Baker v. Northwestern Guaranty Loan Co.

• Decision Date: 09 December 1886
• Citation: 36 Minn. 185
• Parties: SAMUEL H. BAKER <I>vs.</I> NORTHWESTERN GUARANTY LOAN COMPANY.
• Court: Minnesota Supreme Court

Page 185

36 Minn. 185

SAMUEL H. BAKERvs.

NORTHWESTERN GUARANTY LOAN COMPANY.

Supreme Court of Minnesota.

December 9, 1886.

Plaintiff brought this action in the district court for Hennepin county to determine defendant's adverse claim to vacant lands. The defendant, in its answer, alleged that on November 20, 1884, the lands were owned in fee by one Menage, and the other transactions recited in the opinion. A demurrer to the answer was overruled by Rea, J., and plaintiff appealed.

J. H. Bradish, for appellant.

Chas. J. Bartleson, for respondent.

BERRY, J.

November 20, 1884, Menage executed to defendant certain notes, and, to secure the same, mortgages of lands owned by him, conditioned for the payment of the notes in five years. November 28, 1884, Menage conveyed the lands to Walcott, subject (as expressed in the deed of conveyance) to the mortgages mentioned. April 23, 1885, defendant "sold and assigned" the notes and mortgages to Menage. July 8, 1885, Menage assigned a portion of the notes and mortgages to Pitman. January 21, 1886, Pitman reassigned the same to Menage, and thereafterwards Menage "sold and reassigned" all the notes and mortgages to defendant.

The effect of these transactions is this: In legal substance, Walcott's purchase was of a right or equity of redemption. He took subject to the mortgages, so that he is to be regarded as having purchased upon the basis of deducting the amount of the mortgages from the full price or value of the lands, and paying the remainder as the consideration of his deed. As between Walcott and Menage, this state of facts made the lands the primary or principal fund for the payment of the mortgages. Stillman v. Stillman, 21 N. J. Eq. 126; Welton v. Hull, 50 Mo. 296; Greenwell v. Heritage, 71 Mo. 459; Baker v. Terrell, 8 Minn. 165, (195.)

The equity of this conclusion must be apparent, for it is in exact accordance with the contract of the parties, and any other would permit Walcott not only to take and hold what he never purchased, but to do so in disregard of the express terms of his purchase. Authorities supra. Of course, if Menage saw fit, by his voluntary act, to relieve the lands of the charge of the mortgages for Walcott's benefit, and for the purpose and with the intent of making him a gift to that extent, it would be entirely competent for him to do so, so far as his own rights were concerned; but this concession does not trench upon what we have said above.

But it is contended that the assignment of his own notes and mortgages to Menage operated as payment and discharge of the same. This might be so at law, but equity, disregarding forms and strictly legal consequences, will work out a different result, and one consonant with the real purposes and intentions of the party, if necessary to protect his interests, and save his just rights. The cases in which it will do this are many. A familiar one is that in which it refuses to treat an equitable as merged in a legal estate in the same hands, and vice versa. Davis v. Pierce, 10 Minn. 302, (376;) 2 Story, Eq. Jur. (13th Ed.) § 1035b, and notes; Bisp. Eq. § 160. For this as well as other analogous cases, see Stantons v. Thompson, 49 N. H. 272; also Adams v. Angell, 5 Ch. Div. 634; and for an application of the same general principle to the keeping alive of franchises reverted to the state, see First Division, etc., R. Co. v. Parcher, 14 Minn. 224, (297.)

For analogous reasons, in the case at bar, as, under his conveyance to Walcott, Menage has the right to insist that, as between them and their privies, the lands...