Emmert v. Thompson
| Decision Date | 03 May 1892 |
| Citation | 52 N.W. 31,49 Minn. 386 |
| Parties | Joseph Emmert v. Peter Thompson et al |
| Court | Minnesota Supreme Court |
April 13, 1892, Argued
Appeal by plaintiff, Joseph Emmert, from so much of a judgment of the District Court of Nobles County, P. E. Brown, J., entered October 19, 1891, as adjudged that defendant Cornwell be first paid $ 1,434.82 and interest out of the proceeds of the sale of the land described.
This action was brought to foreclose a mortgage given by William Marr and Ellen, his wife, to H. L. Emmert, plaintiff's brother, January 19, 1886, upon the northeast quarter of Section fourteen (14) and the west half of the southwest quarter of Section thirteen (13) in Township one hundred and one (101) north, of Range forty-three (43) west, in Nobles County. It was given to secure the payment of two notes, for $ 1,058.75 each, and dated September 30, 1885, and bearing ten per cent. interest. The mortgage was recorded January 28 1886. H. L. Emmert soon after indorsed and sold the notes to the plaintiff. The defendants in the action were William Marr, Ellen Marr, his wife, Zelotes R. Cornwell, Peter Thompson, and F. S. Gibson. The last three were alleged to be subsequent incumbrancers.
Cornwell answered, stating that on January 20, 1888, he loaned to William Marr $ 1,800, and took his notes therefor, secured by a mortgage of that date on all this land, which mortgage was recorded February 21, 1888; that out of the money so loaned he, at Marr's request, paid off the prior incumbrances on the land, and had them discharged of record as follows: $ 841.80 to E. S. Ormsby, in satisfaction of a mortgage given him by Marr and wife June 15, 1883, on the land in Section fourteen, (14,) and $ 516.90 to Annie C. Hayes, in satisfaction of a mortgage given said H. L. Emmert by Marr and wife September 23, 1884, on the land in Section thirteen (13,) and assigned by him to her January 17, 1885, and $ 76.12 taxes for two years on both pieces of land; that Marr represented that there was no other incumbrance on the land and Cornwell believed him, and did not hear of this mortgage to plaintiff's brother until February, 1890; that Marr and wife were insolvent, and the land worth no more than $ 3,200, and he asked that he be subrogated to the rights of Ormsby and Emmert under the two mortgages he had paid; that the discharges be set aside; and that out of the proceeds of the sale of the land he be first paid the sums paid by him to satisfy those prior liens.
The action was tried in March, 1891. The court filed its findings on August 1, 1891, and found that the facts were substantially as above stated, and directed the land to be sold, and that Cornwell be first paid $ 1,434.82, and interest from February 27, 1888, out of the proceeds, and that the residue be paid to the plaintiff to the amount due on his mortgage, with costs, and that the sheriff bring any surplus into court. Judgment was so entered, and plaintiff appealed.
Judgment affirmed.
Daniel Rohrer, for appellant.
Cornwell was a volunteer lender of money to Marr, and is not entitled to subrogation. Commonwealth of Virginia v. State of Maryland, 32 Md. 501; Gadsden v. Brown, Speer, Eq. 37, 41; Downer v. Miller, 15 Wis. 612; Nolte v. Creditors, 7 Mart. (N. S.) 602; Kline v. Ragland, 47 Ark. 111; AEtna Life Ins. Co. v. Middleport, 124 U.S. 534; Shinn v. Budd, 14 N.J.Eq. 234; Suppiger v. Garrels, 20 Ill.App. 625.
When money is borrowed on a mortgage to pay off a former mortgage on the same land, the fact that an intervening mortgage was overlooked in the examination of the title will not enable the lender to set up the former mortgage, after its discharge of record. Banta v. Garmo, 1 Sandf. Ch. 383; Dingman v. Randall, 13 Cal. 513; Fievel v. Zuber, 67 Tex. 275; Sandford v. McLean, 3 Paige, 117; Unger v. Leiter, 32 Ohio St. 211; Kitchell v. Mudgett, 37 Mich. 81; Bunn v. Lindsay, 95 Mo. 250.
The position that, on the facts found, Cornwell was a mere volunteer, and not entitled to subrogation, nor to the benefit in any manner of the liens he paid off, is sustained by the following additional authorities: Felton v. Bissel, 25 Minn. 15; Wadsworth v. Blake, 43 Minn. 509; Bacon v. O'Connor, 25 Tex. 213; Barber v. Lyon, 15 Iowa 37; Pelton v. Knapp, 21 Wis. 63; Watson v. Wilcox, 39 Wis. 643; New Jersey Midland Ry. Co. v. Wortendyke, 27 N.J.Eq. 660; Wormer v. Waterloo Agricultural Works, 62 Iowa 699; Bank of Mobile v. Mobile & O. R. Co., 69 Ala. 305; Hough v. AEtna Life Ins. Co., 57 Ill. 318; Binford v. Adams, 104 Ind. 41; Fay v. Fay, 43 N.J.Eq. 438; Guy v. Du Uprey, 16 Cal. 195; Hoover v. Epler, 52 Pa. 522; AEtna Ins. Co. v. Reed, 33 Ohio St. 292.
Warner, Richardson & Lawrence and Geo. W. Wilson, for respondent.
Cornwell was on the facts entitled to subrogation. The conclusions of law were warranted by the findings of fact. Upon the facts found, Cornwell's equities and the appropriate remedy for them were clear upon the current of authority at this date. Upon this point we cite many authorities from many states simply because adverse decisions now obsolete can be adduced, and we seek to show what the weight and current of authority now is upon this point. Har. Subr. §§ 811, 816, 819; Payne v. Hathaway, 3 Vt. 212; Detroit Fire & Marine Ins. Co. v. Aspinall, 48 Mich. 238; Vallie v. Fleming, 29 Mo. 152; Levy v. Martin, 48 Wis. 198; Lockwood v. Bassett, 49 Mich. 546; Barnett v. Griffith, 27 N.J.Eq. 201; Homoeopathic Mut. Life Ins. Co. v. Marshall, 32 N.J.Eq. 103; Tradesmen's Bldg., etc., Ass'n v. Thompson, Id. 133; Chiswell v. Morris, 14 N.J.Eq. 101; Hutchinson v. Swartsweller, 31 N.J.Eq. 205; Eggeman v. Harrow, 37 Mich. 436; Scriven v. Hursh, 68 Mich. 176; Sidener v. Hawes, 37 Ohio St. 532; Capehart v. Mhoon, 5 Jones, Eq. 178; Hines v. Potts, 56 Miss. 346; Young v. Morgan, 89 Ill. 199; Barnes v. Mott, 64 N.Y. 397; Muir v. Berkshire, 52 Ind. 149; Gibson v. McCormick, 10 Gill & J. 65; Geib v. Reynolds, 35 Minn. 331; Sidener v. Pavey, 77 Ind. 241; Lowrey v. Byers, 80 Ind. 443; McKenzie v. McKenzie, 52 Vt. 271; Walker v. King, 45 Vt. 525; Childs v. Stoddard, 130 Mass. 110; Gerdine v. Menage, 41 Minn. 417; Cobb v. Dyer, 69 Me. 494; Young v. Shaner, 73 Iowa 555; Kaiser v. Lembeck, 55 Iowa 244; Blodgett v. Hitt, 29 Wis. 169; Winslow v. Crowell, 32 Wis. 639; Kalscheuer v. Upton, 6 Dak. 449; Haggerty v. McCanna, 25 N.J.Eq. 48; Gans v. Thieme, 93 N.Y. 225; Wilton v. Mayberry, 75 Wis. 191.
The right of subrogation is not founded on contract. It is a creature of equity; is enforced solely for the purpose of accomplishing the ends of substantial justice; and is independent of any contractual relations between the parties. Memphis & L. R. R. Co. v. Dow, 120 U.S. 287; Bisp. Eq. § 338.
Relief by the way of subrogation in this class of cases always implies an intervening mortgage duly recorded, so as to have the force and effect provided by the recording act. In such case the question is not whether the subsequent mortgage is itself paramount, but whether the holder of it has an equitable lien paramount to the prior mortgage, in virtue of the fact that his money has been obtained through accident, fraud, or mistake, and has been used to pay prior liens.
Upon the facts found, the court below should have held as a matter of law that Cornwell was entitled to a paramount lien on the eighty acre tract for $ 516.90; on the one hundred and sixty acre tract for $ 841.90; and on both for $ 76.12, -- with interest on each sum at the rate of seven per cent. per year from February 27, 1888, and not to such a lien on both tracts en masse for the aggregate of said sums and interest thereon as aforesaid. But plaintiff makes no point on this, and practically no harm will ensue.
When the loan of money was made by defendant Cornwell to defendant Marr, to secure which, as agreed upon, the latter mortgaged his entire farm, consisting of two hundred and forty acres, it was for the stipulated purpose of relieving one tract, (one hundred and sixty acres) from the trust deed held by Ormsby, the balance (eighty acres) from the Hayes mortgage, and the entire farm from delinquent taxes. The trust deed, the mortgage last referred to, and the taxes were represented to be, and in fact were, first liens upon the premises; and Cornwell believed -- and it was implied from what Marr stated when applying for the loan -- there were no other incumbrances, and that, with these paid off and discharged, his mortgage would take their place, and become the first and only charge upon the property. The taxes and the amounts due on the incumbrances, aggregating $ 1,434.82, were paid out of the proceeds of the loan, in accordance with the agreement under which it was made. Proper releases and discharges were procured and at once recorded, in the mistaken belief on the part of Cornwell, and the agents who transacted the business, that there was no other or prior charge upon the premises. For some time thereafter they remained in ignorance of the fact that plaintiff's mortgage was in existence and of record when the one in question was executed, and by their acts had, of record, become the senior lien. As Marr was and is insolvent, and plaintiff's mortgage, with costs and disbursements of foreclosure, now exceeds in amount the value of the farm as found by the trial court, the seriousness of the situation is quite apparent. The court below subordinated the plaintiff's claim to that of defendant Cornwell, to the extent of the payments made for taxes, and to satisfy and extinguish the incumbrances, reinstating the liens, in effect; and its right and power so to do is the principal question now before us.
It has been well said that the doctrine of subrogation has been steadily growing and expanding in importance, and becoming...
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