U.S. Supreme Court
Johns v. Wilson, 180 U.S. 440 (1901)
Johns v. Wilson
Submitted November 11, 1900
Decided March 1, 1901
180 U.S. 440
Under the practice in Arizona, the grantee of a mortgagor, who has agreed to pay the notes secured by the mortgage, may be held liable for a deficiency upon the sale of the mortgaged premises, in a direct action by the mortgagee.
In such action, the grantee of the original mortgagor is the party primarily liable to the mortgagee for the debt, the relation of the grantee and mortgagor toward the mortgagee, as well as between themselves, being that of principal and surety.
Where a decree of foreclosure and sale against the original mortgagor and his immediate grantee is ineffectual by reason of the fact that, a few days before the filing of the bill, the grantee conveyed the premises to a second grantee by a deed which was withheld from the record until after the foreclosure proceedings had been begun, a bill will lie to set aside the sale, to annul the deed upon the ground of fraud, and to decree a new foreclosure and sale of the same premises.
While it is possible that the mortgagee might have been able to obtain relief by an amended bill in the original suit, a new action is the proper remedy where he has been mistaken in his facts, especially if such mistake has been brought about by the contrivance of the legal owners.
This was a complaint in the nature of a bill in equity, under the Arizona Code, filed in the District Court of Maricopa County by the appellee, Wilson (who had already, in a prior suit, foreclosed a mortgage upon certain real estate against John M. Armstrong, mortgagor, and Robert E. Daggs, purchaser of the premises) against Alvin L. Johns, subsequent purchaser pendente chanroblesvirtualawlibrary
lite of the same premises, and also against William A. Daggs, tenant in possession, Robert E. Daggs, his landlord, and A. Jackson Daggs, agent of Robert E., to charge Johns and Robert E. Daggs with the payment of the mortgage debt, for a foreclosure of the mortgage against all the defendants, for a receiver, and for a judgment against all for damages.
The complaint, which was filed June 22, 1895, alleged that, when the former bill foreclosing the mortgage was filed, April 26, 1894, John M. Armstrong, the mortgagor, and Robert E. Daggs, who purchased the premises December 18, 1893, were the only parties known to the plaintiff to be liable upon the notes, or to have any interest whatever in the mortgaged property; but that the defendants Robert E. Daggs and A. Jackson Daggs, conspiring together to hinder and obstruct the plaintiff in the collection of his mortgage debt, procured a deed of conveyance of the property from Robert E. Daggs to Johns for the sole purpose of hindering, delaying, and obstructing him in the collection of his mortgage debt; that the deed, though dated March 17, 1894, before the proceedings for a foreclosure were begun, was withheld from record until April 28, 1894, after the summons in the foreclosure action had been served and after the lis pendens had been filed; that in this deed Johns expressly agreed and bound himself to pay the plaintiff's mortgage debt; that William A. Daggs, who was at the time of the foreclosure in possession as tenant of Robert E. Daggs, did not advise plaintiff of his surrender of the premises as tenant of Robert E. Daggs, or of his having taken possession as the tenant of Johns, and that such abandonment and release of the property, and the taking possession thereof as tenant of Johns, were done secretly, without any notice to the plaintiff, with intent to deceive him into the belief that he (William A.) was still holding possession as tenant of Robert E. Daggs, and that the plaintiff, on account of such secret transfer of possession, if any was made, was deceived, as the defendant intended him to be, and that the foreclosure action therefore proceeded to judgment without his joining or making the said Johns and William A. Daggs defendants therein; that plaintiff had no knowledge or information, chanroblesvirtualawlibrary
when he began his action and filed his lis pendens, that any other persons than Robert E. Daggs had any claim to the premises. Wherefore plaintiff prayed for a judgment against Robert E. Daggs and Alvin L. Johns, who had assumed and agreed to pay the mortgage debt, for the amount of such debt, and for the sum of $1,000 as damages; that his mortgage be adjudged unpaid and unsatisfied and that the same be foreclosed against all the defendants and all persons holding under them, and for such further relief as the circumstances of the case required.
On a hearing upon pleadings and proof, a judgment was rendered setting aside the sale had in the foreclosure suit of Wilson v. Armstrong and Daggs and the satisfaction of the judgment made upon such sale, that the plaintiff Wilson recover of Robert E. Daggs and Alvin L. Johns, who had assumed and agreed to pay the mortgage debt, the amount of such debt; declaring such amount, $8,541.13, to be a lien upon the property, which was also foreclosed, ordering a sale of the premises as against Robert E. Daggs and Johns, and also finding that appellants had fraudulently conspired together to cheat, wrong, and defraud the appellee, and declaring the deed of Daggs to Johns to be fraudulent and void. It was further ordered that the former judgment stand and be carried into effect by a resale of the property, and, in case the proceeds be insufficient to pay the judgment, that the sheriff make the deficiency out of the other property of Robert E. Daggs and Johns. The property was subsequently sold and bid in by the appellee for $2,000, leaving a deficiency of $6,861.26. There was no decree for damages.
An appeal was taken to the Supreme Court of Arizona, which modified the action of the lower court by omitting therefrom the personal judgment against Johns for the deficiency, but otherwise affirming it, 53 P. 583, and, upon an appeal's being taken to this Court, made the finding of fact set forth in the margin. * chanroblesvirtualawlibrary