Birke v. Abbott

• Decision Date: 09 June 1885
• Citation: 1 N.E. 485,103 Ind. 1
• Parties: Birke and others v. Abbott, Ex'r, etc.
• Court: Indiana Supreme Court

103 Ind. 1

1 N.E. 485

Birke and others

v.Abbott, Ex'r, etc.¹

Supreme Court of Indiana.

Filed June 9, 1885.

Appeal from Marion superior court.

Elliott, J., dissents.

Rand & Winter, for appellants.

Van Vorhis & Spencer, for appellee.

Mitchell, C.J.

This was an action brought by the appellants to quiet their title to a certain 55-acre tract of land in Marion county. There were answers and a cross-complaint filed by Abbott, and upon issues joined on the complaint and cross-complaint, the cause was submitted to the court for trial. Special finding of facts was made, upon which the court stated its conclusions of law adversely to the appellants. All the facts necessary to develop the questions for decision are the following: In 1870 one Church owned the land in controversy, and, while owning it, two judgments were recovered against him in favor of the estate of Colly, one being a foreclosure against the land for something over $1,000, the other a personal judgment for about $600. Church sold and conveyed the land to Ferree, July 20, 1870, the purchaser assuming, in his deed, the existing incumbrances above mentioned as part of the purchase price. On January 7, 1873, Ferree sold and conveyed to Julius A. Kelly, who made a like assumption of the liens. Julius A. Kelly, on March 21, 1873, having paid nothing on the incumbrances, quitclaimed the land to Louis L. Kelly in whose deed no assumption of the incumbrances appears, and who did not assume them in fact.

On the same day on which the land was conveyed to Louis L. Kelly, he executed a warranty mortgage on it to David B. Abbott, to secure a note of $1,000, of even date therewith, payable in three months, with 10 per cent. interest. This mortgage was duly placed of record on the twenty-fourth day of June, 1873. On the thirtieth day of July, 1873, Kelly sold and conveyed the land to Witt by deed containing covenants of warranty, the purchaser assuming in his deed, as part of the purchase price, the payment of the above-mentioned incumbrances to the Colly estate. Of the Abbott mortgage Witt had, at the time he purchased and took his deed, no actual knowledge. At the time of the conveyance to Witt the land had been sold on one of the Colly judgments, and a certificate of purchase was held by the purchaser. The amount for which it sold was expressly stipulated in the deed, and this sum, with costs, together with the judgment on which no sale had been made, Witt stipulated to pay as part of the purchase price. After the conveyance and assumption above mentioned, Witt discovered the Abbott mortgage, and, instead of paying off the Colly incumbrances, he purchased and took an assignment of the certificate of sale on the one, and permitted the land to go to sale on the other. Subsequently he obtained sheriff's deeds on both. It was found that he took this course in order to protect his title. Kelly was, and still is, insolvent.

The land was found to be worth about $2,500. The Colly claims, with interest, amount to about the full value of the land, and the Abbott mortgage and interest amounts to $2,218. The appellants have,by certain mesne conveyances, succeeded to the rights of Witt, and are in possession. The questions for consideration are: Witt having assumed the payment of the Colly judgments, could he acquire title as against Abbott, by the subsequent sales made on those judgments? and if he could not, will the judgments be kept alive for the purpose of protecting the title which he acquired from Kelly?

The appellants' counsel press the argument with much force: (1) That the sheriff's deeds to Witt, which were made in pursuance of the sales on the judgments mentioned, are effectual to cut out the Abbott mortgage, notwithstanding the assumption contained in Witt's deed; (2) that if this is not so, then Witt, and those in privity with him, are subrogated to the rights of the Colly estate, and the liens are on foot for their protection against the Abbott mortgage.

The propositions above stated involve substantially the same principles. If, under the circumstances, Witt, upon making payment, was not and could not be subrogated to the rights of the holder of the incumbrances which he assumed to pay, then, whether he paid them in pursuance of sheriff's sales or otherwise, they were extinguished, and no right can be predicated upon them, either as respects the title obtained under them, or as liens antedating the Abbott mortgage. If, after obtaining the title from Kelly, upon the agreement and consideration that he would pay off the Colly judgments, Witt could, upon discovering the Abbott mortgage, instead of paying the prior incumbrances according to his agreement, purchase the certificate of sale on the one, and permit the land to go to sale on the other, and by that means acquire a title antedating the subsequent mortgage, it must be because he stood in such relation to the judgments and mortgage as that the doctrine of equitable subrogation would obtain for his benefit. Ordinarily, any person may acquire title to land through the medium of a sheriff's sale, but there may be cases in which the purchaser, from his relation to the land sold, or to the judgment upon which the sale is made, is precluded from acquiring title under such judgment or sale. Where the complete legal title is already in the purchaser, another title obtained through a judicial sale would merge in the prior title, if it appears that the title formerly held, and that acquired by the sale, are held in the same right, with no intervening title in a third person. If, however, the title so obtained was procured for the purpose of cutting off intervening titles or incumbrances, and to reinforce a title then held, the subsequently acquired title will merge or be kept on foot, depending on the relation in which the purchaser stood to the judgment or sale on which the title is predicated. If the purchaser was primarily liable to pay the incumbrance on account of which the sale was made, it would seem reasonably manifest that he could build up no additional title on his own default. Where a legal title to the whole estate is claimed by one in possession, all subsequently acquired titles, co-extensive with, or derived from the same source of, that held, are presumptively merged. Equity will keep such subsequently acquired title alive as against intervening incumbrances only in case the purchaser owed no personal duty, or was under no binding obligation, which required him to prevent such title from accruing. When, however, the purchaser of real estate, as part of the consideration for the purchase, by express contract stipulates that he will pay incumbrances on the land, he thereby comes under a personal obligation to pay such incumbrances. Thenceforth, as to all persons who were liable before him, he is the principal debtor, and they stand in the relation of sureties to him, and he could not thereafter defeat incumbrances which intervened between his title and other liens, which, upon a sufficient consideration, he had become personally bound to pay. Winans v. Wilkie, 41 Mich. 264;Heim v. Vogel, 69 Mo. 529; Pom. Eq. Jur. § 797.

That the assumption of the Colly judgment, contained in the deed from Kelly to Witt, made the latter personally and primarily liable, is the established rule of decision in this state, and this contract inured to the benefit of the creditor as well as those previously liable for the debt. Snyder v. Robinson, 35 Ind. 311;Hill v. Minor, 79 Ind. 49;Josselyn v. Edwards, 57 Ind. 212;Rodenbarger v. Bramblett, 78 Ind. 213;Hoffman v. Risk, 58 Ind. 113;Davis v. Hardy, 76 Ind. 272;Ritter v. Cost, 99 Ind. 80, and cases cited. And this is the rule generally prevailing. Sheld. Subr. § 85; Pom. Eq. Jur. § 1207.

Some discussion may be found upon the question whether the mere fact that one has or claims title to, and is in possession of, land, should preclude him from making a purchase at a tax or other sale, in extinguishment of the title or claim of another with whom he stands in no contract or fiduciary relation. But whatever may be said on that subject, it seems clear upon authority and well founded in equity that where a purchaser of land, upon which there are incumbrances, of all of which he has constructive notice, deliberately by contract assumes such relation to some of them as that he becomes, with reference to them, the principal debtor, he cannot, by the violation of his contract, predicate a title on the incumbrances which, upon a sufficient consideration, he contracted to discharge. It is argued that because Kelly, the grantor of Witt, was not personally liable for the incumbrances which his grantee assumed, the assumption of the latter did not bind him personally, and that in consequence the rule above stated does not apply. In support of this proposition counsel rely upon Trotter v. Hughes, 12 N. Y. 76;King v. Whitely, 10 Paige, 465;Pardee v. Treat, 82 N. Y. 387; and Vrooman v. Turner, 69 N. Y. 280. The holding in some of the cases cited is, in substance, that where the grantor in a deed is not personally liable for a debt, the payment of which the grantee assumes in the deed, such assumption amounts to nothing more than taking the title subject to the incumbrance, and is a personal contract between the grantor and grantee and does not inure to the benefit of the creditor whose debt is assumed. It is said that as the grantor had no concern with, and was not liable for, the debts assumed, and had no interest in making provisions for their payment, the court would not intend that it was the purpose of the parties to the contract that it should inure to the benefit of the creditors, and therefore the grantee did not become personally liable to them. This...