Home Owners' Loan Corp. v. Papara

• Decision Date: 26 June 1942
• Citation: 3 N.W.2d 730,241 Wis. 112
• Parties: HOME OWNERS' LOAN CORPORATION v. PAPARA et al.
• Court: Wisconsin Supreme Court

241 Wis. 112

3 N.W.2d 730

HOME OWNERS' LOAN CORPORATION

v.PAPARA et al.

Supreme Court of Wisconsin.

May 5, 1942.

Rehearing Denied June 26, 1942.

Appeal from a judgment of the Circuit Court for Racine County; Alfred L. Drury, Judge.

Modified and affirmed in part and reversed in part.

Action by the Home Owners' Loan Corporation to foreclose a mortgage upon certain real estate located in the City of Racine. The circuit court entered judgment on December 27, 1941, providing that plaintiff was entitled to a judgment of foreclosure against the interests of Tony Papara and Esther Papara, his wife, “with the exception of the dower rights of Esther Papara. In the event at the sale of the above interests * * * in said property, buyers do not offer the amount due under the mortgage * * *, then the dower interests of Esther Papara, * * * in and to the real estate which is the subject of this action, shall be sold at said sale;” that the prior mortgage of the Home Mutual Building-Loan Association be revived and the plaintiff subrogated to all rights of such prior mortgagee as against the inchoate dower interest of Esther, and that plaintiff was not entitled to foreclose against the interests of Carmen and Louise Papara or the heirs of Carmen. From this judgment plaintiff appeals. Esther Papara filed a motion to review that portion of the judgment holding that plaintiff may foreclose against her inchoate dower interest.

Gerald T. Flynn, of Racine, and James B. Croke, of Chicago, Ill., for appellant.

Knoblock & Konnak and E. W. Lawton, all of Racine, for respondents.

FAIRCHILD, Justice.

The real estate in question, consisting of a city lot occupied by a two story frame house, was purchased by defendant Tony Papara and his brother Frank, since deceased, as tenants in common, both then single, on January 8, 1925. To finance the purchase of the property the brothers executed a note, bond, and mortgage in favor of the Home Mutual Building-Loan Association, binding themselves severally and jointly to pay the sum of $3,500. In 1925, subsequent to the purchase of the property and the execution of the mortgage to the Building-Loan Association, Tony married Esther Papara who has filed a motion to review portions of the judgment on this case.

In 1928, Frank Papara died intestate survived by his mother Louise Papara and his father Carmen Papara. By decree of the county court of Racine County, dated April 29, 1929, title to the undivided one-half interest of Frank in the real estate was declared to be vested in Carmen and Louise Papara as the heirs at law of the decedent. At the time of his death, the interest of Frank was subject to the unpaid balance of the Building-Loan Association mortgage.

Carmen Papara left Italy and came to Racine, Wisconsin. The mother, Louise Papara, never came to this country.

For many years prior to the commencement of this action Tony and Esther Papara lived on the mortgaged premises and occupied it as their homstead. They were living there at the time of the death of Frank and Tony regarded this property as his own and believed that he was its sole owner. Tony never conferred with his father or mother, or after the death of his father with any of his sisters or brothers regarding the management of the property.

September 18, 1933, Tony Papara made written application to plaintiff H. O. L. C. for a loan secured by the property in question. At this time the Building-Loan Association mortgage was overdue, and taxes for the years 1931 and 1932 were delinquent. The application went through the usual channels of the H. O. L. C. and the loan was made on September 12, 1934. This loan, in the amount of $3,389.65, was used to pay the Building-Loan Association mortgage, principal and interest, and to pay three years' delinquent taxes; the balance of the money being used to pay insurance, cost of abstract, releasing of judgments, and fees. The money advanced by plaintiff was paid by it to the Bullding-Loan Association which delivered a written satisfaction in full and cancelled its note and bond. To secure and evidence the refinancing loan the H. O. L. C. was given a note and mortgage purportedly executed by the interested parties. As a matter of fact the signature of Carmen Papara and the mark of Louise, successors to the one-half interest of Frank, were forged, both the plaintiff and the answering defendants disclaiming any knowledge as to who committed the forgeries. Tony's wife Esther did not sign the loan application but did sign the note and mortgage. Esther, who was able to read and speak the English language, signed the mortgage at the request of a stranger who called at her residence and after showing her the signature of her husband requested her to sign the instrument. He did not reveal to her the nature of the document. She, however, made no inquiry as to the character of the paper and signed it upon request. The mortgage was not executed in the presence of witnesses nor acknowledged.

Carmen Papara died, after the execution of the H. O. L. C. mortgage and prior to the commencement of these foreclosure proceedings, survived by his wife Louise and several children some of whom are living in this country and some in Italy. Joined as defendants in this action are Tony and his wife Esther, a brother Louis and his wife, both living in Racine, and the unknown heirs of Carmen and others having an interest in the property, and a judgment creditor who did not appear.

The questions to be determined on this appeal are (1) whether plaintiff is entitled to foreclose against the inchoate dower rights of Esther Papara; and (2) whether plaintiff is entitled to foreclose against the present owners of the interest of Frank Papara.

It is clear that plaintiff stands in the position of one entitled to the benefit of the doctrine of subrogation for “it advanced the money under a definite agreement that plaintiff have security in the form of a first mortgage.” Bank of Baraboo v. Prothero, 1934, 215 Wis. 552, at pages 558, 559, 255 N.W. 126, at page 129;Home Owners' Loan Corp. v. Dougherty, 1937, 226 Wis. 8, 275 N.W. 363; 2 Jones, Law of Mortgages (8th Ed., 1928) p. 425, § 1028; Pomeroy, Equity Jurisprudence (5th Ed., by Symons, 1941) p. 640 et seq., § 1212; 5 Tiffany, Real Property (3rd Ed., by Jones, 1939) pp. 570-573, § 1507; Note, 1931, 70 A.L.R. 1396. It therefore remains to be considered whether anything in the circumstances of this case operates to bar the application of that doctrine.

The rights of Esther under the homestead and dower statutes might be of concern but for the fact that the H. O. L. C. is entitled to an equitable assignment of the Building-Loan Association mortgage and has a lien superior to her possible claims. At the time of her marriage Esther's rights were subject to a pre-existing valid lien on the property and any failure to execute the new mortgage with the formalities required by secs. 235.27 and 235.19, Stats., can not deprive the plaintiff of its rights to foreclose against her interests in this case. As said by Mr. Justice Winslow in the case of Lashua v. Myhre, 1903, 117 Wis. 18, at page 22, 23, 93 N.W. 811, at page 812, in reference to a similar situation: “Had the wife refused to sign the new mortgage at all, it is not seen how the result could have been different. The owner of the property having borrowed money of the defendant under his agreement that it should be used to pay off a valid mortgage thereon, and that defendant should have a new one in place thereof, and the money having been in fact so used, a court of equity would doubtless keep alive the valid mortgages for the defendant's protection to meet the very contingency of the wife's refusal to sign. The wife is not, therefore, deprived of any protection which the law has granted her. Exemption and homestead laws are liberally construed to effect their beneficent purpose, but they will not be construed so as to accomplish positive frauds, if such a result can be avoided.”

It is unnecessary to consider whether or not the acts of Esther in this case constitute a sufficient basis for creating an equitable estoppel within the rule...