McDermott v. Burke
Before: Field
Synopsis
Query: Whether a leasehold estate for a term of years is real' property in such sense that a judgment docketed becomes a lien thereon.
A mortgagor cannot make a lease which will bind his mortgagee, where the lessee, at the time, has actual or constructive notice of the mortgage.
The interest of the lessee, in such case, depends for its duration—except as limited by the terms of the lease—upon the enforcement of the mortgage. So long as the mortgage remains unenforced, the lease is valid against the mortgagor, and, in this State, against the mortgagee; but with its enforcement, the leasehold interest is determined, even though the lessee be not made party to the foreclosure suit.
There is no privity of contract or estate between the purchaser upon the decree of sale on foreclosure and the tenant of the mortgagor. The purchaser may treat the tenant as an occupant without right, and maintain ejectment'for the premises—except where the purchaser is precluded, by his acts or declarations, from thus taking him.
The purchaser cannot, for the want of privity, count upon the lease, and sue for the rent or the value of the use and occupation. The relation between the purchaser and tenant is that of owner and trespasser, until some agreement, expressed or implied, is made between them with reference to the occupation. The tenant is not bound to attorn to the purchaser, nor is the latter bound to accept the attornment, if offered, unless the acts or declarations of the purchaser, anterior to the purchase, qualify the subsequent relation of the parties, or the rights springing from it.
There are cases where the purchaser on a sale under a decree of foreclosure, would be estopped from treating the tenant of the mortgagor as a trespasser—as, for instance, when the lease was taken upon the encouragement of the mortgagee, and the purchaser was cognizant of the fact at the time of his purchase.
Only those who are beneficially interested in the claim secured, or in the estate mortgaged, are necessary parties to the foreclosure of a mortgage.
A tenant of the mortgagor is not interested either in the claim secured nor in the estate mortgaged—that is, in the title pledged as security. He has not succeeded to such estate, or to any portion of it. He does not stand in the position of a purchaser. The estate remains in his lessor; he has only a contingent ' right to enjoy the premises. The right of the lessor to the possession ends with, the deed by which the sale of the premises is consummated; and the tenant’s right to possession depends upon that of the lessor, and goes with it; and the tenant having notice, actual or constructive, of the mortgage, need not bé made party to the foreclosure.
Field, C. J. delivered the opinion of the Court Baldwin, J. concurring.
In November, 1855, the Table Mountain Water Company, a corporation created under the laws of this State, executed to Laforge a mortgage upon certain property, situated in Calaveras county, to secure the payment of its promissory note of the same date. In January, 1856, Laforge assigned the note and mortgage to Rowe. On the sixth of October following, Rowe instituted suit for the foreclosure of the mortgage, making the company the sole party defendant, and in February, 1857, recovered a personal judgment for the principal and interest due, and a decree for the sale of the premises. Under this decree the premises were sold, in August, 1857. At the sale, Bowman and Hughes [588]became the purchasers, received the Sheriff’s certificate, and in March, 1858, no redemption having been made, the Sheriff’s deed. During the same month, Bowman sold and conveyed to Burke his undivided interest in the premises. Burke and Hughes, two of the defendants in the present action, thus became joint owners—as tenants in common— of the entire property, unless the interest of the company, covered by the mortgage, had been transferred so as to be unaffected by the decree rendered.
The only interest alleged to have been thus transferred, was that created by the lease executed by the company to Laforge on the twenty-first of October, 1856. This lease was for the term of five years, commencing on the first of November subsequent to its date, and under it Laforge entered upon the premises. In April, 1858, Burke and Hughes brought an action against the company and Laforge to obtain possession of the property, basing their right to a recovery upon the mortgage, and the sale and conveyance under the decree foreclosing the same. Both defendants answered, Laforge setting up the lease referred to, and insisting that his estate thereunder was not affected by the proceedings in the foreclosure suit, as he was not made a party thereto. The action was tried by the Court, and it .found that the company was in possession of the premises at the ‘commencement of the action, and continued in such possession; and that Laforge, by a written contract with the company, made -on the sixteenth of March, 1858, had surrendered the property and all his rights to the same under the lease. It, therefore, rendered judgment in favor of the plaintiffs, and upon a writ issued thereon, they were placed in possession. Their codefendants claim under other proceedings upon an alleged second mortgage of the company to Treat, but we do not deem it at all material, for the disposition of the present action, to consider the source, nature or extent of their interests.
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