done, to have certain alleged payments of usurious interest applied to reduce the debt. The bank was served with subpoena on the 25th of February, and required to appear on the first Monday in April. The February term of the court of common pleas of Allen county began on the 7th of February, and on the 7th of March, during that term, a judgment was rendered in the suit of the bank against Lye for the full amount of his note and interest, and for a foreclosure of the mortgage by a sale of the mortgaged property. The bank answered the suit of the Stouts, setting up the foregoing facts, which being proved by the agreed statement of the parties, the bill was dismissed. From that decree this appeal was taken.

§ 1001. Where a state court has acquired jurisdiction of the subject-matter of a cause its decree is a bar to an action for the same cause in a federal court. The first question to be decided is whether the appellants are concluded by the judgment of the state court finding the amount due the bank and establishing the lien of its mortgage. If they are, they concede that the decree below is right. There cannot be a doubt that the state court had jurisdiction of the suit instituted by the bank, and as was said by Mr. Justice Grier, speaking for the court in Peck v. Jenness, "It is a doctrine of law too long established to require a citation of authorities, that where a court has jurisdiction it has a right to decide every question which occurs in the cause, and whether its decision be correct or otherwise, its judgment, till reversed, is regarded as binding in every other court; and that where the jurisdiction of a court, and the right of a plaintiff to prosecute his suit in it, have once attached, that right cannot be arrested or taken away by proceedings in another court." 7 How., 612, 624. The mere fact, therefore, that the Stouts commenced this suit in the circuit court before judgment was rendered in the state court in favor of the bank is of no importance. The point to be decided is whether the judg ment in the state court binds the Stouts, they not having been parties to the suit in which it was rendered. The rule is, that where suits between the same parties in relation to the same subject-matter are pending at the same time in different courts of concurrent jurisdiction, a judgment on the merits in one may be used as a bar to further proceedings in the others.

§ 1002. Rights acquired pendente lite.

It is also an elementary rule that "if, pending a suit by a mortgagee to foreclose the equity of redemption, the mortgagor makes a second mortgage, or assigns the equity of redemption, an absolute decree of foreclosure against the mortgagor will bind the second mortgagee or assignee of the equity of redemption." Mitf., p. 73; Story, Eq. Pl., sec. 351. Acting on this rule in Eyster v. Gaff, 91 U. S., 521, we held that an assignee in bankruptcy, appointed pending a foreclosure suit, was barred by a decree against the mortgagor. In this we may have gone somewhat beyond the rulings of the English courts, and of Chancellor Walworth in an anonymous case (10 Paige (N. Y.), 20), but to our minds, under the late bankrupt law, an assignee stands as any other grantee of the mortgagor would stand who acquired title after the commencement of the suit to foreclose the mortgage.

§ 1003. Creditor obtaining judgment pending a foreclosure suit.

That the suit of the bank was one to foreclose a mortgage, and that it was actually pending when the judgment lien of the Stouts was acquired, are conceded facts. When the suit was begun, Lye, the mortgagor, represented the entire equity of redemption. He had parted with no portion of it voluntarily; and if the Stouts had failed to get their judgment during the January term,

1876, of the circuit court, no one would claim they were not bound by the decree of foreclosure, although not parties to the suit. Neither could it with any propriety be claimed, we think, that they would not be bound if their lien had only taken effect from the date of their judgment. It is true the lien followed by operation of law from a judgment in an adversary proceeding against the mortgagor, and was not created directly by his own voluntary act, but it was the legitimate result of his failure to pay a debt he had incurred, and reached only the equity of redemption that was being foreclosed in the pending suit. It was in legal effect no more and no less than an incumbrance of the equity of redemption by the mortgagor under the operation of the judicial proceedings which had been instituted against him to enforce the payment of a debt he owed. As this incumbrance was created pendente lite, there can be no question that it comes within the rule just stated as governing such transfers, unless the rights of the parties are changed because the lien, when created, bound the property from January 4 as against other liens and conveyances made by the mortgagor. The inquiry is not as to the extent or validity of the lien, but whether the holder is any less an incumbrancer pendente lite, because, although his incumbrance was actually created while the suit was pending, it bound the land, for certain purposes, from an earlier date. Confessedly the lien of the bank, if its mortgage was valid, was in any event superior to that of the judg ment. The only point in controversy is as to the necessity of making such an incumbrancer a party to a pending suit in order to cut off by a foreclosure his interest thus acquired in an equity of redemption. No doubt the Stouts, as soon as their judgment was rendered, had a lien on the mortgaged property, which for some purposes antedated the foreclosure suit; but until they had secured their lien they would not have been heard to contest the validity of the bank's mortgage, or the amount that was due on the mortgage debt. If they had been made parties when the suit was begun, they could have done nothing by way of defense to the action until they had acquired some specific interest in the mortgaged property. As creditors at large they were powerless in respect to the foreclosure proceedings, but when they obtained their judgment, not before, they were in a position to contest in all legitimate ways the validity and extent of the superior lien which the bank asserted on the property, in which, by the judgment, they had acquired a specific interest. They might have appeared in the common pleas and asked to be admitted to defend the bank's suit, or for some other appropriate relief, or they might do what they in fact did,- commence this suit in the circuit court in aid of their execution. By this suit, however, they could not deprive the common pleas of the jurisdiction it had acquired in the bank's suit, nor take away from the bank its right to prosecute that suit to the end. The two suits related to the same subjectmatter, and were in fact pending at the same time in two courts of concurrent jurisdiction. The parties also were in legal effect the same, because in the state court the mortgagor represented all who, pending the suit, acquired any interest through him in the property about which the controversy arose. By electing to bring a separate suit the Stouts voluntarily took the risk of getting a decision in the circuit court before the state court settled the rights of the parties by a judgment in the suit which was pending there. Failing in this, they must submit to the same judgment that has already been rendered against their representative in the state court. That was a judgment on the merits of the identical matter now in question, and it concluded the "parties and those in privity with them, not only as to every matter which was offered and re

ceived to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." Cromwell v. County of Sac, 94 U. S., 351, 352. It is true the mortgagor did not set up as a defense that the bank had no right to take the mortgage, or that he was entitled to certain credits because of payments of usurious interest, but he was at liberty to do so. Not having done so, he is now concluded as to all such defenses, and so are his privies.

Decree affirmed.

§ 1004. Incumbrances pendente lite. It is not within the power of the mortgagor, pending a foreclosure suit, by contract with a mechanic, and without the consent of the mortgagee, to create an incumbrance upon the property which could in anywise affect the rights of the mortgagee as they might be declared by the final decree. Hards v. Conn. Mut. L. Ins. Co.,* 8 Biss., 234.

§ 1005. So a contract made and work done after the institution of a suit to foreclose will not confer a mechanic's lien superior to the rights of the mortgagee. Ibid.

§ 1006. An assignee of an equitable mortgage, who has taken the assignment merely as collateral security, cannot maintain a bill to foreclose it after the debt for which he held it as security has been paid. Wilbur v. Almy,* 12 How., 180.

§ 1007. In a suit by a married woman to foreclose a mortgage payable to her, where the bonds and mortgage are in possession of her husband, who is living apart from her and beyond the jurisdiction of the court, the husband should be made a party to the suit; but if there have been laches and delay on his part he should not be allowed to come in and defend except upon terms. Ruckman v. Stephens,* 11 Fed. R., 793.

§ 1008. Parties defendant.- One in possession of mortgaged premises claiming them, who is not made a party to a bill for foreclosure, is not bound by the decree. Noyes v. Hall, 7 Otto, 34 (S$ 627, 628).

§ 1009. All parties holding the equity of redemption of mortgaged lands are necessary parties to a bill to foreclose. Wyman v. Russell,* 4 Biss., 307.

§ 1010. The rights of any one interested in the equity of redemption who is not made a party to a bill are not affected by the decree of foreclosure and the sale under it, but he may redeem as before the sale. Clark v. Reyburn, 8 Wall., 318 (§§ 1047-49). § 1011. Beneficiaries. The foreclosure of ries are not made parties is void as to them. § 1012. The trustee in a deed of trust is a necessary party to a foreclosure suit, because he holds the legal title. Gardner v. Brown,* 21 Wall., 36.

a mortgage by a bill in which known beneficiaOliver v. Piatt, 3 How., 333, 407.

§ 1013. This is so although the trustee has failed to give a bond for the faithful discharge of his duties, for such failure does not prevent the vesting of the legal title in him. Ibid. § 1014. Trustee and beneficiaries. After a conveyance of lands subject to mortgage in trust for the benefit of children, both those in being and those to be born, all the children in esse at the time of the filing of a bill of foreclosure should be made parties. A decree against the trustee alone does not take away their right to redeem. Clark v. Reyburn, 8 Wall., 318 (SS 1047-49).

§ 1015. Parties through whom a fraudulent title has passed, but who have no interest in the property and who will not be affected by the decree, need not be made parties in a foreclosure suit. Union Bank of Louisiana v. Stafford,* 12 How., 327. Affirmed in New Orleans Canal & Banking Co. v. Stafford,* 12 How., 343.

§ 1016. Executor with power of sale. A discretionary power of sale for reinvestment, given to an executor during the minority of a devisee, does not vest the executor with the fee so as to make him a necessary party to the suit. An executor with such a power cannot

bind a devisee not made a party to the suit by a ratification of the foreclosure. Chew v. Hyman,* 7 Fed. R., 7.

§ 1017. A wife who has joined in a mortgage releasing her homestead rights is not a necessary party to a foreclosure suit by reason of such homestead. Connecticut Mut. Life Ins. Co. v. Jones, 1 McC., 388 (§§ 941-944).

§ 1018. Where the wife is made defendant in a bill for the foreclosure of a mortgage of her separate property, she being in possession of the property, and the husband is beyond the jurisdiction of the court and is not made a party, the bill will not be dismissed for want of parties. New Orleans Canal & Banking Co. v. Stafford,* 12 How.. 343.

§ 1019. Subsequent incumbrancers.- By the Oregon code a suit to enforce the lien of a mortgage should embrace, as parties to it, all subsequent incumbrancers, so that a decree thereunder, directing the premises to be sold and the proceeds applied to the satisfaction of

the lens held by the mortgagees, shall have the effect of extinguishing such liens as to the right to redeem from the purchaser at the sale. Lauriat v. Stratton,* 6 Saw., 339.

§ 1020. Where a mortgage is made to secure the note of a third person, the maker of such note should be made a party to a bill to foreclose such mortgage, especially if it is sought to hold him responsible for any balance which the sale of the mortgaged premises might not satisfy. Matcalm v. Smith, 6 McL., 416.

§ 1021. Decree not opened to let in new parties. After a decree of foreclosure has been executed by a sale of the property and payment of the purchase money, it will not be opened and the suit reinstated, in order to make a prior mortgagee a party defendant, who ought regularly to have been made a party, unless this is necessary to prevent irremediable mischief. Finley v. Bank of the United States, 11 Wheat., 304; Hagan v. Walker, 14 How., 29, 37. (Judge Curtis explains and limits the statement of Marshall, C. J., in the above case, that the prior mortgagee is the necessary party.)

§ 1022. Joint tenants with mortgagor.- A deed of trust by one of four joint tenants, purporting to cover the whole tract of land, passes only the grantor's interest in it, and the other joint tenants are not necessary or proper parties to a bill to foreclose the mortgage. Stephen v. Beall, 22 Wall., 329 (§ 1186-89).

§ 1023. Infant heirs of mortgagor.— A decree of foreclosure affects the equity of redemption of infant heirs of the mortgagor, not made parties to the suit, only to the extent that they must assert their right to redeem within one year after becoming of age. Kibbe v. Thompson,* 5 Biss., 226; Kibbe v. Dunn,* 5 Biss., 233.

§ 1024. United States owner of equity of redemption.- A mortgagee may have an effectual decree of foreclosure where the United States is the owner of the equity of redemption on a notice given in such manner as the court may prescribe, if the land be not held for government purposes. Elliot v. Van Voorst, 3 Wall. Jr., 299. See Meier v. Kansas Pacific R'y, 4 Dill., 378. See §§ 1029-30,

SUMMARY

XXVI. FORECLOSURE BY EQUITABLE SUIT.

Mortgagee's title cannot be questioned in defense, § 1025.

§ 1025. The mortgagee's title cannot be questioned in defense to a bill for foreclosure. This can only be investigated at law. Chapin v. Walker, §§ 1026, 1027. [NOTES.-See §§ 1028-1038.]

CHAPIN v. WALKER.

(Circuit Court for Arkansas: 6 Federal Reporter, 794-796. 1881.)

STATEMENT OF FACTS.- Bill to foreclose a mortgage. Defendant Brockway in his answer contests the mortgagor's title to the property, and sets up title in a third person under whom he claims a lien, holding a mortgage executed by that person.

§ 1026. Affirmative relief by a defendant must be sought by a cross-bill, not by an answer.

Opinion by MCCRARY, J.

There are several objections to granting the relief sought by the respondent. 1. In the first place, if he were entitled in this case to that relief, it would be necessary for him to seek it by a cross-bill. It is well settled that any affirmative relief sought by a defendant in an equity suit must be by cross-bill, and can never be granted upon the facts stated in the answer. Story's Equity Pleading (Redfield's ed.), § 398a; McConnell v. Smith, 23 Ill., 611; Armstrong v. Pierson, 5 la.. 317.

§ 1027. Mortgagee's title cannot be questioned in a suit for foreclosure. That must be by suit at law.

2. It is also well settled, that, according to the practice which prevails in the federal courts in a suit to foreclose a mortgage, the mortgagee's title cannot be questioned. The question of title must be investigated at law. In a foreclosure proceeding the court will not inquire what interest the mortgagee has in the

mortgaged premises. 2 Jones on Mortgages, § 1482; Bull v. Meloney, 27 Conn., 560; Palmer v. Mead, 7 Conn., 149; Hill v. Meeker, 23 Conn., 592; Williams v. Robinson, 16 Conn., 517; Dial v. Reynolds, 96 U. S., 340. In the last-named case the supreme court, per Swayne, J., say: "It is well settled that in a foreclosure proceeding the complainant cannot make a person, who claims adversely to both the mortgagor and mortgagee, a party, and litigate and settle his right in that case. Barbour, Parties in Equity, 493, and the cases there cited." In Hill v. Meeker, supra, it appeared that the title of the mortgagee to one of several tracts of land embraced in the mortgage was denied. The case was exactly analogous to the one at bar, and the court held that the complainant could take the decree of foreclosure, leaving the parties at liberty to litigate the title in an action at law. The decree in this case will be modified so as to provide that said decree, and the sale thereunder, shall be without prejudice to the right of the respondent Brockway, by proper legal proceedings to contest the legal title to the land described in the answer as claimed by him.

§ 1028. Jurisdiction of equitable suit. The debt secured by a mortgage is the principal thing, and the mortgage only an incident. The debt being a chose in action, where the mortgagor and mortgagee reside in the same state the assignment of a mortgage to a citizen of another state does not confer jurisdiction of a foreclosure suit upon the United States circuit court. Sheldon v. Sill, 8 How., 441.

§ 1029. When the United States is a party.- A mortgagee may have his remedy by decree of foreclosure and sale in a case where the United States, as a partner in a trading corporation, such as the United States Bank, holds the equity of redemption, upon giving such notice as the court may prescribe. Elliot v. Van Voorst, 3 Wall. Jr., 299, 303.

§ 1030. The United States not holding the land for national uses cannot claim the immunities of a sovereign. And a court having jurisdiction over the land may make a valid decree and sale of it. Ibid. See § 1024.

§ 1031. In Louisiana, although there may be a statutory remedy on a mortgage, the jurisdiction of the courts of the United States to enforce it in equity is not ousted. Benjamin v. Cavaroc, 2 Woods, 172.

§ 1032. Notes to beneficiaries in evidence.- In an action by trustees to foreclose a deed of trust, the notes secured by the deed may be read in evidence to the jury, though they are made payable to the beneficiaries, and have not been assigned by the payees to the trustees. Wilcox v. Hunt, 13 Pet., 378, 380.

§ 1033. Parts of mortgaged property that have been sold under a prior mortgage may be omitted in the foreclosure. Sedam v. Williams, 4 McL., 51, 55.

§ 1034. Where no time of payment is specified.— A mortgage which secures a debt already due and specifies no time of payment may be foreclosed at any time. Wright v. Shumway, 1 Biss., 23 (S$ 435–439).

§ 1035. The mortgagor may be estopped by his declarations or agreements from setting up a defense otherwise valid; he may be estopped from taking advantage of a sale made without proper authority in the officer to sell, because no judgment of foreclosure had been entered on the mortgage; his admission that the debt was due; his acts at the sale in forwarding it and waiving matters of form; his delivery of possession to the purchaser, and his standing by and suffering purchasers to improve the property, are sufficient for this purpose. Cromwell v. Bank of Pittsburg,* 2 Wall. Jr., 569.

§ 1036. No set-off in favor of subsequent mortgagee.— A subsequent mortgagee who is made party to a foreclosure suit for the purpose of cutting off his interests cannot set up a personal claim which he may have against the plaintiff, but he must bring a separate action for that purpose. Bybee v. Hawkett, 12 Fed. R., 649, 656.

§ 1037. Decree for deficiency.- Federal courts, upon ordering a sale for the foreclosure of a mortgage, do not decree the payment by the mortgagor of the balance of the mortgage debt. Noonan v. Lee,* 2 Black, 500.

§ 1038. Fraud in the sale of one of several tracts of land under one contract, but conveyed by separate deeds, cannot be set up as a defense in a suit to foreclose a purchase-money mortgage upon another of such tracts. Hicks v. Jennings,* 4 Fed. R., 855.

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