Bridgeport Savings Bank vs. Edward H. Eldredge and others

Bridgeport Savings Bank vs. Edward H. Eldredge and others. A first mortgagee had obtained a decree of foreclosure against a second mortgagee, and the time limitad for redemption had expired. The record of the decree found the fact that legal service of the bill had been made on the second mortgagee, but in fact none had been made, and he had no actual knowledge of the pendency of the suit until after the time limited for redemption had expired; and he would have redeemed if he had known of the decree. On a bill brought by him to redeem, against which the defendant set up the previous decree, it was held, 1. That the decree was not in any proper sense a bar to the present suit, as a judgment at law.would be a bar to a suit at law, but that, without impugn- , ing the decree, the court could, for equitable reasons shown, allow a further time for redemption. 2. That therefore the question whether the plaintiff could contradict the record by showing that no service of the former bill was in fact made upon him, did not present itself as a technical one, to be determined by the rules with regard to the verity of judicial records, but only-in its relation to the plaintiff’s right to equitable relief; and that therefore the evidence was admissible, and the fact of such want of notice was to be considered by the court with the other equitable cireumstancés of the case. 3. That as the first mortgagee could not equitably have taken the decree in the first instance if he had known that the second mortgagee had no notice of it, so he could not now equitably avail himself of the decree, and the foreclosure ought to be opened. 4. *That the plaintiff’s bill, which was an ordinary bill to redeem, and made no reference to the previous decree, -was yet sufficient for the purpose, since the plaintiff was seeking relief, not in the direct setting aside of the former decree, which might have required a bill specially adapted to the purpose, but in the permission to redeem, which a court of equity has always the power, for sufficient reasons, to grant. Where the only service of a bill in equity upon the defendant, a corporation, was by the acceptance of service by an attorney, who was requested by the president of the corporation to make such acceptance as attorney for the corporation, but the corporation had not authorized the president to accept service of legal process, or to appoint attorneys, and the corporation was ac- » customed to appoint its attorneys only by vote of the directors, it was held that tlie service was not a legal one. Whether the finding, in the record of a judgment, that legal service of the process was made upon a party, can be collaterally impeached by such party for the purpose of destroying the jurisdiction of the court and annulling the judgment: Quere. The court inclined to the opinion that it can not. Bill to redeem mortgaged premises. The plaintiffs were second mortgagees. The defendant Eldredge was the grantee of the premises from the Bridgeport bank, which was the first mortgagee. The defendants set op in their answer a decree of foreclosure previously obtained by the Bridgeport bank against the present plaintiffs, the time limited by which for the redemption of the premises had expired before the present suit was brought, and averred that the bill of foreclosure was duly served upon the plaintiffs, and that the decree was passed with their full knowledge and acquiescence. On the trial the defendants offered the decree in evidence, and by it it was found that “ the petition was duly brought and served upon tlie Bridgeport Savings Bank, and that the parties duly appeared before the court.” The plaintiffs thereupon offered evidence to prove that the bill in that case was never legally served on them, and that they never had knowledge of the suit; and the court found the following facts on the subject. J. 0. Loomis, Esq., the attorney for the Bridgeport bank, met Lemuel Coleman, president and trustee of the Bridgeport Savings Bank, in the street, and '^requested him as such to accept service of the [ *558 ] bill, which he had just prepared and then had in his hand. D. Morris, Esq., counsellor at law, and one of the trustees of the savings bank, coming along at the time, Coleman inquired of him whether an acceptance of service would in any way affect the rights of the savings bank, and on being informed by him that the only effect would be to save the expense of officer’s fees, assented to and requested the acceptance of service by Mr. Morris, who afterwards on the next day indorsed the following on the back of the bill: “ Service accepted by the Bridgeport Savings Bank, and further notice waived. By their attorney, D. Morris.” Mr. Morris was not then the attorney of the savings bank, which had no regular attorney, but was accustomed to employ an attorney when required by vote of the board of trustees, and not otherwise. Neither Coleman nor Morris had any special power conferred upon them to accept service of writs, or to authorize such acceptance, and had no such power, unless the same would be implied by law from their capacities as president and trustees of the bank. 'Neither the pendency of the bill nor the obtaining the decree thereon was known to the savings bank, or mentioned at the board at any meeting of the trustees, until after the time limited in the decree for redemption ; and of the officers and trustees, the only persons proved to have knowledge of the acceptance of service, were Coleman and Morris, and the only persons knowing of the pendency of the suit were Coleman, Morris and one Burroughs, who was one of the trustees of .the savings bank, and who knew the fact as cashier of the Bridgeport bank ; and the only persons who knew of the decree being obtained were Morris and Burroughs; but neither Coleman, Morris or Burroughs mentioned these facts to any other of the officers or trustees of the savings bank. The officers of the savings bank consisted of a president, four vice presidents and sixteen trustees. Five trustees by the by-laws formed a quorum. To all this evidence, so far as the same tended to contradict the record of the decree, the defendants objected, but the court admitted it. It [ *559 ] was admitted that the Bridgeport *bank had no knowledge of the insufficiency of the service of the bill, or of the want of knowledge on the part of the savings bank of the bringing and pendency of the suit and the obtaining the decree thereon, and that the proceedings that were had in the matter on the part of the Bridgeport bank were in good faith. The court also found that the savings bank would have redeemed the property, before the time limited in the decree had expired, had it known of the existence of the decree. The bill was an ordinary bill to redeem, and made no reference to the decree of foreclosure previously obtained by the Bridgeport bank. Certain facts were found by'the court with regard to the relation of the defendant Eldredge to the property, but they are not important to the result. Upon these facts the case was reserved for the advice of this court. Beardsley, with whom was Hawley, for the plaintiffs. 1. There was no legal service of the bill of foreclosure upon the plaintiffs. The president had no power, as such, to accept service,' or to authorize its acceptance, nor had a trustee that power. Ang. & Ames on Corp., § 208. Ashuelot Manufacturing Co. v. Marsh, 1 Cush., 507. Salem Bank v. Gloucester Bank. 17 Mass., 29. Whitly v. Barker, 1 Root, 406. 2. The decree can not affect the plaintiffs. They may show it to he void for want of notice to them. Although it is found that service was made on them, yet they may show that no service was in fact made and so no jurisdiction acquired. Aldrich v. Kinney, 4 Conn., 380. Sears v. Terry, 26 id., 273. Latham v. Edgerton, 9 Cow., 227, Bigelow v. Stearns, 19 Johns., 39. Starbuck v. Murray, 5 Wend., 148. Hollingsworth v. Barbour, 4 Pet., 466. Central Bank v. Gibson, 11 Geo., 453. Wort v. Finley, 8 Blackf., 335. Thompson v. Steamboat Morton. 2 Ohio N. S., 26. Farmer's Loan and Trust Co. v. McKinney, 6 McLean, 1. 3. Even if, as a strict technical rule, a judicial record can not he contradicted in such a case, yet the plaintiffs may *show the fact of want of notice as an equitable con- [ *560 ] sideration in favor of granting the relief sought. They may be entitled to that relief, even though the proceedings of the court in granting the decree have been in all irespects regular. If it is clearly equitable in the circumstances that the plaintiffs should be allowed a further time for redemption, the court has full power to grant it, notwithstanding the former decree. 4. It is not necessary that our bill should have been framed with direct reference to the decree, and that we should have prayed that it be set aside or that the defendants be enjoined against setting it up. It is sufficient that we ask to be allowed to redeem. The defendants set up the decree as a reason why we should not be allowed to redeem, and we show that, in the circumstances, it constitutes no good reason why we should not. The court will do what equity requires, a.nd will not allow the decree to be inequitably used against us. Hutton and Blake, with whom was Treat, for the defendants. 1. The record is conclusive as to the service of notice upon the plaintiffs. It was a part of the duty of the court to find the fact of the service. Rev. Stat., tit. 12, § 7. Its finding therefore can not be collaterally impeached. Huntington v. Birch, 12 Conn., 142. Sears v. Terry, 26 id., 273, 286. Cook v. Darling, 18 Pick., 393. And see 2 Am. Lead. Cases, 792, where all the cases on the subject are reviewed. 2. The plaintiffs had in fact legal notice .of the suit. The president had a right to appoint Mr. Morris their attorney, and an acceptance of service by him, as attorney, was sufficient. Ang. & Ames on corp., § 298. American Ins. Co. v. Oakley, 9 Paige, 496. 3. The plaintiffs are to be regarded, on the facts found, as having had fair notice of the pendency of the suit, and are not in the circumstances entitled to equitable relief. The president of the bank, in his official character, had knowledge [ *561 ] *of the suit, and it was known to two other directors. Their knowledge was the knowledge of the bank. Ang. & Ames on Corp., §§ 306, 308. 4. The plaintiffs’ bill is not a proper one for the relief sought. It takes no notice of the previous decree, and does not ask for an injunction against it, or that it be set aside. It would be contrary to all the rules of equity pleadings to' set aside a previous decree of foreclosure on a mere bill to redeem. [MAJORITY — Storks, C. J.] Storks, C. J. The plaintiffs being second mortgagees, and having acquired by foreclosure the ultimate right to redeem the mortgaged premises from the defendants, who have purchased and therefore represent the interest of the first mortgagee, have clearly the right of redemption sought by this bill, but for the objections urged by the defendants. It is only necessary therefore to notice those objections. The first involves the merits of the case on the facts found by the court, and is confined to the legal effect of the decree of foreclosure obtained by the Bridgeport Bank, under which the defendants claim. The other respects the manner in which the present bill is framed, in case the plaintiffs are entitled on the merits to the relief they seek, and therefore involves only a question as to its form. We are of the opinion that neither of these objections ought to prevail. 'The substantial question here is, whether the plaintiffs should now be allowed to redeem the mórtgaged premises from the defendants, notwithstanding the decree of foreclosure heretofore obtained by the latter ; in other words, whether a sufficient ground is shown for the opening of that decree. That a court of equity possesses, and for what it deems a just and reasonable cause will exercise, the power of opening a decree of foreclosure and extending still further the time for the redemp.tion of a mortgage, is too well established to require a reference to authorities. It has always been exercised by that court, "and without any question, and rests on the- same. principle as that upon which the court first limited the time for redemption. [ *562 ] *In respect to the first objection of the defendants, they claim that the former decree' of foreclosure appears from the record of that case to have been regularly obtained; that the facts which that record finds, including the legal service of the petition on which that decree was made upon the defendants therein, can not be contradicted in this case, on the ground that the record in that case imports absolute verity, and can not be thus collaterally impeached : and that therefore that decree constitutes a bar to the present bill. No part of that decree has been attempted to be here contradicted, excepting the fact that the defendants therein were legally served with process in that case. Whether, as a matter of evidence merely, if the question were as to the legal validity of that decree, it would be competent for the plaintiffs, under the rule protecting the verity of judicial records, to question collaterally the fact of the service of that petition, for the purpose of destroying the jurisdiction of the court and thus annulling its decree in that case, is a point which certainly admits of a question. We are" inclined to the opinion that, for that particular purpose, it would not be allowable thus to falsify that record. But it is not necessary to decide that point. The question as to opening a decree of foreclosure does not turn upon the inquiry whether the proceedings on which the decree was obtained were regular, but may depend on other equitable considerations wholly independent of that inquiry; although indeed, where such a decree is interposed by the party obtaining it as an objection to a redemption which, but for the effect of the decree, would be clearly just and reasonable, its irregularity, as well as any other circumstances which ought to set it aside or modify it, will be considered on the question whether the time for redemption shall be further extended; in which latter case the manner of obtaining the decree to he l’elieved against is gone into, not as a technical question of evidence, but as being of itself a ground of relief to the party seeking to redeem ; and the inquiry is analogous to, or rather seems to be really in substance, the familiar proceeding in chancery for a new trial in the nature of a bill of review, the object of which is to set *aside or open the former [ *568 ] proceedings in that court, rather than a collateral attack upon them. Hence, it by no means follows that the operation of the decree in. question would not be relieved against, if it were conceded that it was obtained in all respects regularly. On the contrary, no principle is better settled, or more frequently acted on, than that a court of equity will interfere to restrain the use of an advantage gained by the proceedings of a judicial tribunal, either of law or equity, irrespective of the inquiry whether those proceedings were regular or not, when they must otherwise make either of those tribunals an instrument of injustice, in all cases where such advantage has been gained by the fraud of the opposite party, or by accident or mistake, without the fault of the party seeking relief against them. In regard to the judgment of a court of law, it does not in such a case reverse that judgment, but, conceding it to be valid, it prevents its being used for an unconscientious or inequitable purpose. In regard to its own decrees or proceedings, it may set them aside, or, allowing them to stand, restrain the parties from the use of them for a like improper purpose. If any of these proceedings were void for irregularity, there would obviously be no occasion to apply directly to any court for relief against them ; they would be a nullity, and therefore of no avail, however attempted to be used. Applying these familiar principles, we are clearly of the opinion that the circumstances under which the Bridgeport Bank ohtained the decree on which the defendants rely in this case, were such that they ought not to be allowed to use it for the purpose of preventing the right of redemption sought by this bill. It was obtained under a mistaken belief on the part of the bank that the present plaintiffs were legally notified of the bill on which it was founded. There was plainly no such notice, as there was no express or implied authority on the part of the person who undertook to accept the service of the citation ; nor had the present plaintiffs any knowledge of that proceeding until after the decree was made and the time limited by it for redemption had expired. And it is found that they would [ *564 ] have redeemed the mortgaged property *within that time if they had known of the decree. In preventing the defendants, under these circumstances, from taking advantage of that decree in this case, we only preclude them from availing themselves of a decree which they could not conscientiously have obtained if they had been aware of the want of notice of the bill to the defendants in the case, and of which they can now no more conscientiously avail themselves, since the want of such notice has come to their knowledge. Unless, therefore, the plaintiffs are precluded from availing themselves of this objection to the decree by the manner in which the question is here presented, they are entitled to the relief they seek, notwithstanding that decree. This presents the only other objection of the defendants to the relief here sought. They claim that the former decree can not be attacked thus collaterally on this bill as now drawn, but that it should have been framed for the direct and avowed purpose of opening and setting aside or modifying that decree, and that, as there are no allegations in it adapted to or praying for such relief, the evidence of the plaintiffs in regard to the manner in. which the decree was obtained was not admissible. There is certainly force in this objection ; but considering the manner in which the question is here presented, it is our prevailing opinion that the evidence was properly received and should have its full effect. However special or particular the statements in a bill are generally required to be where relief is sought against the inequitable operation of a judgment or decree, we think that the rule should not be applied in a case like the present, where the-object is merely to obtain liberty for further time to redeem a mortgage, and the only objection is a previous decree of foreclosure, subsequent to which no new rights have been acquired. The facts alleged in this bill, unanswered, present a clear title to relief. The decree formerly made does not constitute, nor could it properly be set up by way of answer as, an absolute or positive bar or objection to the extension of the time for redemption, but at best constitutes only an equitable reason against such extension. The bill is in the ordinary form of *a bill for redemption, taking no notice of [ *565 J the previous decree. The defendants in their answer not only set up the decree, but aver that it was rendered upon legal notice to the plaintiffs and with their actual knowledge and acquiescence. The plaintiffs then, after the defendants have presented their ¡woof, offer evidence to negate these allegations, and to show that there was no legal notice, and that they had no actual knowledge of the suit. To this evidence the defendants object, solely on the ground that it contradicts the record. This was clearly a point of no importance" on the question whether the decree constituted an equitable reason why the plaintiffs should not be allowed to redeem, and the evidence being admissible for the purpose of showing that the decree did not constitute such reason, and for the purpose of negating the allegations of the answer, and not objected to on any other ground, we think that we ought not now to reject it from our consideration, but that it ought to be treated as being properly before us, and entitled to the same effect as if the manner of its introduction was in all respects regular and unexceptionable. We are therefore on the whole of the opinion, not however without some hesitancy, that the plaintiffs were rightly permitted to impugn the effect of the decree, and that the superior court should be advised to grant the prayer of the bill. In this opinion the ■ other judges concurred; Sanford, J., with much doubt however as to the propriety of granting the relief upon the bill in its present form. Advice that prayer of the bill he granted.