First National Bank of Westport v. Moore

• Decision Date: 15 November 1928
• Docket Number: 12,782
• Citation: 163 N.E. 602,88 Ind.App. 189
• Parties: FIRST NATIONAL BANK OF WESTPORT v. MOORE ET AL
• Court: Indiana Appellate Court

163 N.E. 602

88 Ind.App. 189

FIRST NATIONAL BANK OF WESTPORT v. MOORE ET AL

No. 12,782

Court of Appeals of Indiana

November 15, 1928

From Decatur Circuit Court; John W. Craig, Judge.

Suit by the First National Bank of Westport against Estella Moore and others to foreclose a mortgage, in which the Aetna Life Insurance Company filed a cross-complaint. From a decree in favor of the cross-complainant, the plaintiff appeals.

Affirmed.

George L. Tremain and Rollin A. Turner, for appellant.

John E Osborn, for appellees.

OPINION

ENLOE, P. J.

The essential facts necessary to an understanding of the question involved in this appeal are as follows:

The appellee Estella Moore in December, 1921, was the owner of certain lands in Decatur county, Indiana, and on December 23 of that year, she obtained a loan of $ 1,500 from the Greensburg National Bank, executed a note therefor, and secured the payment of said note by giving a mortgage on her said real estate.

The appellee Estella Moore and her husband, Samuel Moore, were indebted to the Farmers Trust Company of Indianapolis, as evidenced by their promissory note, in the sum of about $ 12,000, which indebtedness was secured by a mortgage on certain real estate owned by Samuel Moore. They were also indebted to the appellant herein in the sum of about $ 4,000 evidenced by their promissory note, and secured by a mortgage on certain real estate owned by Samuel Moore which last mortgage was junior and inferior to the mortgage of the Farmers Trust Company. These last two items of indebtedness being due, suits were brought to foreclose said mortgages, with the result that, December 5, 1922, a decree was entered by the Decatur Circuit Court, ordering the lands covered by said two mortgages sold and the proceeds applied: First, to the payment of costs; second, to the payment of the indebtedness to the Farmers Trust Company in the sum of $ 12,539.35; third, to the payment of the indebtedness due appellants in the sum of $ 4,054.10. There was also a deficiency judgment against the appellee Moore for any amount remaining unpaid upon the sale of said lands. Upon the sale of said lands by the sheriff, under said decree, there was a deficiency, and appellant received nothing upon its said judgment.

The indebtedness to the Greensburg National Bank being due and said bank demanding its money, Estella Moore applied to appellee Aetna Life Insurance Company for a loan of $ 2,000 with which to take up, pay off and discharge said indebtedness to the Greensburg National Bank. Said loan was made, a note evidencing the same and a mortgage covering the same lands covered by the said mortgage to the Greensburg National Bank were duly executed, and, out of the proceeds of said loan, the said indebtedness to the Greensburg National Bank in the sum of $ 1,783.05 was paid, and said mortgage to said bank was thereupon released. At the time of making said loan, the appellee had no actual knowledge of the existence of said deficiency judgment against said Moore, and the same was not shown upon the abstract of title furnished to appellee insurance company, for its examination, prior to its making said loan. The appellant asserts that, upon these facts, the lien of its judgment is superior to the lien of the appellee Aetna Life Insurance company, and said company asserts that, under the facts, it is entitled to be subrogated to the rights and lien of the said Greensburg National Bank, and that it is entitled to have its mortgage established as the prior lien, and the said indebtedness being due, it is entitled to have said mortgage foreclosed as the prior lien.

The appellant, by its complaint, sought to have its judgment established as the prior lien on said lands and the Aetna Life Insurance Company, by its cross-complaint, sought to be subrogated to the rights of said bank, and the foreclosure of its mortgage as the prior lien.

The trial court held that said appellee was entitled to be subrogated and entered its decree accordingly, from which this appeal is prosecuted.

Was said appellee entitled to be subrogated to the rights of the Greensburg National Bank?

The appellant insists that, under the facts of this case, the said appellee is a "Volunteer," and that it is, therefore, not entitled to subrogation.

Mr. Pomeroy, in his work on equity (2d ed. § 1211) says: "Under some circumstances, the payment of the amount due on a mortgage, when made by certain classes of persons, is held in equity to operate as an assignment of the mortgage. By means of the payment, the mortgage is not satisfied and the lien of it destroyed, but equity regards the person making the payment as thereby becoming the owner of the mortgage, at least for some definite purposes, and the mortgage as being kept alive, and the lien thereof as preserved for his benefit and security. This equitable result follows, although no actual assignment, written or verbal, accompanied the payment, and the securities themselves were not delivered over to the person making the payment, and even though a receipt was given speaking of the mortgage debt as being fully paid, and sometimes even though the mortgage itself was actually discharged and satisfied of record. This equitable doctrine, which is a particular application of the broad principle of subrogation, is enforced whenever the person making the payment stands in such relation to the premises or to the other parties that his interests, recognized either by law or equity, can only be fully protected and maintained by regarding the transaction as an assignment to him, and the lien of the mortgage as being kept alive, either in whole or in part, for his security and benefit."

In the case of Walker v. King (1872), 44 Vt. 601, it was held that when a party, not personally liable thereon, pays a debt secured by mortgage to protect some interest which he has in the property, he is not a mere volunteer and is entitled to subrogation. In Walker v. King (1873), 45 Vt. 525, there were three mortgages upon the land held by different parties. F. and M. purchased the mortgagors' equity of redemption and paid off the first, second, and a part of the third mortgage. These, they paid to protect their interest in the land, and it was held that they were entitled to be subrogated to the rights of those whose mortgages they had paid.

In Chaffe & Bro. v. Oliver (1882), 39 Ark. 531, the court, speaking of the doctrine of subrogation, said: "It rests upon the maxim that no one shall be enriched by another's loss, and may be invoked wherever justice and good conscience demand its application, in opposition to the technical rules of law, which liberate securities with the extinguishment of the original debt."

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