McDERMOTT v. BURKE et al., 16 Cal. 580

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 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. In October, 1857, Robinson and others recovered a personal judgment against Laforge, and on the twentieth of May, 1858, issued execution thereon, under which the Sheriff levied upon whatever interest Laforge possessed from the lease of the company, and in June following sold the same.

At the sale, McCall became the purchaser, and received the Sheriff’s certificate, and assigned the same to the plaintiff, to whom the Sheriff executed his deed. Several questions are presented by the defendants as to the regularity of the proceedings of the Sheriff, and the sufficiency of the proof as to the assignment of the certificate; but we do not propose to pass upon them. We shall assume, for the purposes of the present, action, that the proceedings of the officer were regular, and that the assignment was sufficiently established.

The plaintiff claims, by the judgment sale and Sheriff’s deed, to have succeeded to the leasehold interest of Laforge, and to be consequently entitled to the possession of the premises until the expiration of the term. This claim is conclusively met by the fact that, at the time of the Sheriff’s levy under the execution, the lease had been surrendered by Laforge. He then possessed no interest which could be the subject of levy and sale.

It does not appear that the judgment had been docketed, so as to become a lien upon any real property possessed by Laforge—even if a leasehold estate for a term of years can be deemed real property in such sense that a judgment can become a lien thereon. We do not, however, rest our decision upon this point. We are of opinion that the legal rights of the lessee were extinguished by the proceedings in the foreclosure suit and sale following the decree thereon. A mortgagor cannot make a lease which will bind his mortgagee, where the lessee at the time had notice of the. mortgage, either actual or constructive.

The interest of the lessee in such case is dependent 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. There is no privity of contract or of estate between the purchaser upon the decree of sale and the tenant. The purchaser may,, therefore, treat the tenant as an occupant without right, and maintain'; ejectment for the premises.

He cannot, for the want of such 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, express or implied, is made between them with reference to the occupation. Until then, both are equally free from any contract obligations to each other. The tenant is not bound to attorn to the purchaser, nor is the latter bound to accept the attornment, if offered. The purchaser may prefer to have the possession, and the tenant may also prefer to surrender it.

We are speaking now of cases wdiere the purchaser is not precluded, by his acts or declarations, from the assertion of any rights consequent upon the purchase. There are cases, undoubtedly, where the purchaser would be estopped from treating the tenant of the mortgagor as a trespasser ; as, for instance, where the lease was taken upon the encouragement of the mortgagee, and the purchaser was cognizant of the fact at the time of his purchase.

We are speaking of the law which is applicable where no circumstances anterior to the purchase have intervened to qualify the subsequent relation of the parties or the rights springing from it. (Simers v. Saltus, 3 Denio, 219; McKircher v. Hawley, 16 Johns. 292; Castleman v. Belt, 2 B. Monroe, 157; Keech v. Hall, 1 Doug. 21; Pope v. Biggs, 9 Barn. & Cress. 254; Doe v. Bucknell, 8 Car. & Payne, 567; Partington v. Woodcock, 6 Adol. & Ellis, 695.) The error of £he plaintiff arises from a misapprehension of the rule as to the parties necessary to the foreclosure of a mortgage.

The rule only requires, as parties, those who are benflcially interested in the claim secured or in the estate mortgaged. The tenant is not thus interested in the claim; he is not entitled to its proceeds when collected, or to any portion of the proceeds. Nor is he thus interested in the estate mortgaged—that is, in the title which is pledged as security. He has not succeeded to such estate, or to any portion of such estate. He does not stand, therefore, 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 sale of the premises, or rather, with the deed by which the sale is consummated. The right of the tenant to such possession depends upon that of the lessor, and goes with it. We do not intend to determine that there are not cases in which a Court of Equity would allow a tenant for years to redeem the premises, sold upon a foreclosure. We only affirm that he has no such absolute right, from the mere fact of his tenancy, as to require his presence to the vesting of the legal title in the purchaser under the decree foreclosing the mortgage.

It is possible that he may have, under sdme circumstances, a claim to the consideration of a Court of Equity, upon offering to redeem, and on applying for relief within a reasonable period after becoming acquainted with the proceedings. It is clear that he cannot, without the interposition of equity in the matter, resist the right of the purchaser to the possession; much less can he, when out of possession, maintain ejectment for the premises; and the party succeeding to his interest, standing in his shoes, has no greater rights. It follows that the judgment of the.

District Court must be reversed, and that Court directed to enter judgment for the defendants; and it is so ordered.