BARRY v. HARNESBERGER et al. In re McGUIRE et al. McGUIRE & SCHWARTZ v. BARRY, 148 F. 346

KOIIESAAT, Circuit Judge, having stated the case, delivered the opinion of the court. Appellants made redemption of the lands in question as- assignees of the defendants/ Harnesbergers,’ equity of redemption in pursuance of the terms of the Illinois statute. This statute lays down a rule of property, and has received

interpretation at the hands of the Supreme Court of Illinois in the cases of Seligman v. Laubheimer, 58 Ill. 124; Ogle v. Koerner, 140 Ill. 170-181, 29 N. E. 563; Lightcap v. Bradley, 186 Ill. 510-526, 58 N. E. 221. That in such a case this court will follow the state court decisions is too well settled to require citation of authorities. In Seligman v. Laubheimer, supra, the court says: “The second mortgagee, who redeemed from the sale, was the grantee of the mortgagors.

By express provision of the statute, he had the right to redeem the lands, by the payment of the amount bid by plaintiff in error [who was the first mortgagee and who purchased the property at the sale for less than the decree]. If he had filed a bill in chancery to redeem, he could then be compelled to do equity, by the payment of the prior mortgage debt, before he could obtain any relief. But this redemption was a statutory right. Upon the payment of the amount bid, with interest, the original certificate of purchase was null and void.

The equity of redemption established by the courts is entirely different from the statutory right. The one is governed by principles of equity jurisprudence; the other is controlled, in its operation and, ef-effect entirely by the statute. In the enforcement of the one right, the party must pay all that is equitably due; in the other he need only comply with the statute.” In the case of Ogle v.

Koerner, supra, it is said: “But where the redemption is made by a party not liable upon the mortgage debt, the mortgage lien having been exhausted, the property cannot be subjected a second time to the satisfaction of the same lien. The party redeeming does so for. his own benefit, and the holders of the senior mortgage, having, by the sale, become entire strangers to the property, are in no position to derive any advantage from the redemption.

The sale having been made at public auction, and in the manner prescribed by statute, the presumption, as between the senior and junior incumbrances, is a conclusive one that the property has produced its entire value, and, the value having been once applied to the senior mortgage, the lien has accomplished its full purpose and is thereafter functus officio.” In Lightcap v.

Bradley, supra, this language is used: “It is true that, if the premises are redeemed by the mortgagor, they become like any other property owned by him and may be subject to execution and sale for a deficiency; but that is because they belong to the debtor, and not on account of any lien by virtue of the mortgage. A redemption by any person not liable for the debt would free them absolutely, so that they could not even be levied upon by execution for a deficiency.” And again, in the same case (Bradley v. Lightcap, 201 Ill. 511, 66 N.

E. 548), it is said: “The sale discharged the land from the trust deed and transferred the lien created by contract into a statutory lien by the certificate of purchase, and the land was released as security for the balance of the debt.” From these authorities it is evident that the original mortgage lien was.fully discharged by the master’s sale. This was a proceeding under the statute, and appellants, as grantees of the mortgagee, were not required to pay the full amount of the mortgage indebtedness before they could redeem.

They paid all that the receiver seems to have deemed the land to be worth, and all that the statute required. While there was an irregularity in the steps taken by appellants in making the redemption, it is clear from the whole record that these were mistakes merely. There is absolutely nothing in the record to show that the Harnesbergers had, or ever have claimed to have, any interest in the premises subsequent to the sale of the equity of redemption to appellants. The fact that appellants received and recorded the deed overcomes the error, if it was such.

It seems clear, and we hold, that title passed to appellants through the warranty deed and the* redemption proceedings. The deficiency judgment was not a lien upon any of the Harnesbergers’ property between the dates of April 7, 1901, and April 18, 1903, a period of 2 years and 11 days. The language of the court in the foreclosure decree awarding an execution for any deficiency that might arise after sale is of no force, since the statute authorizes only a judgment or decree for the deficiency.

This judgment or decree then became like any other judgment or decree, and subject to the same conditions as to its lien. Therefore it cannot be claimed that it was a lien at the date of the levy upon any interest the Harnesbergers may have had iñ tire premises prior to the conveyance to appellants. We do not mean to intimate that any such lien could attach.

It appearing then, first, that the lien of the mortgage was extinguished by the foreclosure proceedings; second, that by conveyance and redemption under the statute title passed to appellants; third, that appellants have been ever since the redemption in open and adverse possession of the premises in question; fourth, that no lien can be claimed as against their interest therein — it follows that the levy was without warrant of law, and should have been quashed by the Circuit Court. The ruling appealed from is reversed, with directions to the Circuit Court to quash the levy.