
    Wesley Vaughan v. Abner Black, Sarah E. Black, Sidney S. Ball, and Charles M. Watters.
    
      Foreclosure suit — Decree—Deficiency—Chancery rule 122 — Object of.
    
    1. The personal liability of a party collaterally liable for the payment of a debt secured by a mortgage on real estate cannot be absolutely fixed in the original decree of foreclosure, and,if done, that portion of the decree is nugatory.
    
    2. The proceeding against such a party is substantially a new one, equivalent to the legal process of fieri facias, and cannot be instituted against persons not properly charged in the bill; and their liability cannot be adjudicated except in case of a deficiency reported on the sale of the mortgaged premises. Such parties have every defense open to them, and cannot be called upon to-defend until cited so to do.
    S. Under the statute and decisions of this Court, in order to charge a third party with the payment of a deficiency on a foreclosure sale, his liability must be one that could be sued independently at law as a legal obligation, and must be a liability to pay the mortgage debt.
    4, Where the grantees of a mortgagor were made defendants in the foreclosure suit, but the complainant failed to serve on them the underwriting required by chancery rule 122,—
    Held, that such defendants were given to understand that no personal decree would be asked againstthem. and that they need not defend unless they desired to save the mortgaged premises.
    5. The object of chancery rule 122 was to save defendants’ the necessity of looking into the record (which usually involves the employment of counsel), unless notified that specific relief would be sought against them; and complainants must see to it that defendants are not misled, and are responsible for the correctness of them process.
    Appeal from Eaton. (Hooker, J.)
    Argued October 5, 1886.
    Decided October 14, 1886.
    Appeal from order refusing leave to file bill of review.
    Order reversed.
    The facts are stated in the opinion.
    
      Wood & Maynard, for complainant:
    Chancery rule 101 prohibits the bringing of a bill of review after the time for appeal has expired, except on newly-discovered evidence, unless upon reasons satisfactory to the court: Benedict v. Thompson, Walker, Ch. 446.
    Having no statute on the subject, the usual chancery practice governs, and there is nothing unusual in this case. The two cases in which a bill of review is permitted are settled by the first of the Ordinances in Chancery of Lord Chancellor Bacon, respecting' such bills, which has never been departed from: 2 Barb. Ch. Pr. 91; 2 Hoff. Ch. Pr. 2; Clapp v. Thaxter, 7 Gray, 384.
    Under these authorities, the error must be apparent upon the face of the decree, and no averment can be received not supported by the decree: Webb v. Pell, 3 Paige, 368; Dexter v. Arnold, 5 Mason, 311.
    In Gould v. Castel, 47 Mich. 604, it was held gross laches for a defendant to disregard a subposna served on him, and permit the proceedings to go to decree, because the copy failed to give the date of the return-day; and a motion to set aside such proceedings was denied. And see same case, p. 606, as to service of true copies.
    
    As to necessity of prompt action in moving to set aside irregular proceedings, see Johnson v. Johnson, Walker, Ch. 309; Hart v. Small, 4 Paige, 288; Nichols v. Nichols, 10 Wend. 560; Creveling v. Moore, 39 Mich. 563; Merrick v. Mayhue, 40 Id. 196.
    A bill of review on the ground of newly-discovered evidence cannot be granted if the party had knowledge of its existence in season to have obtained it for use at an earlier stage in the case: Ryerson v. Eldred, 23 Mich. 537.
    
      Peter Doran, for defendants Ball and Watters:
    Under our practice, the court may examine the proofs introduced by the complainant, together with the other records in the cause, and if, taking such proofs to be absolutely true, and as establishing the truth of the facts sought to be established, a foundation for the decree granted, is not furnished, the court may revise and correct such decree on filing. a bill of review: Griggs v. Gear, 8 Ill. 2; Turner v. Berry, Id. 541; Evans v. Clement, 14 Id. 206; Garrett v. Moss, 22 Id. 363; Judson v. Stephens, 75 Id. 255; Webb v. Pell, 3 Paige, 368; Millspaugh v. McBride, 7 Id. 509; Gies v. Green, 42 Mich. 107; Whiting v. Bank of United States, 13 Peters, 6.
    Ball and Watters never assumed the payment of the mortgage, but merely took the property subject to it, and are not personally liable for the debt: Winans v. Wilkie, 41 Mich. 264; Gage v. Jenkinson, 58 Id. 169.
    The subpcena was not properly served, the copy not being accompanied with the underwriting required by chancery rule 122, and the original was left blank as to the names of the ■defendants. Such a variance is fatal: Gould v. Tryon, Walker, Ch. 339 ; Arden v. Walden, 1 Edwards, Ch. 631.
    An order denying leave to file a bill of review is appealable: Jennison, Ch. Pr. 374; Johnson v. Shepard, 35 Mich. 115; Beecher v. M. & P. Rolling Mill Co., 40 Id. 308.
    
      
      How. Stat. §6704. — “If the mortgage debt be secured by the obligation or other evidence of debt of any other person besides the mortgagor, the complainant may make such person- a party to the-bill, and the court may decree payment of the balance of such debt-remaining unsatisfied after a sale of the mortgaged premises, as well against such other person as the mortgagor, and may enforce such decree as in other cases.”
    
    
      
      See Low v. Mills, 61 Mich. 35-6, a valuable case on this point.
    
   Campbell, C. J.

In the fall of 1883 the original bill in this ■ease was filed against Black and wife as mortgagors, and Ball and Watters as subsequent purchasers. A decree of foreclosure was made, which not only ordered a sale of the land and personal liability against Black, but also proceeded to decree a similar liability against Ball and Watters, who-were claimed in the bill to have become personally liable by reason of a letter claimed to have been written by them in. the following language:

“ Grand Rapids, Oct. 25, 1882.
“Wesley Vaughan, Esq. — Sir: Yours of the twenty-fourth at. hand, and we would say that as soon as possible, which wilL be inside of two weeks, one of us will be in your place, and pay you the interest on your mortgage. Would be there' sooner if we could get away. We don’t want the mortgage foreclosed, but will take care of it.
“Respectfully yours, etc.,
“Ball & Watters.”

The note secured by the mortgage was for 8500, with interest at 10 per cent., payable October 6, 1882, “with the' privilege of extending the time of payment of said principal to October 6, 1884; interest payable annually, at JO percent., according to a mortgage bearing even date.” Under the mortgage the right to make the principal as well as-interest payable could only have been after thirty days’ default, which had not expired when this letter was written.

A subpoena was served, of which the underwriting left in blank the names of the defendants against whom a personal decree was to be sought, and containing the usual conclusion applicable where no such decree is sought, — “and the bill is filed to reach interests in property, and not to obtain further relief against the remainder of the defendants.”

When the decree was obtained it was on default, and the-proof of service went no further than the original subpcena.. It makes no reference to the underwriting as being served,, and the petition for a rehearing shows that the underwriting upon the copy bore no signature. This might have been important, if the case were not otherwise defective.

A sale was made, resulting in a deficiency. In January, 1885, a hearing was had on a petition for execution for deficiency, and a decree was ordered accordingly on the nineteenth of January, 1885. A petition for rehearing was made within the time for appealing, and denied on argument.

It is objected, as a preliminary objection, that this application is too late. As the rule leaves this matter open to discretion, we do not think the objection should prevail where gross injustice would follow. But the complainant is mistaken in this regard. It has been settled by repeated decisions of this Court that it is not within the power of courts of chancery to grant absolute personal decrees against parties claimed to be collaterally liable for the mortgage debt in the original decree, and, if done, the decree is so far nugatory. The remedy is purely statutory, and cannot be invoked until after a balance is reported unsatisfied. The proceeding, then, is substantially a new one, equivalent to the legal process of fieri facias. It cannot be sought against persons not properly charged in the bill, and it cannot be adjudicated except upon the occasion of a deficiency reporte d. Parties so charged have every defense open to them. They are not called on to defend until cited. It is singular that so little attention has been paid to our reported decisions. See Howe v. Lemon, 37 Mich. 164; Mickle v. Maxfield, 42 Id. 304; Johnson v. Shepard, 35 Id. 115; Gies v. Green, 42 Id. 107; McCrickett v. Wilson, 50 Id. 513.

So far as any personal decree is concerned, it cannot be regarded as operative effectively until the order of January 19, 1885, and the application was strictly within the rule.

Had the service of subpoena been such as to notify Ball and Watters that a personal decree would be sought against them, we have no doubt that the bill made out no cause of action. Under the statute, and the decisions under it, the liability must be one that could be sued independently at law as a legal obligation (Johnson v. Shepard, 35 Mich. 123), and under the statute it must be a liability to pay the mortgage debt.

The 'letter above quoted is not shown by the bill to have been accepted by any notice, and, if it had been, it contains no promise to pay the mortgage debt at all, unless possibly the interest. Under the note and mortgage a payment of interest at that time would extend the principal' two years. That interest is not included in the deficiency, and its amount would have been trifling. Upon the facts now developed, it appears plainly that Watters never authorized any obligation, and had no title in the land, and that the deed of the land to Ball did not obligate him to pay the mortgage.

But the failure to serve a proper underwriting left the defendants to understand that no personal decree would be sought against them, and that they need not defend unless they desired to save the land. The object of the present rule changing the form of subpoena was to prevent the necessity of defendants looking into the 'record (.which would usually involve the employment of counsel), unless notified that specific relief would be sought against them. Parties complaining must see to it that defendants are not misled, and must be responsible for the correctness of their process.

As the petition filed was broad enough to call for the immediate rescission of the order for execution, and as it is impossible on any ground to sustain it, the' court should have set it aside; and as we on appeal may do the same thing, we shall, in reversing the order of the circuit court refusing the prayer of the petition, at the same time vacate and set aside the order of January 19, awarding execution against Ball and "Watters.

As tbe original decree cannot, of itself, furnish any personal relief against the present petitioners, no review is necessary to protect them. They will recover costs below and here, of the present proceedings, including the petition for execution, and proceedings thereon. The execution will be set aside, also, as a necessary consequence.

The other Justices concurred. 
      
      Chancery rule 101 provides that no bill of review shall be filed, either on the discovery of new matter, or otherwise, without special leave of the court first obtained, nor unless the same is brought within the time allowed for an appeal, except upon newly-discovered facts or evidence, unless upon reasons satisfactory to the court.
     
      
      See Shelden v. Warner Estate, 59 Mich. 444-5.
     
      
      See chancery rule 122.
     
      
      A pro confesso decree made for leant of the defendant’s appearance may be vacated by the court after enrollment, upon petition or motion; but the rule is otherwise where an appearance has been entered. In such case a re-examination of the case can be had only on bill of review. Low v. Mills, 61 Mich. 35 (head-note 2).
     