Dowdy v. Blake

• Citation: 6 S.W. 897,50 Ark. 205
• Parties: DOWDY v. BLAKE
• Decision Date: 28 January 1888
• Court: Supreme Court of Arkansas

6 S.W. 897

50 Ark. 205

DOWDY v. BLAKE

Supreme Court of Arkansas

January 28, 1888

APPEAL from Desha Circuit Court in Chancery, J. A. WILLIAMS.

Affirm.

J. W House, for appellant.

The only question which can arise in this case, is, did Treadwell, the original vendor, at the time Blake paid off the judgment or execution against himself and Todd, have a lien on the lands conveyed by Todd to Smith, trustee, and afterwards sold by Smith to Dowdy to satisfy the mortgage debt? If so, can Blake be subrogated to the rights of Treadwell, and enforce the lien for half the amount paid by him against the lands bought by Dowdy? We say not.

1st. Because in the original conveyance by Treadwell to Todd and Blake, the $ 4,000 note was made payable to Todd, and by him indorsed to Treadwell, and afterwards Tread-well brought his suit at law in the circuit court of Shelby county, Tennessee and finally obtained judgment in that court, which was afterwards affirmed by the supreme court of that state, and by this we assume Treadwell intended to abandon and waive his equitable lien for purchase money, and look to Blake and Todd personally for his demand. Mr. Washburn in his treatise on real property, in writing as to what will constitute a waiver of the vendors lien, says: "This lien will be defeated if the vendor do any act manifesting an intention not to rely upon the land for security. 2 Wash., p. 90, 4th Ed.

If we are right in this proposition, then when Treadwell obtained a judgment against them, it was only a personal judgment, not a lien on the land which he had sold them. And if Blake, by paying off the execution, could be subrogated at all, it would only be to the rights of Treadwell, that is, to a personal judgment against Todd for one-half of the amount paid by him; certainly he could not be subrogated to any right or claim superior to the one he had paid.

2d. That Blake and Todd were joint obligors on the notes to Tread well, and appellee was surety for Todd for any amount he paid over and above one-half of the purchase price of the land, is the strongest view that can be taken for appellee, but this doctrine is not sustained in this state and others, though it is by some of the highest courts of several states. See authorities post. But conceding it to be the true doctrine the appellee cannot recover, for Todd is shown by the record to have paid $ 9,000 of the $ 11,000 purchase money, and appellee only paid about $ 2,000, and acquired no equities against Todd, because he had not contributed his share under the contract. Todd was primarily liable, even if Blake did pay more than his share, and his remedy was against Todd first. He makes no showing of diligence in suing Todd before he was a bankrupt. Todd was primarily liable, and the money should have been made out of him, and if by neglect, he failed to collect when Todd was solvent, he cannot now be subrogated to Treadwell's rights so as to enforce a lien against the lands in the hands of Dowdy. He must have shown that at no time after the recovery of the judgment by Treadwell he could have collected half of the same from Todd 4 Ind. 425; 18 Minn. 506; 7 Leigh, (Va.), 244; 10 Billon, (Ky.), 239; 5 Sneed, (Tenn.), 79; 3 Grant Cas. (Penn.), 114; 31 Pa. 89; 7 Mich. 355.

3. Blake and Todd were co-obligors on the note for the purchase money, and when Blake paid the judgement the debt and the judgment were extinguished, and Blake could not be subrogated to any rights as against Dowdy. On the 15th day of December, 1873, Blake and Todd had made a written contract, in which they had divided the lands between them, and each one took possession of his part as agreed upon and all matters adjusted between them no lien was reserved in said contract in favor of Blake or Todd, the settlement was complete. After this Todd conveyed to Smith, trustee. Now, after Blake puts Todd in a condition to sell the lands set apart to him in said contract, and he afterwards conveyed them, can Blake set up an equity against said lands, which existed, if at all, at the time said contract was made? In other words, can he set up an equity paramount to a right which he himself has guaranteed to another? We think not. See Kirby v. Hill, 4 Watts & Seargeant, Penn., 426; Barley v. Brownfield, 2 Pa. 41; The West Branch Bank v. Armstrong, 40 Pa. 278; Sevan v. Patterson, 7 Md. 164; Douglass v. Fagg, 8 Leigh, Va., 588; Moore v. Campbell, 36 Vt. 361; Hammatt v. Wyman, 9 Mass. 138; Brackett v. Wilson, 17 Mass. 153; Adams v. Drake, 11 Cush., Mass. 504; Rockingham Bank v. Claggett, 29 N.H. 292; Preslar v. Stallworth, 37 Ala. 402; Saunders v. Walson, 14 Ala. 198. See also 21 Ala. 59. Dowdy only had notice of a small balance of purchase money, and was in reality an innocent purchaser. He did not assume the payments of this balance, nor was the land bound for the amount and Todd discharged from the debt, The recital in the mortgage only served to notify Dowdy that there was a small balance of purchase money due. Todd was as much bound to pay after the mortgage as before. And this obligation was never altered by Smith's notice of sale and Dowdy's purchase of the land. The terms in the notice of sale and the recitals in the deed from Smith to Dowdy do not increase or diminish Dowdy's liability. Dowdy simply bought all that Todd conveyed to Smith. If Blake has any remedy against the lands set apart to Todd, in their division equity would compel him to first exhaust that remedy against the land Todd had not disposed of.

4. The second does not present a case in which appellee can be subrogated to the rights of the original vendor. 14 Ill. 468; 55 Ga. 575; 4 Ark. 286. Blake and Todd were co-obligors, jointly and severally liable; and if one paid more than the other it created no lien in his favor; it merely gave him a simple contract debt against him.

X. J. Pindall, for appellee, with whom is C. W. Frazier.

1. The effect of the acceptance of the trust on the part of Dowdy was an admission of the incumbrance, and he took, charged with it, and subject to the balance of the purchase money. The land was advertised and sold, subject to this charge, the amount due from Todd was ascertained by Smith, the trustee. Dowdy, the beneficiary, bought at his own sale, and is estopped.

2. Dowdy was in no sense an innocent purchaser. Fargason v. Edrington, 49 Ark. 207. The admissions of the trustee while in discharge of his duty bind his principal. Ib.

3. By the partition, all matters up to that date were settled, and Blake, having discharged the $ 2,000 note due and in litigation, was subrogated to Treadwell's rights, and could enforce his lien. McGee v. Russell, 49 Ark. 104; 2 Wash. Real Prop., sec. 10, (marg. p. 75), page 216.

Where a lien is retained it passes to assignee. 2 Wash., sec. 18, page 92; Hempst. 527.

The authorities that Blake should have exhausted Todd first are not applicable, and the same objection lies to the other proposition, that Blake is setting up a right against which he has guaranteed (meaning the partition agreement). 21 Ala., Hogan v. Reynolds, is based on 4 Ala., (N. S.) 690, and both are under a statute, and do not apply. The fact that Todd charged the unpaid balance on the land is an answer to all arguments.

5. One who is liable therefor, and pays debts which are assumed of another, and secured, will be subrogated to the rights of the creditor in the security. 32 Ark. 346. Blake being liable, had to pay Todd's half of the debt, which Todd in the partition assumed to pay, and it was secured by lien and is subrogated to the lien of Treadwell. 2 Jones on Mortg., 1089, 1090; 1 Story, 477-8, 483, 484-5; 2 Story, 1233; 3 Otto, 206; 39 Ark. 337; 1 Wash., R. P.; 1 John. Chy., 425; 47 Ark. 309-311.

OPINION

COCKRILL, C. J.

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 meantime 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 deed 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 trustee's 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...