Atkinson v. Plum 1

• Decision Date: 16 November 1901
• Citation: 40 S.E. 587,50 W.Va. 104
• Parties: ATKINSON v. PLUM et al.1
• Court: West Virginia Supreme Court

40 S.E. 587

50 W.Va. 104

ATKINSON

v.PLUM et al.¹

Supreme Court of Appeals of West Virginia.

Nov. 16, 1901.

DEED OP TRUST—RELEASE—PRIORITIES—ESTOPPEL—CANCELLATION OF INSTRUMENT.

1. Where one releases a deed of trust, and takes a new deed of trust for a balance of his debt, a lienor subsequent to the first deed of trust thus gets preference over the second deed of trust, and equity will not cancel the release against such second lienor, except for fraud or mistake.

2. To create an estoppel by conduct, there must be some conduct of the party amounting to a representation or concealment of material facts.

3. To create an estoppel by conduct, the representation must be made with the intention, actual or fairly to be inferred by the other party, that such other party should act upon it, or such representation should be so grossly negligent as to mislead another to his injury, and thus amount to fraud constructively.

4. The doctrine of estoppel by conduct always presupposes error on one side and fault or fraud upon the other, and some defect of which it would be inequitable for the party against whom the doctrine is asserted to take advantage.

5. It is essential to an estoppel by conduct that the party claming to have been influenced by the conduct of another should not only be destitute of information as to the matter to which such conduct relates, but also without convenient and available means of acquiring such information.

6. To authorize equity to cancel a writing on the ground of mistake based on mistaken belief of a party, that belief must be a fair and reasonable one, justified by facts adequate to inspire it.

(Syllabus by the Court.)

Appeal from circuit court. Wood county; L. N. Tavenner, Judge.

Bill by W. F. Atkinson against D. S. Plum and others. Judgment for complainant and the Traders' Building Association appeals. Affirmed.

W. N. Miller and P. P. Moats, for appellant.

Dave D. Johnson and W. E. McDougle, for appellees.

BRANNON, P. Mary Jane Plum being the owner of real estate in Parkersburg, she and her husband, D. S. Plum, made a deed of trust to secure the Traders' Building Association in the sum of $1,200 on said property. D. S. Plum confessed a judgment in favor of W. F. Atkinson, and Atkinson brought a suit in the circuit court of Wood county, claiming that this property had been purchased with the means of the husband, D. S. Plum, though conveyed to his wife, and that it was liable for the debt of Atkinson. The circuit court decided that it was not liable for Atkinson's debt, and dismissed the bill. From this decree Atkinson took an appeal to this court, and, as will be seen in 45 W. Va. 626, 32 S. E. 229, this court held that the property was liable for Atkinson's debt, and reversed the circuit court, holding that the building association held the first lien, and Atkinson the next Some time after the decree in the circuit court, and before Atkinson took his appeal, there was paid on the building association debt money sufficient to reduce it to the sum of $500, and the said Plum and wife purchased an advance of $500 from said building association, and executed a deed of trust upon said property to secure the same, and the said building association surrendered the bond for the loan of said $1,200, and executed a formal release of the deed of trust made to secure said loan of $1,200. Afterwards this court rendered the decision in favor of Atkinson above stated, and then Atkinson filed what is called an amended bill in the case, setting up the reversal of the former decree of the circuit court, and setting up that the first deed of trust in favor of the building association had been fully paid and discharged, and that said association had executed a release of said first deed of trust, and surrendered its evidence of that debt, and claiming that the lien of that deed of trust had ceased, and that the debt of said Atkinson had become the first lien upon said property. The building association filed an answer to this amended bill, which is really a supplemental bill, though its name is immaterial, in which answer it contended that the lien of its first deed of trust should be restored to it so as to give the building association priority over Atkinson for the amount due to the association under the second deed of trust, and prayed that the release be canceled. This answer says that the old debt had not been in fact paid off, but had only been reduced by partial payments to the amount secured by the second deed of trust, and that the second deed of trust represents in truth only a balance of the old debt it further set forth that Atkinson had represented to Plum and his wife that he did not propose to appeal from said decree of the circuit court, and that this fact had been reported to the association by said Plums, and that, considering this and the fact that Atkinson had not yet, after the lapse of some 16 months, taken appeal from said decree, the building association consented to the said new loan, and took the second deed of trust and executed a release of the first; and that such release was executed in the belief and faith that Atkinson would not controvert the said circuit court decree, or further seek to assert his debt by an appeal. The case was referred to a commissioner to report the liens on the property, and he reported At kinson's debt as the first lien, and the building association's second deed of trust as a second lien; thus denying to the association the benefit of its first deed of trust. The decree of the circuit court also gave Atkinson priority of lien, and denied the prayer of the answer of the association that the release be canceled, and the lien of the first deed of trust restored. From this decree the building association has appealed.

There are only two questions which I deem material to be considered in this case. The first one is a nice and troublesome one, and that is whether, as a matter of law, the new deed of trust and the release of the old one extinguished the lien of the first deed of trust, and thus gave priority of lien to Atkinson's debt. It is contended for the association that its old debt has never in fact been paid, or, if so regarded, that it would get the benefit of the first deed of trust on principles of subrogation. I do not see that the law of subrogation enters into the case. That is applied where a new party comes in and pays off a prior Hen. It does not apply where the creditor himself pays off his own lien by furnishing money and taking a second security, —where he takes a second mortgage for a balance of the old debt. It •seems to me that the question is whether the surrender of the bond for the old debt, and the taking of a new deed of trust for the balance, and the execution of a formal release of the old deed of trust, operate-in law to waive the first deed of trust and discharge its lien. The case, in this point of view, falls under the principle of the waiver of liens and debts by change of the securities. It is unquestionable law that a mere change of securities of equal dignity for a debt is not a novation of that debt, is not payment or release thereof per se. A second deed of trust on the same property does not alone discharge the lien of the first. Therefore the mere execution of the second deed of trust to the building association on the same property for a balance of the same debt would not alone, without more, remove the first deed of trust given to the building association. It may be said with some force that, whilst such is the law in ordinary cases, it would not be so in the case of building associations, because a loan by such an association is a formal proposition for a specific sum acted upon by its directors, and that a second loan, though intended to be applied in discharge of a first loan and deed of trust, is itself a distinct proposition of another loan, a different loan, approved as such by its authorities, and that it abrogates the first loan. Still it seems to me that courts of equity would look at the substance, and would not hold the second loan, merely as such, though secured by a second deed of trust, to be a release of the first deed of trust per se, unless there is something more to show the intention, as there generally is in case of loans by suchassociations. While the rule above stated that the mere execution of a second mortgage for the same debt, or the giving of a new note will not alone discharge the first mortgage, or be considered a payment of it, still, if such be the intention of the parties, it would be such release or payment. These principles will be found fully stated in Coles v. Withers, 33 Grat. 186; Farmers' Bank v. Mutual Assur. Soc, 4 Leigh, 69; Hopkins v. Detwiler, 25 W. Va. 734; Bank v. Good, 21 W. Va. 465; Hess v. Dille, 23 W. Va. 90; 1 Jones, Mortg. §§ 924, 926. But it will appear from those authorities that, where the intention of the parties is that the change of security or evidence of debt is to operate as a discharge of the first mortgage or note, it will so operate. Intention is the pole star in the matter. It is a matter of contract. In this case not only was there a formal application for a distinct loan, and an approval of it by the...