Dowdy v. Blake

• Citation: 6 S.W. 897
• Parties: DOWDY <I>v.</I> BLAKE.
• Decision Date: 28 January 1888
• Court: Supreme Court of Arkansas

6 S.W. 897

DOWDY

v. BLAKE.

Supreme Court of Arkansas.

January 28, 1888.

Appeal from circuit court, Desha county; J. A. WILLIAMS, Judge.

Blake and Todd purchased a tract of land in Desha county from Treadwell, in 1869, for $11,000, Todd paying $5,000 of the purchase price at that time. They executed their notes for the deferred payments of purchase money, and their grantors reserved a lien upon the lands sold to secure the payment. In 1871 Treadwell brought suit in Tennessee, against Blake and Todd, to recover a balance of $2,000 and interest which he claimed was due him on the purchase. The defendants resisted the suit, and succeeded in reducing the amount claimed, but judgment was rendered against them for $1,607.27, with interest and costs of suit. Execution issued against the defendants upon this judgment, and Blake was compelled to satisfy it. This was in February, 1876. In the mean time Blake and Todd had a settlement of their affairs, adjusted the burden of the unpaid Treadwell debt equally between them, agreed in writing upon a partition of the lands, and, without executing deeds to carry the partition into effect, each entered into the possession of his separate share. After this Todd executed a deed of trust upon the lands set apart to him to secure a debt he owed Dowdy, reciting in the deed that the lands were "free from incumbrance except a small balance for the purchase money." This was intended by Todd, and understood by Dowdy and the trustee named in the mortgage, to refer to the purchase money due Treadwell, the payment of which Todd and Blake were then contesting in the Tennessee litigation. Todd made default in the payment of his mortgage debt, and the trustee named in the mortgage advertised the land for sale in accordance with the power conferred by the deed. His advertisement of sale contained the statement that he would sell the land "subject to a balance of $865 or thereabouts of purchase money." Dowdy became the purchaser at the trustees' sale in March, 1876, to satisfy his debt. This present suit was commenced in December of the same year by Blake against Dowdy to subject the lands purchased by the latter from Todd to the payment of one-half of the Treadwell judgment. The court below granted the plaintiff the relief he desired. Dowdy has appealed. His counsel submits that the questions which arise are, did Treadwell, the original vendor, have a lien on the lands in controversy when Blake discharged the execution against Todd and himself? and, if so, can Blake be subrogated to Treadwell's security, and enforce it for any part of the amount so paid, against the lands in the hands of Dowdy, Todd's vendee?

J. W. House, for appellant. X J. Pindall, for appellee.

COCKRILL, C. J., (after stating the facts as above.)

The reservation of a specific lien in the deed executed by Treadwell to Todd and Blake, to secure the purchase money thereafter to be paid for the land, and the acceptance of the deed by the grantees, created an equitable mortgage, (Robinson v. Woodson, 33 Ark. 307; Ober v. Gallagher, 93 U. S. 199; 3 Pom. Eq. Jur. § 1255 et seq.;) and the security was not waived or lost by reason of the fact that the vendor took notes from his vendees for the unpaid purchase money, and afterwards sued at law, and obtained judgment in personam against them thereon, (Richardson v. Green, 46 Ark. 267.) Treadwell's security was intact when Blake paid the debt. If Todd had not parted with his interest in the land, would Blake be subrogated to Treadwell's right to resort to it for the repayment of any part of the purchase money? In Bispham's Principles of Equity it is said to be the rule that the right of subrogation does not exist "between parties who are equally bound; as, for example, copartners, co-obligors, and co-contractors." Section 337. The same doctrine is stated in terms almost as broad by the annotators of the Leading Cases in Equity. Dering v. Earl of Winchelsea, 1 Lead. Cas. Eq. pt. 1, p. 147; Aldrich v. Cooper, 2 Lead. Cas. Eq. pt. 1, p. 281. And in Engles v. Engles, 4 Ark. 286, 38 Amer. Dec. 37, the rule as thus announced seems to have been followed by this court in a case where one co-purchaser had paid more than his share of the purchase money, though the doctrine of subrogation was not called to the attention of the court in that case.

The broad statement of the rule, as given above, cannot be said to be generally sustained by the adjudicated cases, and much authority, qualifying if not denying it, at least as far as co-obligors are concerned, might be quoted. Thus in the case of Pratt v. Law, 9 Cranch, 456, 5 Wheat. 429, three persons mortgaged their joint property to indemnify the drawer of bills of exchange drawn for their mutual accommodation; sold the bills, and divided the proceeds equally among themselves, each agreeing to pay one-third of the amount if the bills should be returned protested. They were so returned, and Greenleaf, one of the three mortgagors, paid the whole debt. The question arose between the assignee in bankruptcy of Greenleaf and one who had acquired title to the interest of the other two mortgagors in the mortgaged property by purchase at sheriff's attachment sale after the bills had been taken up by Greenleaf. It was argued there, as here, that payment by one of the co-obligors discharged the mortgage, (see page 482;) but the court held that a two-thirds equitable interest in the mortgage passed to the mortgagor who discharged the debt, and that the assignee succeeded to it, and could enforce it against the land in the possession of the subsequent purchaser. The court say: "Had these bills not been taken up, and the holder prosecuted all the drawers and indorsers to insolvency, there can be no doubt that the holder would have been entitled to charge the mortgage premises, in equity, with the payment of the bills. But what difference is there, in equity, between the case of any other holder of these bills and that of Greenleaf, who, liable, equitably, only for one-third, was compelled to take up the whole, and did it with his own funds. It consists only in this: that the one becomes creditor for the whole; the other only for two-thirds." It will not be difficult to dispose of the question now under consideration when the relation of the parties—that is, of Todd and Blake—is understood. A joint note having been given by them to the vendor for the purchase money, they were principal debtors in their relation to him, and were jointly and severally bound to him for the whole amount. But the purchase was made for their equal benefit. The land was to be shared equally between them, and the implication of law, in the absence of an agreement to that effect, is that they intended to adjust the burden of the purchase in like proportion. This is upon the maxim qui sentit commodum, sentire debet et onus. The obligation between themselves was therefore that each should discharge one-half the burden, and each become the surety of the other to the extent of the debt which the other was to pay. McGee v. Russell, 49 Ark. ____, 4 S. W. Rep. 284; Owen v. McGehee, 61 Ala. 440; Ackerman's Appeal, 106 Pa. St. 1; Deitzler v. Mishler, 37 Pa. St. 82; Crafts v. Mott, 4 N. Y. 604; Chipman v. Morrill, 20 Cal. 130; Goodall v. Wentworth, 20 Me. 322; Fletcher v. Grover, 11 N. H. 368; Stokes v. Hodges, 11 Rich. Eq. 135; Sheld. Subr. § 169. Now, when one in the situation of a surety pays the debt of him who is primarily liable, equity puts him in the place of the creditor whose debt he has discharged, and gives him the benefit of the securities which the creditor has obtained from the principal debtor. Though no assignment of the security is actually made, equity treats it as having been done. Newton v. Field, 16 Ark. 232. "The principle is a general one," says Mr. Bispham, "and will apply in every instance (except in the case of a mere stranger) where one man has paid a debt for which another is liable." It is eminently calculated to do exact justice between persons who are bound for the performance of the same duty or obligation, and is therefore much encouraged and protected." Bisp. Eq. §§ 336, 337. "It is a mode," says Judge STRONG, in McCormick v. Irwin, 35 Pa. St. 111, "which equity adopts to compel the ultimate discharge of the debt by him who in good conscience ought to pay it, and to relieve him whom none but the creditor could ask to pay;" and it is not confined to cases of strict suretyship. Schoonover v. Allen, 40 Ark. 136. From these statements of the general principle of subrogation, it seems clear that one co-purchaser who has paid a part of the common obligation which the other in good conscience ought to have paid, and for which, as between themselves, he is primarily liable, would be substituted to the rights of the creditor in order that injustice may not be done. But we are not without analogous cases to sustain the position.

The right of contribution between co-purchasers has been frequently recognized and enforced. Owen v. McGehee, and other cases supra. The equity of subrogation springs out of the right to contribution, and is only one of the means by which that right is enforced. Bisp. Eq. § 335. The cases recognizing the right to contribution are therefore in point. But, as direct authority upon the question, we quote from the opinion in the case of Ackerman's Appeal, 103 Pa. St. supra: "In Gearhart v. Jordan, 11 Pa. St. 325, it was held that the rule [as to subrogation] embraces purchasers in common of an estate bound by a joint lien; as between themselves, the purpart of each is liable to contribute only its proportion of the common burden, and beyond this, is to be regarded simply the surety of the remaining purparts. In this respect they are to be treated as the several estates of joint debtors, one being surety of the other; and, if the purpart of one is called upon to pay more than its due proportion, the tenants of his lien creditors, upon the...