Hardin v. Graham

¶1[1] This cause was before this court upon preliminary motions anld am opinion was -nen-dered, whi-ch i-s referred to for further particulars, viz., 36 S. D. 525, 155 N. W. 782. Upon the transmission of the record to- the trial court that court declined to- find that the record1 had actually been settled at the time of the hearing -o-f the motion for a new trial. We are therefore of the opinion, that the only portions of the record that are before us and) -that we can 'consider .are such, as- would’ be before us, artd -such- as we co-ul'd consider, bald the appeal been taken so'lel}' from, the judgment. We are therefore limited- to- -a consideration /of whether the judgment is warranted -by the pleadings and the findings of fact.

¶2The matter in dispute relates to the -ownership and- right of possession o-f the mining properties- of the- Branch Mint Mining & Milling -Company. Reference is matte to Phillips v. Branch Mint Mining & Milling Co., 27 S. D. 350, 131 N. W. 308; Hardin v. *60Union Trust Co., 191 Fed. 152, 111 C. C. A. 632; Hardin v. Union Trust Co., 226 U. S. 606, 33 Supt. Ct. 111, 57 L. ed. 379, for a more 'comipiete understanding of the case. The decision in the Phillips case -resulted in the establishment of the miners’ liens as first liens upon the property.

¶3On September 4, 1909, Hardin became the o-wner of the equity of the mining company in the property by virtue of a re'ceiver’-s -deed issued1 unider receivership proceedings in -the state court in the Phillips case.

¶4Hong prior to the lien claim's anidi -the claim of Hardin-, the mining company had mortgaged the property to- the Union Trust Company as trustee for the purchasers of -a bond issue. In February, 1910, the trustee 'began1 'foreclosure suit in- the then United States 'Circuit Court for the -district of South Dakota, to which Hardin 'was a party. On Ju-ly 27, 1910, judgment was entered -decreeing foreclosure of the -mortgage, which judgment w!as affirmed in the- United States Circuit .Court of Appeals decision above referred1 to, -and! a writ of 'certiorari w.as denied in the United States Supreme 'Court decision above referred to. From a sale under foreclosure of the miners’ liens in the Phillips case, the Union Trust Company became a .rede-mptioner and -obtained redemptiolner’s -deed on January 8, 1912. It thereafter deeded) the property to John Stokes Ad'ams, who in turn deeded it to- Graham on March 24, 1913. The -money for such redemption was advanced- to the Trust Company -by Graham, one of the bondholders. It is -conceded' by the parties' that the certificate of sale under the miners’ lien foreclosure was the paramount lien on the property.

¶5During the pendency of -the forcl'osure suit ini the federal court two receivers were appointed by -that -court to take charge of the property, and) an order for the sale of the property was made to satisfy certain receivers’" 'certificate® issued 'during the pendency of said suit. (The receivers hereinafter referred to1 -in this opinion are these receivers and not 'the receivers • in the state -court hitíberfo referred to.) Graham obtained a receivers’ -certificate for the money advanced by himi to the trust company to effect the .redemption1 from the Phillips lien sale. At the receivers’ sale held ion February 5, 1913, Graham became the purchaser, and in satisfaction of hisi bid of $20,552.64 turned over receivers’ *61certificates (including die above-mentioned1 certificate), aggregating' $20,472.92, anid paid the remainder of his bid in cash. Such salle was. by the order of the federal court made without the right of redemption. It was oomfirmed and! a receivers’ deed was issued to Graham, which was filed for record in March, 1913. On June 12, 1913, Hardin tendered1 Graham the sum of $21,-844.20, add served upon him a notice of redemption from said •receivers’ sale, which tender was refused. Thereupon Hardin ■brought tills action, the purpose- of which was in general to have the court adjudge that he had effected a redemption from the sale made by the receivers on February 5, 1913. The trial court concluded that such receivers’ .sale and deed were valid, and that Hardin’s tender wias ineffective because he had no right to redeem, -and judgment was entered declaring Graham to be the owner olf the property. From the judgment and an ’order denying a new trial Hardin lias appealed, but, as we have 'hitherto shown, we must disregard the appeal from the order denying a new trial.

¶6[2] By section 189, G. C., it is provided:

“Sluice boxes-, flumes, hose, pipes,' railway tracks, cars, blacksmith shops, mills, arid all other 'machinery or tools used in working or developing a mine, are to be deemed affixed1 to the mine.”

¶7These things are considered to he real property. The important question in this case is, therefore, whether the federal court had authority -to authorize ¡the receivers to- sell real property without the right of redemption.

¶8Many decisions so hold where the property .consists 'both of real -and1 personal property, -and it is not feasible to sell the different kinds of property separately, or where the purpose of the s-u-it is the 'winding -up of the affairs of an insolvent corporation. Hammock v. Farmers’ Loan & Tr. Co., 105 U. S. 77, 26 R. ed. 1111; Nat. Foundry & Pipe Works v. Oconto Water Co. (C. C.) 52 Fed. 43; Oconto Water Co. v. Nat. Foundry & Pipe Works, 59 Fed. 20, 7 C. C. A. 603; McKenzie v. Bismarck Water Co., 6 N. D. 361, 71 N. W. 608; Farmers’ L. & Tr. Co. v. Ottumwa Nat. Bk. (C. C.) 78 Fed. 881: Pacific N. W. Packing Co. v. Allen, 116 Fed. 312, 54 C. C. A. 648; Merc. Realty Co. v. Stetson, 120 Iowa, 324, 94 N. W. 859; Blair v. Illinois Steel Co., *62159 Ill. 350, 42 N. E. 895, 31 L. R. A. 269. Ooncedin'g ¡that in certain cases a ¡court of equity has power to direct the sale of the equity of a corporation in its property without the right of redemption, it is entirely clear that at ifae time of the receivers’ sale •the mining company bad' no equit}'- in this property. Ever since September 4, 1909, Hardin has been the ¡owner of that equity, unless he -was ¡deprived thereof by the sheriffs ¡deed to Graham issued under foreclosure ¡of the miners’ liens in the Phillips case. Ever since September, 1909, ¡the mining company has had¡ no equity in the property. If said sheriff's deed to¡ Graham deprived Hardin of such equity in the property, then by suoh deed Graham succeeded1 to ¡such equity. So that in either event the mining- company he-lid noi equity in the property at the ¡time of the sale by the federal 'court receivers. By the laws of South Dakota such a .sale as was attempted to> be made by the receivers could not deprive Hard-in (if he w-as the owner) or Graham ('if he was the owner) of the- right of redemption. C. C. P. §§ 373, 375, 376, 646; Locey Coal Mines v. Chicago, W. & V. Co., 131 Ill. 9, 22 N. E. 503, 8 L. R. A. 598. It will be observed that Hardin’s title tol the mining property became vested long prior to- the beginning of ¡the foreclosure suit in the federal court, and therefore long ¡prior to the 'talcing of possession of the property by (he receivers. Watkins v. Minn. Thresh. Mfg. Co., 41 Minn. 150, 42 N. W. 862.

¶9The jurisdiction' of ¡the federal court was invoked for the purpose of foreclosing the mortgage. When that court appointed receivers -in the foreclosure suit such powers as the court could confer on the receivers were piolwersi under -and by virtue of the mortgage. ¡Under the mortgage itself no s'ale could be made .which would! -cut off the right of redemption. Subject to the light of redemption, the court had • power to order a sale of -the -property, to .pay the mortgage debt or any claim incidental to- the. mortgage debt. Although an unusual practice, we do not question the powers of the federal court to order a separate sale of the mortgaged property to raise the amount of the advancements that were made to' preserve the property .-and for the expense of the receivership!; but inasmuch as those -advancements were merely incidental to the foreclosure of the mortgage, a sale thereunder coiu'lid give no greater rights than those secured .'by the *63mortgage, at least as against Hardin if lie wtas then the owner of the property. It is clear therefore that 1» sale could >be made either under foreclosure or on account of matters incidental thereto which would cut off the right of redemption iof one whose rights 'became vested prior to the receivership.

¶10[3] Noiw was Hardin, deprived of his equity in the property •by the sheriff’s deed1 to Graham under the Phillips sale? Upon the face of 'the deed he was. Upon consideration of the acts of the parties he was: met. By applying to and receiving from the receivers a receivers’ certificate for the amount which he advanced to the Union Trust Company to redeem from the Phillips sale, Graham said in effect that he w-as merely advancing the money for the purpose of protecting the lien of the mortgage. Such action on his part was utterly' inconsistent with an assertion of title. His action declared, louder than word's, that such title as ■he got was merely incidental to the mortgage and for its protection. He should therefore be estopped from' asserting title-under the sheriff’s deed issued upon the Phillips sale.

¶11We must therefore 'hold' 'that Handlin was entitled to redeem from -the receivers’ sale at the time he made his tender. Inasmuch as the mortgage still stands unforeolosed and rests upon the unexecuted decree of foreclosure, Hardin had the right to redeem from' the receivers’ sale without paying or tendering the amount 'due under such decree, which decree will; after redemption is made by him, still stand as an incumbrance upon the property.

¶12[4] But it is urged that this action constitutes a collateral attack upon the orders of the federal court authorizing and confirming the receivers’ sale. If Hardin had waited until after the period1 of redemption had expired!, or if the court had authority to order the sale without the right of redemption, there would be much force in respondent’s argument. But during the period of redemption to which he was entitled, Hardin tendered the amount necessary to redeem, and1 this action was brought to. enforce that right which was denied to him. The power to authorize a sale by the receivers, was- within the jurisdiction of the federal court. The power to authorize this particular sale without the right of redemption was not within the jurisdiction of the federal *64court. Hence this 'action dbes not constitute a collateral attack upon the ard'ers and' judgments of that count.

¶13The judgment appealed1 from 'is reversed, and the trial count is directed to enter judgment allowing Hardin within a reasonable time to pay into court the amount requisite to redeem from (die sale made by the federal court receivers, and that upon such payment title to1 the 'premises be decreed1 to- be in him subject to the unexecuted decree of foreclosure hereinbefore referred to. If Hardin shall fail to malee such redemption within such reasonable time as the Court may direct, then the judgment appealed from may be re-entered.