Dunn v. Chapman

• Decision Date: 18 February 1929
• Docket Number: 12595.
• Citation: 146 S.E. 818,149 S.C. 163
• Parties: DUNN v. CHAPMAN et al.
• Court: South Carolina Supreme Court

146 S.E. 818

149 S.C. 163

DUNN v. CHAPMAN et al.

No. 12595.

Supreme Court of South Carolina

February 18, 1929

Appeal from Common Pleas Circuit Court of Pickens County; M. L Bonham, Judge.

Suit by James H. Dunn against H. H. Chapman and others. From a decree overruling defendants' demurrer to the complaint defendants appeal. Affirmed.

Following is the demurrer to the amended complaint, referred to in the opinion:

"The defendants, H. M. Chapman and J. M. Abbott, as receivers of Liberty Bank, demur to the amended complaint upon the following grounds, to wit:

"1. That the complaint does not state facts sufficient to constitute a cause of action, for the reason that it is alleged in the complaint that James Dunn purchased from G. R. Gilstrap a tract of land situated in the county and state aforesaid, containing 55.6 acres, and received a deed therefor, and the same is recorded in Book III, at page 18; and that thereafter, on the same date, the plaintiff, James Dunn, executed and delivered to G. R. Gilstrap, his note and mortgage covering said tract of land in the sum of $3,240.37, and the same is recorded in Book S. S. p. 314.

"2. It is further stated on the face of the said complaint that, in order to pay the mortgage debt of the said G. R. Gilstrap, the said James Dunn procured a loan from the Federal Land Bank in the sum of $1,600; and he procured a further loan from the Liberty Bank of $1,995.42, and in order to secure the said sums, the plaintiff executed to the Federal Land Bank, on the 16th day of January, 1922, his note and mortgage covering the 55.6 acres of land, and the same is recorded in Book V. V. p. 107; and that thereafter, on the 22d day of February, 1922, the plaintiff herein executed and delivered his note and mortgage on the 55.6 acres of land to the Liberty Bank for the sum of $1,995.42, and the same is recorded in Book W. W. p. 103, and this money was used in full payment of a certain mortgage debt due by plaintiff to G. R. Gilstrap.

"3. That it is alleged in the said amended complaint that the plaintiff herein paid the Liberty Bank the sum of $1,995.42, and the

cashier of the said bank, on December 31, 1925, canceled and marked satisfied the said mortgage of record, and delivered the note to the said plaintiff. The Liberty Bank had the perfect right to accept, receive, and take this money, and mark the said mortgage satisfied, and there is nothing unlawful or illegal in this transaction, and nothing upon which to base a cause of action against the Liberty Bank.

"4. That it is shown upon the face of the amended complaint that the Federal Land Bank has a first mortgage on the 55.6 acres of land mentioned in the said complaint, and the Liberty Bank had a perfect right to take a mortgage on the 27.5 acres which, it is alleged in the complaint, was deeded to James R. Gilstrap by James Dunn, and the said mortgage was executed, and is subject to the prior mortgage of the Federal Land Bank as alleged in the complaint. It is alleged in the said complaint that on the 17th day of December, 1923, the said G. R. Gilstrap executed and delivered to the said Liberty Bank a deed to the 27.5 acres of land, which he had a perfect right to do, and the Liberty Bank had the lawful right to accept the same, and nothing is unlawful on account thereof, and no action is alleged against the said Liberty Bank with reference thereto, the same being a perfectly legitimate transaction, and the deed being subject to the first mortgage executed to the Federal Land Bank, covering said land.

"5. All of the transactions alleged in the complaint with reference to the Liberty Bank are perfectly legitimate and business like, and no unlawful acts have been committed by it, as have been shown on the face of the complaint herein.

"6. No fraud or collusion is alleged between the Liberty Bank and G. R. Gilstrap, and, in so far as the allegations of the said complaint are concerned, there is nothing to base a cause of action upon against the Liberty Bank, either legal or equitable.

"Wherefore, these defendants pray that the complaint be dismissed with costs."

Jas. P. Carey, Jr., of Pickens, W. C. Hughs, of Walhalla, and B. A. Chapman, of Pickens, for appellants.

Robinson & Mann, of Pickens, and Mann & Plyler, of Greenville, for respondent.

COTHRAN J.

We think that the decree of his honor Judge Bonham, overruling the demurrer of the defendants to the plaintiff's complaint, should be affirmed for the reasons which follow.

The facts alleged in the complaint and admitted by the demurrer are these:

On January 5, 1921, the plaintiff bought from one Gilstrap a tract of land containing 55.8 acres. He paid a part of the purchase price, and gave his note for $3,240.67, secured by a mortgage of the tract for the remainder. At the maturity of the note, Dunn borrowed from the Federal Land Bank $1,600, and from the Liberty Bank $1,995.42, $3,595.42 in all, with which to meet his note. The notes secured by mortgages upon the tract to these two banks were dated respectively January 16, 1922, and February 27, 1922; with their proceeds Dunn paid off the Gilstrap note and mortgage, and had the mortgage marked satisfied. (Why he needed $3,595.42 to meet a note of $3,240.67 which had run a little over a year, the interest upon which, even at 8 per cent., would not have amounted to more than $285, is not explained.) Later and before the maturities of the two mortgages given to the banks, Dunn reconveyed to Gilstrap 27.5 acres of the 55.8-acre tract, the consideration therefor being the assumption by Gilstrap of one-half of the Federal Land Bank mortgage $1,600, $800, and the whole of the Liberty Bank mortgage $1,995.42 (I assume with unpaid interest). Dunn and Gilstrap went to the Liberty Bank on February 28, 1922, explained to the cashier the trade between them, and had him to prepare a deed from Dunn to Gilstrap of the 27.5 acres, possession of which was surrendered to Gilstrap. Thereafter on February 17, 1923, Gilstrap executed a note to the Liberty Bank (the amount not appearing), and secured it by a mortgage upon the 27.5-acre tract conveyed to him by Dunn. On December 17, 1923, Gilstrap conveyed the 27.5-acre tract to the Liberty Bank, it is assumed in payment of his note and mortgage of February 17, 1923. Gilstrap has paid nothing upon his obligation to pay one-half of the Federal Land Bank mortgage and all of the Liberty Bank mortgage, as the consideration of the conveyance by Dunn to him of the 27.5 acres, and has left the state, leaving Dunn responsible alone for both the $1,600 Federal Land Bank mortgage and the $1,995.42 Liberty Bank mortgage. Upon the insistence of the Liberty Bank and to save the remaining 28.3 acres of the original 55.8-acre tract, Dunn paid to the Liberty Bank the whole of the $1,995.42 mortgage with accumulated interest up to December 31, 1925, at which time the Liberty Bank canceled and had marked satisfied of record the $1,995.42 mortgage. The Liberty Bank surrendered the note to Dunn, but retained the mortgage, and refuses to deliver it to Dunn.

The present action was instituted by Dunn who, alleging the facts substantially detailed above, asked for the following remedies: (1) That he be allowed to redeem the 27.5 acres, I assume upon the payment of the note of Gilstrap to the Liberty Bank; (2) that the deed from him to Gilstrap be declared a conditional sale, dependent upon the payment by Gilstrap of one-half of the Federal Land Bank mortgage and all of the Liberty Bank mortgage; that the failure of Gilstrap to perform the same rendered said conveyance void, and entitled him to a reconveyance of the 27.5 acres; (3) that failing in these two remedies he be declared subrogated to the rights of the Liberty Bank in the $1,995.42 mortgage which he has paid.

The defendants interposed a demurrer to the complaint upon the general ground with specifications, which appear in the written demurrer, which will be reported. The demurrer came on to be heard by his honor Judge Bonham, who, on October 19, 1927, filed an order which bears evidence of earnest and intelligent consideration, and exceedingly logical conclusions.

We need not advert to the first and second remedies sought by the plaintiff, which are satisfactorily disposed of by the learned circuit judge. The crucial issue in the case, as to the solution of which the circuit judge and Mr. Acting Associate Justice RAMAGE are at variance, is whether the facts outlined entitle the plaintiff to be subrogated to the rights of the Liberty Bank in the $1,995.42 mortgage which he has paid, and the interesting question as to the extent of that subrogation, in the event that the general issue be determined in favor of the plaintiff.

In the opinion of Mr. Justice RAMAGE, it is correctly stated that no issue of fraud by, or collusion between, the Liberty Bank and Gilstrap is raised by the pleadings, and his observations in reference thereto are without criticism, except that the real issue in the case, subrogation, is not at all affected, one way or the other, by the presence or absence of any such issue.

The opinion declares: "Under the clearly established law in this State, subrogation cannot be set up by one who has simply paid his own note, as was done by the plaintiff in the case at bar. Plaintiff was primarily liable and no amount of argument can get us away from that fact. There is no escaping the conclusion that plaintiff was simply paying his own note and mortgage, and no amount of sophistry can wipe this fact out of the case."

There can be no doubt of the proposition that equity will deny the right of subrogation to one who pays or has paid a debt for which he was at the time primarily liable. That has been thoroughly settled by many cases. The...