Opinion
No. 34227.
November 25, 1940.
1. MORTGAGES.
The mere fact that mortgagee saw fit to exercise power of appointing substitute trustee is sufficient to create presumption that substitution was desired for some reason, and consequently, if existence of reason for such action is challenged, burden is upon him who denies that no reason existed, to prove the nonexistence thereof.
2. MORTGAGES.
The contention of grantee of purchaser at second deed of trust foreclosure sale, that foreclosure of first deed of trust was invalid for failure of substituted trustee to embody in notice of sale the name of grantee as assumptor of first deed of trust indebtedness, was without merit, where record failed to disclose that grantee assumed indebtedness in any of the conveyances to grantee.
3. MORTGAGES.
A grantee of purchaser at second deed of trust foreclosure sale, assuming first deed of trust indebtedness by agreement with first mortgagee, was barred by limitations from questioning title of grantee of purchaser at first deed of trust foreclosure sale on ground of failure of substituted trustee to embody in notice of sale the name of grantee as assumptor of first deed of trust indebtedness, where grantee of purchaser at second deed of trust foreclosure sale had not been in possession for 12 months (Laws 1934, chap. 250).
4. MORTGAGES.
The statute of limitations relating to right to question validity of foreclosure sale by reason of defect in notice of sale not only bars right to bring a suit except within twelve months, but completely extinguishes such right as well as any remedy in regard to such defects (Laws 1934, chap. 250).
5. LIMITATION OF ACTIONS.
Where title of person in undisputed possession of land is brought into question, such person can set forth any equitable defense in favor of his right to the property, and statute of limitations will not run so as to prevent him from setting forth such defense.
6. QUIETING TITLE.
In suit to cancel cloud on title, it is necessary to join as defendants only those parties who are asserting an adverse claim to the land or hold such record evidence of title as should be canceled in order to remove any cloud, doubt, or suspicion as to ownership of true title.
7. APPEAL AND ERROR.
In suit by grantee of purchaser at first deed of trust foreclosure sale, against grantee of conveyance from purchaser at second deed of trust foreclosure sale, for benefit of creditors of purchaser at second deed of trust foreclosure sale, to cancel conveyance, grantee of such conveyance could not complain for first time on appeal that one of the creditors was an indispensable party.
APPEAL from the chancery court of Clarke county; HON. ROBERT G. GILLESPIE, Special Chancellor.
Witherspoon Witherspoon, of Meridian, for appellant.
The power of appointment in a deed of trust to appoint a substituted trustee must clearly state the event upon the happening of which the power is to become effective; language conferring such power is to be strictly construed; substitution and foreclosure attempted under any other circumstances except upon the happening of the event stipulated for in the power is void.
Guion v. Pickett, 42 Miss. 77; Jones v. Salmon, 128 Miss. 508, 91 So. 199; Powers v. Interstate Trust Banking Co., 163 Miss. 30, 139 So. 318; West v. Union Naval Stores Co., 117 Miss. 155, 77 So. 961; Bonner v. Leslie, 61 Miss. 392; McNeil v. Lee, 79 Miss. 455, 30 So. 821; Clarke v. Wilson, 53 Miss. 128; Ready v. Hamm, 46 Miss. 422; 2 Perry on Trusts (4 Ed.), sec. 602(g).
One owning an equitable interest in land is an indispensable party to a suit in equity to cancel the deed by which he acquired title.
Merwin on Equity, p. 456; McIlvoy v. Aslop, 45 Miss. 365; Barry v. Barry, 64 Miss. 709; Harding v. Cobb, 47 Miss. 599; Harlow v. Mister, 64 Miss. 25; Foster v. Jones (Miss.), 17 So. 893; Lewis v. Jefferson, 173 Miss. 657, 161 So. 699; May v. Sullivan, 37 Miss. 541; Moses v. Kraus, 90 Miss. 618, 44 So. 169; Wilson v. Wilson, 166 Miss. 369, 146 So. 855; 15 Encyc. of Pleading and Practice 611, 612.
The questions raised above could be considered here even though not raised in the court below.
15 Encyc. of Pleading and Practice 688, 689, and authorities there cited.
Chapter 250 of the Mississippi Laws of 1934 is a twelve months statute of limitations on the right and remedy to bring a suit to question the title to real estate by reason of the failure to insert in any notice of sale under a deed of trust the name of the owner, mortgagor or assumptor of the mortgage indebtedness. One main trouble about applying this statute of limitations to this case is that appellants did not bring the suit; they are defending a suit brought by the appellees. Appellants are using the defect in the foreclosure of the Bank's deed of trust as a defense. No defense is ever barred by a statute of limitations; a defense holds good as long as the complainant waits to make his attack no matter how long that may be.
37 C.J. 803 and authorities cited under note 55.
Counsel say that it must be kept in mind that this is a suit to cancel a cloud on title and that it is necessary to join as defendants in such cases only those parties whose claims the complainant wishes to cancel. This argument is that appellee might wish to compel McLendon's "claim" and not cancel the Dunlap Dry Goods Company's "claim," and that it had the right to cancel one and let the other go. The trouble about this argument is that McLendon and the Dunlap Dry Goods Company claim under the same deed and the court below cancelled the entire deed; not just McLendon's interest in it, and the court ordered the clerk to make a notation on the margin of the record showing that it was cancelled.
All persons whose claims constitute a single cloud must be joined in a suit to cancel it.
Griffith's Miss. Chancery Practice, secs. 101, 103, 115, and Chap. V; Wheeler v. Biggs (Miss.), 12 So. 596; May et ux. v. Sullivan, 37 Miss. 541; Mundy et al. v. Calvert, 40 Miss. 181; Martin v. Williams, 42 Miss. 210; Champlin v. McLeod, 53 Miss. 484; Cannon v. Barry, 59 Miss. 289; Hunt v. Booth, Freeman's Ch. 215; Bland v. Bland, 105 Miss. 484, 62 So. 641; Lemmon et al. v. Dunn et al., 60 Miss. 210; Taylor v. Webb, 54 Miss. 36; Harlow v. Mister, 64 Miss. 25; Patty v. Williams, 71 Miss. 837, 15 So. 43; Moses et al. v. Kraus, 90 Miss. 618, 44 So. 162; Smith v. Denny Co., 90 Miss. 434; Beason v. Coleman, 92 Miss. 622, 46 So. 49; Terry v. Unknown Heirs of Gibson, 108 Miss. 749, 67 So. 209; Lewis v. Jefferson, 173 Miss. 567; Gates v. Naval Stores Co., 92 Miss. 227, 45 So. 979; Clayton v. Merrett, 52 Miss. 353; Wilson v. Wilson, 166 Miss. 369, 146 So. 855.
The question in this case is whether this deed could be "cancelled and held for naught" in the absence of the Dunlap Dry Goods Company. It would appear that as long as our courts adhere to what we believe to be the most ancient, fundamental, necessary and most widely accepted principle of human justice of all those contained in the law that it could not. If there is any principle of the law which stands upon an equality with that which says that no man may be tried or condemned in his absence we do not know of it. This was the rule when the Civil War was fought and when the federal troops burned some of the courthouses in Mississippi as shown by the holding of this court in Martin v. Williams, supra. It is the rule today and will be the rule as long as we live in a country where any of the fundamental principles of justice and rights are recognized.
Griffith's Miss. Chan. Practice, secs. 48, 115; Martin v. Williams, 42 Miss. 210.
Chas. R. Shannon, of Laurel, and Beverly C. Adams, E.F. Steiner, and T.H. Hedgepeth, all of New Orleans, La., for appellee.
It was not necessary for appellant to have been named in the notice of trustee's sale in connection with the foreclosure of the deed of trust of Tom Johnson in favor of appellee, Federal Land Bank.
Sec. 2167, Code of 1930; Wilkinson v. Fed. Land Bank, 168 Miss. 645, 151 So. 761; Castleman v. Canal Bank and Trust Co., 171 Miss. 291, 156 So. 648; Melchor v. Casey, 173 Miss. 67, 161 So. 692; 17 C.J.S. 401, sec. 52.
If it is held that appellant should have been named in notice, the defect is cured by Chap. 250 of the Mississippi Laws of 1934 providing that suits challenging validity of foreclosures on this ground must be filed in one year.
Chap. 250, Laws 1934.
New questions will not be considered when raised for first time on appeal.
4 C.J.S. p. 430, sec. 228, p. 438, sec. 233(a), p. 465, sec. 241 (a); Estes v. Memphis Charleston Ry. Co., 119 So. 199, 152 Miss. 814; Whittington v. Cottam Co., 130 So. 745, 158 Miss. 847, 76 A.L.R. 332; Williams v. Butts, 87 So. 145, 124 Miss. 661; Mitchell v. Finley, 137 So. 330, 161 Miss. 527; Equitable Life Assurance Society v. Slaughter, 172 So. 300, 178 Miss. 366; Noxubee County v. Long, 106 So. 84, 141 Miss. 72; Williams v. Lumpkin, 152 So. 842, 169 Miss. 146; Talbert v. Melton, 9 S. M. 9; Adams v. Clarksdale, 48 So. 242, 95 Miss. 88; Miss. Valley Trust Co. v. Brewer, 128 So. 83, 157 Miss. 890; Hutson v. King, 80 So. 779, 119 Miss. 347; City of Biloxi v. Trustees of Miss. Annual Conference Endowment Fund, 173 So. 797, 179 Miss. 47; Miss. Power Co. v. May, 161 So. 755, 173 Miss. 580; Adams v. Sup'rs of Union County, 170 So. 648, 177 Miss. 403; Rohrbacher v. Jackson, 51 Miss. 735.
For general rule as applied to the questioning of validity of substitution of trustee for first time on appeal, see: 4 C.J.S. 447, sec. 233(e); Watson v. McDonald, 41 Miss. 376.
Keeping in mind that this is a suit to cancel a cloud on title and that it is necessary to join as defendants in such cases only those parties whose claim the complainant wishes to cancel, we submit that cases of misjoinder and non-joinder of parties present the strongest instances in which the general rule should be applied.
2 R.C.L. 85, sec. 61; Raynor v. Scandinavian-American Bank, 122 Wn. 150, 210 P. 499; Wright v. Scotton, 13 Del. Ch. 402, 121 A. 69, 31 A.L.R. 1162; So. Surety Co. v. Dardanelle Road Improvement Dist., 169 Ark. 755, 276 S.W. 1014, 42 A.L.R. 299; Hatten v. Interocean Oil Co., 182 Okla. 465, 78 P.2d 392; Green v. Green (N.C.), 9 S.E.2d 413; Morris v. Smith, 288 P. 1068, 76 Utah 162; First Presbyterian Church v. Fuller (Fla.), 183 So. 726; Simmons v. Parker, 1 Miss. Dec. 456; Adams v. Clarksdale, 48 So. 242, 95 Miss. 88; Planters Oil Mill Mfg. Co. v. Falls (Miss.), 29 So. 786; Rothrock Const. Co. v. Port Gibson Mfg. Co., 32 So. 116, 80 Miss. 517, rehearing denied, 32 So. 484, 80 Miss. 517; Delta Pine Land Co. v. Adams, 48 So. 190, 93 Miss. 340; Kimbrough v. Davies, 61 So. 697, 104 Miss. 722; 4 C.J.S. 442, sec. 333(a).
The power authorizing substitution was sufficiently broad, and the conditions thereof were fully met.
Graham v. Fitts, 53 Miss. 307; Enochs v. Miller, 60 Miss. 19; McCaughn v. Young, 85 Miss. 277, 37 So. 839; Jones v. Frank, 123 Miss. 280, 85 So. 310; Melchor v. Casey, 173 Miss. 67, 161 So. 692; Thompson v. Wynne, 127 Miss. 733, 90 So. 482; King v. Jones, 121 Miss. 319, 83 So. 531; 18 C.J.S., Corporations, secs. 3 and 8; 15 C.J. 51, sec. 3.
It was not necessary to name as defendants any parties other than appellant.
Griffith's Chan. Practice, sec. 110, 115; Bell v. Gordon, 55 Miss. 45; 41 C.J. 890, sec. 1113; 51 C.J. 207, sec. 138; 65 C.J. 526, sec. 272; 3 Jones on Mortgages (8 Ed.), sec. 2122.
Argued orally by S.A. Witherspoon, for appellant, and by Beverly C. Adams, for appellee.
This suit was begun by appellee in the Chancery Court of Clarke County by bill of complaint against the appellant R.L. McLendon, individually and as the trustee in a deed of conveyance of certain real estate made to him by a local merchant for the benefit of his mercantile creditors, among whom was the Dunlap Dry Goods Company of Mobile, Alabama, and wherein the complainant sought to cancel the conveyance so held by said trustee, together with certain subsequent conveyances made by all of the creditors, except the Dunlap Dry Goods Company, in favor of the said R.L. McLendon, individually, as clouds upon the title of the complainant. From a final decree cancelling the said deeds of conveyance and the claim of title asserted by the said Robert L. McLendon by virtue thereof, he prosecutes this appeal, both individually and as such trustee.
It appears from the evidence that on May 15, 1922, Tom Johnson and wife, being the owners of the land in controversy, executed a deed of trust thereon, which constituted a first and paramount lien, in favor of the Federal Land Bank of New Orleans, Louisiana, wherein Barrett Jones was named as trustee, and which deed of trust provided for the appointment of a substitute trustee if for any reason the trustee named in the instrument, or his successors, should not be present, able and willing to execute the trust, or if for any reason the holder of the indebtedness secured thereby should so desire. After default was made in the payment of the indebtedness, J.E. Shirley was duly appointed as the substitute trustee, under an instrument of writing duly recorded, and on May 27, 1933, the land was sold by him under foreclosure when the said Federal Land Bank became the purchaser thereof. That, on June 15, 1933, the land was sold and conveyed by the said purchaser to the appellee.
It further appears that subsequent to the execution of this deed of trust, there was a second one executed by the said Tom Johnson and wife to A.L. McIntosh, as trustee, to secure an indebtedness to the local merchant hereinbefore referred to, and that thereafter the lien of this second deed of trust was duly foreclosed on August 29, 1932, when the said beneficiary therein became the purchaser of the land at the trustee's sale. That, on August 31, 1932, he conveyed the land to the appellant Robert L. McLendon, as trustee, for the benefit of certain of his creditors as aforesaid, the conveyance reciting the amount of indebtedness due each of them respectively, and authorizing the trustee to sell and convey the land for their benefit; and further reciting that the conveyance was made subject to the first lien held at that time by the said Federal Land Bank of New Orleans. As heretofore stated, the said Robert L. McLendon, individually, later acquired the conveyances in his own favor from the several creditors other than the Dunlap Dry Goods Company of Mobile, Alabama.
The appellee, Charles A. McGee, entered into possession of the land at the time of his purchase thereof from the Federal Land Bank, and was still in possession thereof at the time of the filing of this suit on the 24th day of July, 1936.
The appellant, both individually and as trustee, filed an answer and cross-bill, and he now challenges (1) the validity of the appointment of the substituted trustee on the ground that the Federal Land Bank failed to state in the appointment, or to otherwise show, any reason for desiring to make the substitution; (2) the validity of the trustee's sale made by J.E. Shirley, as substituted trustee, on the ground that he claims to have assumed the indebtedness due the Federal Land Bank prior to the foreclosure of its deed of trust, and that his name was omitted from the trustee's notice of sale; and (3) the jurisdiction of the court to adjudicate the right of the appellee to have cancelled as clouds upon his title the conveyances held by appellant and the claims of title asserted by him following the foreclosure of the second lien, without first making the Dunlap Dry Goods Company a party to the suit.
It is sufficient to say in response to the first contention above stated that the mere fact that the mortgagee saw fit to exercise the power of appointing a substitute trustee is sufficient to create the presumption that the substitution was desired for some reason. Consequently, if the existence of a reason for such action was necessary and is challenged, the burden is upon him who denies that any reason existed for making the substitution to prove the non-existence thereof. Graham v. Fitts, 53 Miss. 307; Enochs v. Miller, 60 Miss. 19; McCaughn v. Young, 85 Miss. 277, 37 So. 839; Jones v. Frank, 123 Miss. 280, 85 So. 310; Melchor v. Casey, 173 Miss. 67, 161 So. 692. As to the contention that the foreclosure was invalid because of the failure of the substituted trustee to embody in the notice of sale the name of the appellant as the assumptor of the indebtedness then held by the Federal Land Bank, the record fails to disclose that he assumed the indebtedness in any of the conveyances made to him, and if the correspondence between him and the Federal Land Bank should be deemed sufficient to constitute an assumption of such indebtedness by subsequent agreement, he is precluded by Chapter 250, Laws of 1934, from questioning the title of the appellee on account of such defect in the notice of sale, since this statute of limitation not only bars the right to bring a suit except within twelve months from the passage of that act, but completely extinguishes such right as well as any remedy in regard to such defect. Where the title of a person in undisputed possession of land is brought into question, he may set forth any equitable defense in favor of his right to the property, and the statute of limitation will not run so as to prevent him from setting forth such defense, 37 C.J. 804; but in the case at bar the appellant is out of possession, and is barred by the statute here under consideration from exercising the right to question the validity of the sale by reason of any defect mentioned in the statute, since his right to question the sale on that account, as well as any remedy that he may have had in that behalf, had been completely extinguished at the time of the bringing of this suit by the appellee who was in possession of the property under such foreclosure of the paramount lien.
On the point that the Dunlap Dry Goods Company was a necessary and indispensable party to the suit, which was not raised in the court below, it should be kept in mind that this is a suit to cancel a cloud on the title and that it is necessary to join as defendants in such cases only those parties who are asserting an adverse claim to the land or hold such record evidence of title as should be cancelled in order to remove any cloud, doubt or suspicion as to the ownership of the true title. On the record now before us it does not affirmatively appear that the Dunlap Dry Goods Company is an indispensable party. The only evidence indicating that said company ever had any beneficial interest in the land is the deed of conveyance to the trustee for the benefit of creditors which expressly recognizes the existence of the paramount lien then held by the Federal Land Bank, and which interest was necessarily extinguished by the subsequent and valid foreclosure of such lien, so far as the record here discloses. Most assuredly, the trustee who appeared and filed an answer and cross-bill on behalf of the remaining beneficiary of the trust, and who appeals here in its behalf, is not in position to now raise in this Court for the first time any question as to the nonjoinder. Nor should the court here hold of its own volition that it is without jurisdiction on account thereof, unless it appeared from the record that there is some substantial basis for holding that the said dry goods company was not divested of its interest in the land by virtue of the foreclosure of a first lien thereon.
Affirmed.