SECOR ". SINGLETON.
725 et al.
SECOR
et al.
t1. SINGLETON
(Circuit Court, E. D. Mis8ouri, E. D. March 25. 1800.) 1. EQUITY--8UPPLEMENTAL
BILL.
t.
a.
SAJI[lI-MORTGAGOR-MoRTGAGEES-PUROllASER-PRIVlES.
A purcbaser at a foreclosure sale is not a privy in estate with the mortgagor so as. to be bound by a decree affecting the mortgage premises, rendered in a suit between tbe mortgagor and tbird parties, begun after the mortgage was executed, and to which tbe mortgagee was not made a party. In such case the mortgagee: would not be bound by the decree, and a purchaser at the mortgage sale has all rights of the mortgagee.
.
4.
SAME-'-DEOREE-BETWEEN WHOM CONOLUSIVE.
Oertain' s.tockbolders of 'a corporation baving sued tbe the tax" Ing authorities of certain counties to restrain the former.from paying, and tbe lat-. tel' from .col1ec.ting, taxes on :the. p.roperty of the corporation on tbe groun.d t.hatit. . . . wa!!exempt,·and having o.btainedsuch decree, that corpGr.a1lion and ·tax-: ing authorities were adversary parties, though both were defendants in the SUit,. and that as between them the decree was a conclusive adjudication that the prop.Wty was exempt from taxation.
In Eql,lity. On to supplemental bill. The bill in ,this case recites, in substance, that Charles A. Secoret al.;· ina suit heretofore instituted by them in this court as stockholders of iheMissouri, Iowa & Nebraska Railway Company, obtained a final or.. ·der ofinjuDction restraining the railway company from pa.ying taxes on its properly located in Scotland, Schuyler, and Clark counties,Mo.,and restraining. the several counties and certain county officials from levying: and collecting. or attempting to levy or collect, any taxes on .said prop-· .erty prior to ,the year 1892; that thereafter the property of the railway to which the injunction related was sold under a decreefore--. closing a mortgage executed by the Missouri, Iowa & Nebraska Railway Company,iil the year 1870, and became by purchase the property of the Keokuk & Western Railway Company, the present complainant, _about the 1st of December, 1886; and that, since the last-mentioned sale, Scotland county has begun proceedings to enforce the collection of . . assessed against the property inquestioil while it was owned · by the Missouri, Iowa & Nebraska Railway Company. The prayer is that the suit in which the injunction was obtained may be revived in the name olthe .Keokuk & Western Railway Company, and that it may have the, benefit Qf the decree, in that proceeding. is demurred' S.cotllmd and Clark counties, and the county judges thereof; R.T. lfugMs' and H. S. Priest, for complainant., , T.S.,J{fYf!,tgcrmery llind. Sclwfield, for defendant Clark county· ./oh1J, C;,: M'?QrI1, .defendant . ::,;
726; THAYER, J., (ofter statingthefact8 as above.) 1. On the hearing of the demurrer there was qluch lijl,tQ the ch!l,tacter of the bill now before the court, and as to whether it could be maintained after a final it to say., thaUhe court redecree. gards it as an ordinary supplemental bill. Complainant the Keokuk & Western Railway Company suggests to the court that since the final dethe interest ,dfone of the original parties in and to 'the lpJ;operty .affected by the litigation and by the deQree, and that since the deeree certaincotinty officers; 'who were parties to the suitOllly inaXl offi9ial pacity, llave. ceased to be such officers, and that others have been elected in their stead. There,is a prayer that the complainant; who has succeeded' td the oWnership, may be to that position .!With respect to the litigation that was formerly occupied by the partj·f().f'\v,bose interest he ,has succeeded, to the end that further actionmafbe taken under ,the decree. tThe bill is clearly an ordinary 'bill, and the proceedings thereon are this court by the fifty-seventh equity rule, and in England by statute,{15 & 16 Vict. c. Ed.')1515, 1524; Van HookY. ThrocJc.. v. (Jlii)e1mJ:I,dl 7 Paige, 287. With respect to the 'right to filE! asupplernental bill 'after fiiud decree,it may be said therqle is, the same .as in. case ,of bills of revivor. Such bills, it seems, may be filed as well after a final decree as before, if a person has succeeded to the interest of one of the origioal parties to the suit, in such manner as to entitle him to of the'decree,finds it neCessary tOin\'oke further a:ctiononthepart of the court' to obtain such benefit. Indeed,a person entitled to Ithe benefit of a decree by aeq,uiring an interest in the subject-matter bHhecontroversyelubsequent to the to invoke the aid of the court or take decree is Dot,as it seems, further action until he, has made hiniself.:a !party by Bupplemental bill, and has brought in therepreseritatives ()1' successors in interest of other: originaLparties plaintiff ,or defendant.' :Daniell, Oh. Pl'. (5th Ed.) H?25;-.1537i t Sedg'lffickv. Oleveland,8Up"'a; Van Hook \"; Throckmorton, 8Upra.; Binks v. Binks, 2 Bligh', Owings' Case, 1 Bland, 409. · . · 2. Ttea1ingthepleading now before,the,court as a supplemental bill, filed, after.qnalJidecree, by a party whd has succeeded to an'interest in the subject-matter of the litigation, the qUl'lstion arises whether the complainantoocll:pies such a relation to' any of the parties to the original suit,aB erltitles:him to file such a bill. !'The deoisionof this question must depend' on the inquiry,whethell'thedMree,jlltheoriginal suit is as conclusive between the Keokuk & WtlStern RaihvayC(}mpany and the several counties-,and county officials,8s it was or isbetweell the Missouri, Iowa & Nebraska ,Railway Company :and those parties. The Keokuk & Westerh Raill1tay.Company has, :by'virtue of the foreclosure· sale,aequired all the interest i11 the property affected· by the litigation that waS formerly owned by the Missouri-,'Iowa & Nebraska RliilwayC<mipany. If, then, thatdooreeds asconclu",ive 'indt!! behalf astt was in' 1avoro£ its'predecessor in interest; ,no ,reason1B 1p:eroeived why itmay:not file its I'
'SECOR
v.
SffiGLETON.
'727
.and be admitted a party to the record, and obtain the berlefit of the decree already entered, without being put to the necessity of 'filing an original bill to :establish its right. The question to be decided seems to be, substantiailly" one of privity. It is insisted by defendants' counsel that the original decree did not affect the property purchllBedat the foreclosure sale in any sucb, manner as to bind a subsequent owner, in anY' event; that it did not qualify the estate or interest that the Missouri, Iowa & Nebraska Railway,Company had in the property, and hence was not one: of those adjudications that run with the lrund, and:lJiTlda through privity of estate, or that can be invokedJor the protection of a subsequent owner. This position the courl:regards as, The original suit concerned the right to tax thept6perty in question; The decree determined that the property would be exempt from assessment for taxation until 1892, ifowQed in ,the. mean time by the Missouri, Iowa & Nebraska Railway Company, 'and, in<acpordance with that determination, enjoined the counties; and "certain'oGunty officials1whowere parties defendant, from collecting or ,'assessiiogrtaxes thereondtiring the continuanoeof such ownership. ' The ··df>,cte8. i aocOrdingly, hlid:'sqirect effect on the property. It attached .thereto anilnportant imm'unity, not usuallyinciderit to ownership, ,that . rendered; ownership trlOJre: vahiable. It was, in' my judgment, precisely oneoHhose adjudications 'which reach beyond parties to the record,and ·bindas,w.ell privies in eState. Blakemore, 2 Denison,Cr"Cas. ,t41.0;:AdtimB v. Barnes, 17 Mass.. 367; Cooley v:,· Wa".en, 53Mo; 166; 'iBigelbw, Est. (5th Ed.) 144, 145. ' Itisflirther contended that the' original decree herein could not,.be -pleaded as an estoppel ina suit brought by the Missouri, Iowa &Nebraska Company, against the several couuties; who, .withthe :company, were parties to the original actiOn, for the that ,the'colDpauyand the counties were all named as defendants in· the stockholders'bill, and that as between them no issue was raised or litigated. Hence it: is argued that, as the Keokuk & Western Railway Company is merely,4he successor in interest of the Missouri, Iowa & Nebraska Railway,.Corhpany, it could e11force no right under the original decree as against the several couDties,even if admitted to become a party to the record .. '. I am .forced to' .regard this: reasoning as erroneous. The sole question; at issue iu the original suit :W8s whether the Missouri, Iowa & .Nebraska Railway Company was entitled to an exemption from taxation 'on:itsprbperty located in the several counties, and upon that issue the company' and the counties occupied the position of advehiaries. Al,though the bill was filed by stockholders of the railway company, they did not::sueto enforce an individual right, but solely to enforce aright or immunity that pertained to the corporation. The suit was essentially .'a 'Iiluit by the corporation against the counties that the stockholders were to prosecute in· its' behalf, because the'directors had bP.ennegligent Jin asserting the right of the corporation: . Dodge v. Woolsey, 18 'Hciw.:,S8-1 j,Memphis v. Dean, 8 Inasmuch, then, suit r'Wa8j!.ineffect,a, suit by the railwaycompl\D,y.against thecountiesj and I
728
FEDERAL REPORTER,
yolo 41.
was likewIse an equity proceeuing, it is wholly immaterial how the parties were 8rranj:ted upon the record. The decree rendered was certainly a conclusive adjudication, between the Company and the counties, that the property of the former was exempt from taxation, and in a suit between them might be invoked as an estoppel. But there :is .a another point of view from which it appears to the court thatthe decree in the stockholders' suit cannot be regarded as conclusive between the counties and the Keokuk & Western Railway Company upon the points litigated in that suit. It must be borne in mind that the Keokuk & Western Railway Company is not a grantee of the Missouri, Iowg& Nebraska Railway Company under a conveyance executed by the latter company subsequent to the decree in the stockholders' suit, or pending that litigation. The Keokuk & Western Railway Company acquired its title by the foreclosure of a mortgage that was executed by the/Missouri, Iowa & Nebraska Railway Company in the year :1870;and,it does not appear that the mortgagees, or any representative of the mortgagees, were made parties to the stockholders' suit of Secor and others against the railway company and the several counties. A purchaser at a foreclosure sale becomes a privy in estate with the mortgagor, S08S to be bound by a decree against or in favor of the mortgagor, in aanit between the latter and tbirdpartiesaffecting the mortigaged premises,only in those cases where the mortj:tagee can be regarded as a privy. The purchaser's rights ,are precisely those the mortgagee, and, like his, relate back to the mortgage. A mortgagee is privy in estate with a mortgagor only in respect to the estate as it existed when the mortgage _executed. Mathea v.' Cover, 43 Iowa, 512. It is It wellsettled rule that mortgagees are not bound by judgments'or decrees renderedngainst the mortgagor, and affecting the mortgaged premises, in suits begun by third parties subsequent to the execution of the mortgaj:te, unless the mortgagees are themselves made parties,or 80me one authorized to represent them, like trustees of mortgage bondholders, are made parties to, the litigation. The doctrine of privity cannot be invoked to bind mortgagees by decrees against the mortgagor, in suits between him andihird parties, unless the mortgage was executed pendente lite or after the decree. CampbeU v. HaU, 16 N. Y. 575; Scate8 v. King, 110 Ill. 456; Dooley v. Potter, 140 Mass. 49, 2 N. E. Rep. 935; Outterv.Jones, 52 Ill. 84; ZoeUerv. Riley, 100 N. Y. 102,2 N. E. Rep. 388. Doe v. Derby, 1 Ado!. & E. 783; Bigelow, Estop. (5th Ed.) 142, 143. The result of the rule as applied to the case at bar, undoubtedly is, that if the stockholders' suit of Secor and others had terminated in favor of the counties, bya decree adjudging that the property of the Missouri, Iowa & Nebraska Railway Company was subject to taxation, and that tax: assessments thereon were valid, such it decree would nQt have been conclusive against the mortgagees in the then outstanding mortgage, ndragainst the Keokuk & Western Railway Company. Therefore the decree actually rendered in that case, declaring the property to be exempt, cannot operate as an estoppel between the counties and the Keokuk' & Western Railway Company, for the reaSon that an estoppel must always