THIS was an appeal from the Circuit Court of the United States, for the Eastern District of Louisiana. The facts are stated in the opinion of the court. It was argued by Mr. Bradley, for the appellant, no counsel appearing for the appellee.
The opinion of the court was delivered by: Mr. Justice McLEAN delivered the opinion of the court.
Mr. Bradley thus stated his case and points.
Daniel T. Walden, as indorser of two notes of William Christy, was indebted to Fowler, the complainant, and suit was brought by him upon these two notes, and judgment recovered, as above stated.
At that time, Daniel T. Walden held and owned the premises described in the petition of Fowler, and also at the time when the third judgment was converted into a mortgage. Nor was there then legal mortgage, nor had Fowler any notice of any equitable mortgage on that property. Just prior to that time, Walden, being indebted to the defendant, Hart, had given him a special mortgage, describing with particularity certain other property, nor embracing or touching any part of the premises now claimed by Fowler. In this condition of things, Walden was declared bankrupt. Hart then filed his petition in the Bankrupt Court, setting up, as against the assignee and Walden, that there was a mistake in the description of the property intended to be conveyed by Walden's mortgage to him, and claiming that the said mortgage was intended to convey the premises now claimed by Fowler.
No process was served upon Fowler, or upon the other creditors of Walden. The Bankrupt Court, however, proceeded to take the proofs and adjudicate, and in its judgment affirmed the pretensions of Hart, ordered the mistake to be corrected, set up his special mortgage on these particular premises, and ordered them to be sold to satisfy that special mortgage, and the surplus, if any, to be brought into the general fund. The sale was made in execution of that order, and at that sale Hart became the purchaser, for a sum less than the amount of his mortgage, received a deed, went into possession, and has ever since been in possession, claiming under that proceeding and sale.
The Circuit Court decided, on this state of facts, that the law and the evidence are in favor of the defendant; ordered, adjudged, and decreed, that there be judgment in favor of the defendant, Hart, and that the cause be dismissed by complainant's costs. And Fowler appealed.
In the case of Houston et al. v. The City Bank of New Orleans, 6 How. 505, 506, this court distinctly affirmed the power of the District Court, in bankruptcy, to convene the mortgage creditors, sell the mortgaged property, pay the proceeds to the mortgagees, according to their respective priorities, and order the cancellation of the mortgages. No such order has been made in this case.
The questions arising in this case, and not hitherto decided by this court, are,––
1st. The powers of the District Court to exercise, in a summary proceeding, a jurisdiction heretofore limited to courts of equity, to correct mistakes in deeds, and reform them according to the intent of the parties; and,
2d. To correct a mistake in a deed, as between third parties, creditors, or purchasers, without notice.
3d. To make such correction, without causing such third parties to be convened and made parties to the suit.
I. This court has said, in Ex parte Christy, 3 How. 312, that the District Court, sitting in bankruptcy, is clothed with the most ample powers and jurisdiction 'over the rights, interests, and estate of the bankrupt, and over the conflicting claims of creditors; and,
II. Page 317: The District Court has a concurrent jurisdiction, to the same extent and with the same powers as the Circuit Court, ...