Burton v. John Hancock Mut. Life Ins. Co

• Citation: 157 So. 525,158 So. 474,171 Miss. 596
• Decision Date: 07 January 1935
• Docket Number: 31342
• Court: Mississippi Supreme Court
• Parties: BURTON et al. v. JOHN HANCOCK MUT. LIFE INS. CO

157 So. 525

158 So. 474, 171 Miss. 596

BURTON et al. v. JOHN HANCOCK MUT. LIFE INS. CO

No. 31342

Supreme Court of Mississippi

January 7, 1935

Division A

November 12, 1934

APPEAL from the chancery court of Bolivar county HON. R. E. JACKSON Chancellor.

Suit by Manaway Burton and others against the John Hancock Mutual Life Insurance Company, wherein defendant filed a cross-bill. From a decree declining to grant the relief prayed for in the bill, and granting that prayed for in the cross-bill plaintiffs appeal. Reversed and remanded.

On suggestion of error. Suggestion of error overruled.

For former opinion, see 157 So. 525.

Reversed and remanded. Overruled.

B. A. Green, of Mound Bayou, for appellants.

In this case, Eddie and Sam Thompson, Jr., surviving heirs of Samuel Thompson, Sr., and Sarah L. Pemble were available parties to the appellee, against whom appellee should have proceeded, but against whom appellants could not proceed, because appellants had already obtained complete relief from them. They should have been proceeded against so that the redemption of the land would have fallen equally upon them, and more especially is this true, when Eddie and Sam Thompson, Jr., obligated themselves personally to pay off this debt and likewise obligated their share in the land to secure the payment of the entire two thousand eight hundred dollar debt.

Griffith's Chancery Practice, secs. 107, 116, 117 and 118.

The subrogee is in general entitled to stand in the shoes of the creditor, and to enforce every right which the creditor himself could have enforced, so far as necessary to secure reimbursement or contribution. In all cases, of course, the subrogee can enforce the rights no further than is necessary for his own reimbursement.

5 Pomeroy's Equity (2 Ed.), par. 2351.

Subrogation being a doctrine of equity, it will be carried no further than the strict demands of equity and justice require.

27 Am. & Eng. Enc. of Law, p. 207; Clopton. v. Gholson, 63 Miss. 466; Stern et al. v. Hampton, 73 Miss. 563, 19 So. 300.

Complete relief which is the desire and policy of equity courts, could not have very well been given in this case, without fixing the encumbrances on the shares of the several parties.

Millsaps v. Bond, 64 Miss. 453, 1 So. 506; Keaton v. Miller, 38 Miss. 630.

Where a creditor has a lien upon two funds and another lien upon only one of them, he will be compelled to exhaust the fund upon which he has an exclusive lien and will be permitted to resort to the other for the deficiency only.

Citizens Bank v. Mack, 180 P. 618, 620; Shoemaker v. White-Dulaney Co., 230 P. 162, 164; Anderson v. Bank, 203 N.W. 921; Metzger v. Emmel, 124 N.E. 360; Dorby v. Vinnedge, 100 N.E. 862.

Subrogation is an equitable right and not a legal one and can be enforced only in equity. It will not be enforced when it would be in equitable to do so or where it would work injustice, to others having equal equities.

5 Pomeroy's Equity, p. 5197, sec. 2349.

It is well settled in this state that the statute of limitations may be pleaded in an action involving the right of subrogation.

37 Cyc., p. 385; Rucks v. Taylor, 49 Miss. 552; Union Mortgage Banking & Trust Co. v. Peters, 18 So. 497.

Under certain conditions the plea of the statute will not be permitted to avail, and this is true in all cases where the party pleading the statute or some party in privity with him has been guilty of some fraud, and his actions have been such that he would be estopped to set up the statute of limitations.

Jones v. Rogers, 38 So. 742; Williams et al. v. Lee et al., 130 Miss. 481, 94 So. 454; Mitchel v. Bishop, 1 Miss. 58.

We say in this case the court cannot make these appellants when they were minors, debtors to Liberty Trust Company, nor can their share in this land become encumbered without their consent.

Hilt v. Applewhite, 20 So. 161; Berry v. Bullock, 81 Miss. 463, 33 So. 410; Brown v. Brown, 90 Miss. 410, 43 So. 178.

W. W. Simmons, of Cleveland, for appellee.

We believe it to be a well settled principle of equity that where one makes a loan for the purpose of paying off prior encumbrances on land and takes a lien on said land to secure the payment of the money so provided, and the security thus taken proves void or defective, that the lender is entitled to be subrogated to the rights of the lienees who were satisfied with the money thus provided.

25 R. C. L., p. 1343, sec. 26; Cansler v. Sallis, 54 Miss. 446; Union Mortgage Banking & Trust Co. v. Peters, 72 Miss. 1058, 18 So. 497; Prestridge v. Lazar, 95 So. 837; Spence v. Clark, 120 So. 195.

The appellants while spurning the idea that they were guilty of any fraud are perfectly willing to accept, and indeed insist upon having the fruit of the fraud of others. We believe that equity will not tolerate such consummation.

Planters Bank v. Neilly, 7 How. 80; 12: R. C. L. 402, sec. 150; Ferrall v. Bradford, 2 Fla. 508, 50 Am. Dec. 293, 300; Whitesell v. Strickler, 167 Ind. 602, 78 N.E. 845, 119 A. S. R. 524, 532.

The mortgagee has the right to enforce or foreclose his mortgage without regard to the solvency or insolvency of the mortgagor, and in that respect the person subrogated succeeds to all the rights of the mortgagee.

Spence v. Clark, 120 So. 195; 25 R. C. L. 1377, sec. 60.

We believe it is a sound rule of law that the statute of limitations cannot be invoked to bar the right of subrogation until the statutory period after discovery of the circumstances giving rise to the right of subrogation has elapsed.

Section 2312, Code of 1930; Nieff v. Elder, 84 Ark. 277, 105 S.W. 260, 120 A. S. R. 77.

In Mississippi the "reasonable time" is fixed by the statute. The mortgage to secure the two thousand eight hundred dollars given to Liberty Trust Company was dated prior to the maturity of the debt, to the security for which subrogation was sought in this case.

Nash v. Smith, 133 Miss. 1, 96 So. 516; Bank v. Peters, 18 So. 497.

OPINION

Smith, C. J.

This is an appeal from a decree declining to grant the relief prayed for in a bill of complaint, and granting that prayed for in a cross-bill.

The appellants filed a bill of complaint in the court below, alleging that Samuel Thompson, Sr., died intestate in November, 1919, seized and possessed, in fee simple, of certain land, leaving as his heirs, his widow, Sallie Thompson, and two children, Eddie Thompson and Samuel Thompson, Jr., and the appellants who are the children of a daughter of Samuel Thompson, Sr., and his wife, Sallie Thompson, who died in October, 1913; that in August, 1921, Sallie Thompson, Eddie Thompson, and Samuel Thompson, Jr., executed a deed of trust on the land to the Liberty Trust Company to secure an indebtedness due by them to it, which deed of trust was assigned by the Liberty Trust Company to, and is now owned by, the John Hancock Mutual Life Insurance Company; that in January, 1926, Sallie Thompson, Eddie Thompson, and Samuel Thompson, Jr., executed another deed of trust on the land to T. E. Pemble, to secure a debt due by them to him, which deed of trust was foreclosed and the land purchased by T. E. Pemble, who conveyed it to Sarah L. Pemble.

The bill prayed that the deed of trust therein referred to be held to convey only the three-fourths interest in the land inherited by Sallie Thompson, Eddie Thompson, and Samuel Thompson, Jr., from Samuel Thompson, Sr.; for a partition thereof setting apart a one-fourth interest therein to the appellants; and for rent thereon.

All the persons mentioned in the bill were made defendants thereto, the Liberty Trust Company and the John Hancock Mutual Life Insurance Company being nonresidents.

The defendants having failed to appear, a decree pro confesso was rendered against them adjudging that all of them "had been duly served with proper process." Thereafter, final decree was rendered awarding the appellants the relief prayed for. Afterwards, the operation and effect of the decree pro confesso and of the final decree were suspended for sixty days in order that the John Hancock Mutual Life Insurance Company might have opportunity to appear and answer the bill of complaint. Within the time limit, the John Hancock Mutual Life Insurance Company appeared and answered the bill denying that the appellants were the heirs of Samuel Thompson, Sr.; alleging that he left as his sole heirs at law, Sallie Thompson, Eddie Thompson, and Samuel Thompson, Jr.; admitting the execution of the deed of trust by Sallie Thompson et al. to the Liberty Trust Company and the assignment thereof by said company to the John Hancock Mutual Life Insurance Company; that a portion of the money loaned to Sallie Thompson et al. by the Liberty Trust Company was paid, at their request, to the Prudential Insurance Company of America to discharge two deeds of trust executed by Samuel Thompson, Sr., to the Colonial & United States Mortgage Company, and which had been assigned to the Prudential Life Insurance Company of America. The prayer of the cross-bill is that, if the deed of trust executed by Sallie Thompson et al. to the Liberty Trust Company, and now owned by the John Hancock Mutual Life Insurance Company, be held to convey only a three-fourths interest in the land, the two deeds of trust executed by Samuel Thompson, Sr., to the Colonial & United States Mortgage Company and assigned by it to the Prudential Life Insurance Company of America be revived; that the John Hancock Mutual Life Insurance Company be subrogated to the rights of the Prudential Life Insurance Company thereunder; and that they be foreclosed for its benefit. An amendment to the crossbill alleged that, at the time the loan was made by the Liberty Trust Company to Sallie Thompson et al., they represented...