## Facts

- Real property was subject to a first (senior) mortgage and a second (junior) mortgage held by Murphy.
- The first mortgagee foreclosed and sold the property without joining Murphy as a party; Farwell purchased at the senior foreclosure sale.
- Murphy separately foreclosed the second mortgage and purchased at the junior foreclosure sale without joining the first mortgagee or Farwell.
- After both sales, Murphy filed an equitable action to redeem the property from the senior foreclosure sale and tendered the amount due on the first mortgage to Farwell.
- Farwell rejected the tender, asserting his senior-foreclosure purchase gave him superior title and the right to pay off (and thereby remove) the junior interest.
- The trial court ruled for Farwell and denied Murphy’s redemption claim.
- Murphy appealed.

## Issues

1. Whether a junior mortgagee (or purchaser under the junior foreclosure) who was not made a party to the senior mortgage foreclosure retains the right to redeem from the senior foreclosure purchaser by paying the senior debt.
2. Whether the parties’ mutual failure to join each other in their respective foreclosure proceedings changes the priority-based right of redemption between a senior foreclosure purchaser and a junior mortgagee/purchaser.

## Decision

- The Wisconsin Supreme Court reversed the trial court.
- The court held that Murphy, as holder and foreclosure purchaser under the second mortgage who was not made a party to the first foreclosure, retained an equitable right to redeem from Farwell.
- Murphy’s tender (or willingness to pay the amount found due) on the first mortgage was sufficient to invoke redemption.
- The case was remanded for further proceedings consistent with allowing redemption upon payment of the senior mortgage debt (with appropriate incidentals such as interest and costs as determined in equity).

## Legal Principles

- A foreclosure decree cuts off only the rights of parties properly joined; a junior mortgagee omitted from a senior foreclosure is not bound by the decree as to the junior interest.
- An omitted junior mortgagee (and a purchaser standing in the junior mortgagee’s position) may redeem from the senior mortgage or the senior foreclosure purchaser by paying the senior debt.
- A junior foreclosure sale cannot impair the senior mortgage, but it can transfer to the junior purchaser the mortgagor’s remaining interest subject to the senior lien, including the equity of redemption against the senior encumbrance.
- Equity generally permits redemption upon full payment of the senior obligation rather than treating procedural omission as forfeiting an omitted junior lienholder’s rights.

## Conclusion

The court held that a junior mortgagee who was not joined in a senior foreclosure preserves an equitable right to redeem from the senior foreclosure purchaser by tendering the senior mortgage debt, and it reversed the decree that treated the senior purchaser’s title as cutting off that unjoined junior right.


Murphy v. Farwell, 9 Wis. 102 (Wis. 1859)