argues that the trial judge’s reversal of the summary judgment decision was an improper horizontal appeal prohibited by Economou v. Economou,
¶ 13. We also cannot give controlling effect to plaintiffs argument that defendants were allowed to raise new arguments in support of their summary judgment motion after they failed to raise those arguments in response to plaintiffs motion. We do not believe that defendants waived the argument that ultimately persuaded the trial court. In their opposition to plaintiffs motion for summary judgment, they argued that “equity should demand, that in instances of foreclosure, where the result would be landlocked property, a right of way by necessity supersedes the distinction between superior and inferior encumbrances.” This is essentially the argument that persuaded the trial court and persuades us, as the next section of this opinion indicates. Defendants did predicate their summary judgment motion in part on a new theory of merger, but the court rejected this theory.
¶ 14. In any event, we would not hold that waiver prevented the trial judge’s action even if defendants had not preserved their arguments in their opposition to plaintiffs summary judgment motion. As the following discussion reflects, this is a complicated issue of first impression for this Court. The trial court struggled with the issue, sua sponte raising arguments to which the parties responded. We think that the potential for systemic abuse of the summary judgment process by the trial judge’s action is minimal, because “[rjoutinely, the trial judge refuses to reconsider refiled motions because of lack of time and discomfort with the role of reversing the decision of a colleague.” State v. Bruno,
¶ 15. Plaintiffs main argument on appeal is that the trial court erred in granting summary judgment for defendants on the grounds that the 1990 mortgage in this case is junior and inferior to any way of necessity that may have arisen over Parcel I for the benefit of Parcel II. On review of a grant of summary judgment, this Court will apply the same standard as
¶ 16. Away of necessity is “a fiction of law,” Howley v. Chaffee,
avoids the costs involved if the property is deprived of rights necessary to make it useable, whether the result is that it remains unused, or that the owner incurs the costs of acquiring rights from landowners who are in a position to demand an extortionate price because of their monopolistic position.
1 Restatement (Third) of Property (Servitudes) § 2.15 cmt. a (2000).
¶ 18. Plaintiff argues, however, that Traders, Inc. does not apply when additional superior mortgages exist and are thereafter foreclosed. In such circumstances, she asserts that the priority of the interests in the land should be determined by the common law rule of “first in time, first in right.” See First Twinstate Bank v. Hart,
¶ 19. The trial court disagreed, ruling that the claimed way of necessity was not junior to the mortgages held by plaintiff and thus not subject to foreclosure, for three reasons. First, a reservation of easement must be implied in the granting of the 1990 mortgage because “the law must charge the parties with foresight of a potential way of necessity, in the event a foreclosure eventually resulted in a severance of the two parcels.” Second, there is a strong public policy against landlocking land. Third, plaintiff was attempting to foreclose on collateral that was not part of the original security agreement.
¶ 20. We agree with the trial court that defendants will continue to haye a way of necessity over Parcel I for the benefit of Parcel II in the event that the 1990 mortgage is foreclosed. We believe this result is the necessary consequence of Traders, Inc.
¶ 21. This is a case of first impression in Vermont, and apparently elsewhere. Plaintiff argues that we should follow case law from other jurisdictions holding that a preexisting mortgage has priority over a later-created way of necessity and thus extinguishes it through foreclosure. With one exception, however, these cases involve ways of necessity created by the mortgagor’s voluntary transfer of unmortgaged landlocked property to third parties. See, e.g., Bush v. Duff,
¶ 22. The one exception is Leonard v. Bailwitz,
¶ 23. If we were to accept the purchase money mortgage rationale of Leonard, which is plaintiffs position, we would not allow the foreclosure of any mortgage on the parcel with road access to create a way of necessity because in every foreclosure action a mortgagee holds legal title which precedes in time anyway of necessity. Accordingly, all mortgagees could argue equally that they were entitled to a security unburdened by the way of necessity because their interest(s) had priority over the foreclosed party’s. In Traders, Inc., we declined to follow this reasoning
¶ 24. Although we did not explain our holding in Traders, Inc., as the court attempted in Leonard, we think that the considerations discussed by the trial court in this case are paramount. That is, when the mortgagee took its mortgage covering only a part of the mortgagor’s adjacent property, it must be charged “with foresight of a potential way of necessity in the event a foreclosure eventually resulted in a severance of the two parcels.” The same can be said of the mortgagees in this case. Accordingly, the Traders, Inc. rationale requires that we recognize the way of necessity in this case.
¶ 25. We do not view a rationale that is based on the knowledge of the mortgagee when the mortgage was created as inconsistent with the holding of Traders, Inc. that a severance occurred by operation of law when the mortgagee foreclosed. Nor do we question the Traders, Inc. holding, which is the main point of theoretical disagreement with Leonard and is thus central to the decision. We must consider the mortgagees both when the mortgage was given and when the foreclosure action occurred. We reconcile the need to look at both points in time in a case involving mortgage foreclosure in equity, because it is appropriate to look at the knowledge and expectations of the parties. The first mortgagee knew or should have known that under Traders, Inc. if the mortgagor defaulted, its foreclosure would have created a way of necessity. This was the necessary consequence of taking a mortgage on the property with road access, while leaving the property without road access unencumbered. It is illogical to increase its rights because of the presence of junior mortgages.
¶ 26. Although our holding follows from the public policy rationale for the way of necessity, it is fully consistent with equitable principles. See Merchants Bank v. Lambert,
¶ 27. Further, it is entirely consistent with equitable principles to charge the mortgagee with knowledge that the mortgagor has an interest that will become a way of necessity on foreclosure. Equity recognizes both actual and implied, or inquiry, notice. Thus, if a party has “sufficient facts concerning [another’s] interest in the property to call upon him to inquire, he is charged with notice of such facts as diligent inquiry would disclose.” Black River Assocs. v. Koehler,
¶ 28. In reaching our holding, we reject plaintiffs position that by sequencing mortgage foreclosures, mortgagees can create, and then extinguish, ways of necessity. If the first mortgagee had foreclosed on its mortgage, it would clearly have created away of necessity under Traders, Inc. As we discussed above, we can think of no reason why it is freed of that way of necessity because the third mortgagee foreclosed first. Again, we emphasize that the primary rationale for the way of necessity is the public policy against having land lay idle because of lack of access. See Simonton, supra,
¶ 29. We also reject plaintiffs argument that defendants can adequately protect their interests through their right to redeem. If we were to follow plaintiffs logic and hold that the way of necessity creates only an equity of redemption, the right to redeem is of limited value. Defendants cannot redeem their way of necessity without also redeeming the legal
Affirmed.
Notes
Although appellant initially brought this foreclosure action based upon the first and second mortgages held by her — dated July 31, 1987 and January 5,1990, respectively — she amended her complaint during the course of the proceedings to limit the action to the second mortgage. Accordingly, this opinion concerns only the second mortgage.
In the trial court’s opinion Judge Wesley wrote:
The law’s search for justice is always most challenging when the facts prove to be distinctly beyond the ordinary. This case is no simple foreclosure action. The byzantine background established by the circumstances here has guaranteed that the Court’s usual resort to prior precedent would provide but dim illumination on facts that elude direct comparison to those associated with previously settled principles.
