Hardin v. Clark

• Decision Date: 10 April 1890
• Citation: 11 S.E. 304,32 S.C. 480
• Parties: Hardin. v. Clark.
• Court: South Carolina Supreme Court

11 S.E. 304

32 S.C. 480

Hardin.

v.Clark.

Supreme Court of South Carolina.

April 10, 1890.

Subrogation—Covenant op Warranty.

1. A judgment debtor conveyed land to hit vendee, leaving enough of the purchase price with the vendee to pay the judgment. The vendee failed to do this, but conveyed to a third party, who sold the land under a general warranty, and afterwards voluntarily paid the judgment to protect his warranty. Held, that he was not subrogated to the right of the judgment creditor to proceed against the estate of the judgment debtor.¹

2. In such case, where, in a suit to marshal the assets of the deceased debtor, a decree was made applying certain funds in the hands of the administrator to the payment of the judgment, but no money was actually paid thereunder, one whowarranted the title to lands upon which such judgment was a lien, with constructive notice of the judgment, and afterwards, in order to protect his grantee, voluntarily paid the judgment, cannot be subrogated to the rights of the judgment creditor under such decree.¹

3. Where a judgment debtor conveyed, with a covenant of warranty, certain lands upon which the judgment was a lien, and received in payment notes secured by a mortgage of such lands, and afterwards, in consideration of the assumption of the judgment debt by the vendee, surrendered to him such notes to the value of the judgment and canceled the mortgage, said covenant of warranty was thereby redeemed as to a subsequent purchaser with notice of said transaction.

4. It was not error to hold that the purchaser was put upon inquiry, and was chargeable with notice of said transaction, (which inquiry would have disclosed,) when, in addition to the fact of an existing record of the judgment, and of the mortgage and its cancellation, it appeared that said purchaser, on inquiring, was told by one of his vendors that he thought a good title would be secured, and the only cloud was the judgment; that they had attempted to enforce that in the courts, and had failed.

5. Where, in a suit to which the plaintiff herein was not a party, the court, while stating the facts preparatory to deciding the question involved, mentioned an immaterial matter as being a fact, there was no adjudication as to such matter that would preclude a contrary finding herein.

6. Where, under Code Civil Proc. S. C. § 188, legal and equitable causes of action are joined, but both parties treat the case as an equitable one, and the matters of fact are determined by the court without a jury, the supreme court will not decline to review such questions of fact.

7. Points not raised below will not be considered, unless notice has been served that they will be relied on here.

Appeal from common pleas circuit court, Richland county; Pressley, Judge.

Action brought by W. Holmes Hardin against W. A. Clark, as administrator of C. D. Melton, deceased, praying damages for breach of covenant of warranty, and that he be subrogated to the rights of the holder of a judgment obtained against C. D. Melton by Samuel Wright. Plaintiff appeals.

S. P. Hamilton, for appellant.

J. D. Pope and J. S. Mulles, for respondent.

McIver, J. On the 25th November, 1867, defendant's intestate, C. D. Melton, sold and conveyed, with full warranty, to his brother, C. W. Melton, certain real estate in the county of Chester for the sum of $8,-000; the purchaser giving his notes, payable in one, two, three, and four years, se cured by a mortgage of the premises. On the maturity of the last one of the notes, an arrangement was made between C. D. and G. W. Melton whereby G. W. Melton assumed the payment of certain judgments against C. D. Melton, among which was one which, for convenience in this discussion, will be designated as the " Wright judgment, " which, having been obtained before the sale to G. W. Melton, were liens on the property, and thereupon thesaid notes were surrendered to G. W. Melton, and the mortgage canceled. It seems that G. W. Melton satisfied all of the judgments except the Wright judgment, and on the 28th of August, 1875, conveyed the property by a voluntary deed to certain trustees for the benefit of his wife and children; and these trustees, in January, 1880, conveyed the same, without warranty, to the plaintiff herein, who afterwards, in April, 1881, conveyed the property to one James C. Hardin, with full warranty. The estate of C. D. Melton proving to be insolvent, the defendant herein, as his administrator, some time in 1878 or 1879 commenced an action to marshal the assets, call in creditors, etc.; and under this action it was adjudged, after considerable contest, that the Wright judgment was a valid judgment, and, as such, entitled to rank first in the administration of the assets, (see Clark v. Melton, 19 S. C. 498;) and upon a subsequent accounting in that action the master reported a balance in the hands of the administrator of something over $4,000, which report was confirmed on the 20th of April, 1885, "so far as the rights and interests of the judgment creditor, Dr. Samuel Wright's estate is concerned. " After the validity of the Wright judgment had thus been established, the defendant herein commenced an action for the purpose of requiring the holder of the Wright judgment to enforce the same against the Chester property, upon the ground, among other things, that as that judgment was a lien on the Chester property, while the other judgment against C. D. Melton had no such lien, the holder thereof should first be required to seek payment out of the Chester property, leaving the assets of C. D. Melton's estate to be applied to the junior judgments, under the doctrine known as the "Two-Fund Doctrine. " The court, however, while fully recognizing the doctrine invoked, declined to apply it under the peculiar circumstances of that case, as it would probably involve the holder of the Wright judgment in tedious and expensive litigation, but without prejudice to any right which the parties interested might have to be subrogated to the right which the holder of the Wright judgment might have to enforce the same against the Chester property. See Clark v. Wright, 24 S. C. 526. Soon after this decision was rendered, to-wit, on the 13th of July, 1886, Mary B. Melton, the widow of C. D. Melton, who had previously bought up some if not all, of the junior judgments against her husband, bought the Wright judgment; and, the same having been duly assigned to her, the sheriff, under her instructions, levied on the Chester property, then in the possession of James C. Hardin, under said Wright judgment. Thereupon James C. Hardin commenced an action (to which however, the plaintiff herein was not a party) to enjoin the sale, upon the grounds, among others, that the Wright judgment never was a lien on the premises, and that plaintiff was a bona tide purchaser without notice; but this court held that neither of these grounds could be sustained, and hence the temporary injunction was dissolved, as we suppose. After this decision was rendered, the plaintiff, before the property was sold, and of course before his covenantee was evicted, voluntarily paid the Wright judgment, because, as he says, he was "notified by James C. Hardin that he did not intend to pay off said incumbrance, or topurchase the property, if sold, but that he looked to the plaintiff to indemnify him under his covenant of warranty to the full amount of $6,000, [the amount for which plaintiff had sold the property to J. C. Hardin;] and the plaintiff, having no defense on his covenant of warranty against the claim of the said James C. Hardin, " paid up the judgment, as aforesaid, then amounting to the sum of $4,994.10. Soon after thus paying the Wright judgment, the plaintiff commenced this action, whereby he demanded judgment—First, for damages by reason of the breach of the covenant of warranty contained in the deed of the 25th of November, 1871, from C. D. Melton to George W. Melton; second, that the plaintiff be subrogated to all the rights of the holder of the Wright judgment acquired by the order of 20th of April, 1885, the effect of which, it is claimed, was to adjudge that the assets of the intestate's estate, in the hands of the defendant as administrator, should first be applied to the payment of the Wright judgment. The defendant, by his answer, set up various defenses, none of which need be stated, except such as was considered by the circuit judge.

The case was heard by his honor, Judge Pressley, who rendered his decree, finding, as matter of fact, that "all the parties had notice of the said judgment [referring to the Wright judgment] by the record thereof, and James C. Hardin had special notice thereof before they paid the purchase money. They also had notice that George W. Melton had assumed payment of the said judgment when his notes and mortgages for the purchase money of said land were surrendered to him, and that enough of the purchase money due by him had been left in his hands to pay the said judgment." He therefore held " that C. D. Melton, by surrender to Geo. W. Melton of his notes and mortgage for the purchase money of said land, thereby placed in his hands funds to pay the said judgment, and thereby redeemed C. D. Melton's said covenant of warranty. I further hold that plaintiff, who had sufficient notice of said transaction, has no higher equity in said covenant of warranty than George W. Melton had. He failed to apply to said judgment the money which had been allowed him out of his own notes and mortgage. That was his own default; and plaintiff, who had notice thereof, can have no higher equity than G. W. Melton had." Accordingly, judgment was rendered dismissing the complaint, without costs. From this judgment plaintiff appeals upon the several grounds set out in the record, which make, substantially, the following questions: (1) Whether there was error in finding, as matter of fact, that plaintiff had notice, not only of the Wright judgment, but also of...