Martin v. Hickenlooper

• Decision Date: 04 August 1936
• Docket Number: 5424
• Citation: 59 P.2d 1139,90 Utah 150
• Court: Utah Supreme Court
• Parties: MARTIN v. HICKENLOOPER et al

59 P.2d 1139

90 Utah 150

MARTIN v. HICKENLOOPER et al

No. 5424

Supreme Court of Utah

August 4, 1936

Appeal from District Court, Third District, Salt Lake County William H. Bramel, Judge.

Suit by Brigham J. Martin against Clara C. Hickenlooper, and others wherein defendant Mrs. W. Zorn filed a cross-complaint against C. H. Stoven and others. From the judgment, plaintiff and named cross-defendant and another appeal. On rehearing.

Superseding opinion in 90 Utah 130, 40 P.2d 213.

JUDGMENT MODIFIED and AFFIRMED.

Vernon Snyder and Herbert Van Dam, Jr., both of Salt Lake City, for appellants.

Irvine Skeen & Thurman and A. R. Barnes, all of Salt Lake City, for respondents.

WOLFE, Justice. ELIAS HANSEN, C. J., and FOLLAND, J., concur. MOFFAT, Justice, EPHRAIM HANSON, Justice, dissenting.

OPINION

WOLFE, Justice.

This case was formerly decided in favor of appellant Martin [Martin v. Hickenlooper, 90 Utah 130, 40 P.2d 213], and a rehearing granted September 27, 1935. The following opinion and decision is substituted for the former opinion and decision and the latter recalled:

The appeal was by Martin from a decree giving Mrs. Zorn priority of mortgage lien over his mortgage by virtue of the principle of subrogation. On February 1, 1921, while C. H. Stoven was owner of the property, he, together with Florence M. Stoven, his wife, executed a mortgage for $ 3,500 in favor of the state of Utah. On June 18, 1921, the Stovens conveyed the mortgaged property to Clara C. Hickenlooper subject to the mortgage together with certain shares of water in two irrigation companies. Two days later, on June 20, 1921, Clara C. and W. A. Hickenlooper, her husband, mortgaged the premises to Martin to secure two notes of even date aggregating $ 2,500. Thereafter, on February 24, 1922, the Hickenloopers conveyed, subject to the two above-specified mortgages, to the Fritsch Loan & Trust Company together with "any and all water rights used in connection with" the premises. On June 1, 1927, the Fritsch Loan & Trust Company delivered to Mrs. Zorn a mortgage together with the water shares to secure its note of $ 3,500. This mortgage did not specify that it was subject to any other mortgage. The state's mortgage was released on the same day, to wit, June 1, 1927, by reason of the money advanced by Mrs. Zorn. On June 1st an abstract was furnished to Mrs. Zorn, certified to January 12, 1927; the $ 1,000 note payable to Martin had been paid, but the $ 1,500 note together with back interest remained unpaid. Martin brought this action to foreclose, joining Mrs. Zorn among others. She cross-complained and answered. As to Martin she claimed priority on the ground that her money was used to pay off the state's note, was intended for that purpose, and that the Fritsch Loan & Trust Company, by one Penner, its general manager and secretary, agreed that her mortgage was to be a first lien and that he made representations that it was such. Mrs. Zorn had no knowledge that Martin had a mortgage on the property until he brought suit. She never received a release of the state's mortgage nor any of the canceled papers relating to the state's mortgage. She never examined, or caused to be examined, either the abstract or the record. The evidence is that she trusted Penner and that he said she did not need a lawyer; that he would have his lawyer look it over. Other facts, if necessary to an understanding of the principles to be propounded, will be given later.

The trial court found that the Fritsch Loan & Trust Company had made the representations and promises as above set out, and decreed the Zorn mortgage as prior to the Martin mortgage on the theory that the former stood in equity in place of the state's mortgage, and gave a personal judgment against the Stovens in favor of Zorn. Practically all of the assignments go to alleged error of the court in applying the principle of subrogation. Such assignments as specified error in the admission of evidence are not well taken, as it was necessary to admit such evidence in order to determine whether Mrs. Zorn should be subrogated to the state. Such assignments as specified error in the overruling of demurrers to Mrs. Zorn's cross-complaint and to the refusal to strike certain paragraphs in the complaint are likewise not well taken, for the reason that the matters alleged therein were necessary to present respondent's theory of subrogation and, therefore, necessary to constitute an answer to the complaint and were not irrelevant or immaterial. This leaves only the question of whether, under the facts of the case, the court properly applied the equitable doctrine of subrogation.

Owing to the fact that there appears to be a formidable array of confusion in the cases which we shall later consider as to what is required for subrogation in the case where one loans money to pay off the mortgage or lien of another, we deem it helpful to preface such consideration by a statement of the principles which govern subrogation generally. In the first place, it is a purely equitable doctrine borrowed from the civil law. It was first applied only in the case of sureties. As stated in the case of Beaver County v. Home Indemnity Co., 88 Utah 1, 52 P.2d 435, equity first applied the doctrine strictly and sparingly. It was later liberalized and its development was the natural consequence of a call for the application of justice and equity to particular situations. It became recognized as a wholesome and highly meritorious doctrine and is now highly favored in equity. Bingham v. Walker Bros., Bankers, 75 Utah 149, 283 P. 1055, 1063. Says the court in Kent v. Bailey, 181 Iowa 489, 164 N.W. 852, 853:

"The books agree that subrogation is not founded on contract or privity or strict suretyship, but is born of equity, and results from the natural justice of placing the burden where it ought to rest. The remedy depends upon the principles of justice, equity, and benevolence to be applied to the facts of the particular case. It is of equitable origin, adopted to compel the ultimate discharge of a debt or obligation by him who in good conscience ought to pay it. These principles will be found well stated in the text-books on the subject and repeated in the almost innumerable decisions. See valuable note in which the cases are collected to American Bonding Co. v. Nat. Mech. Bank, 97 Md. 598, 55 A. 395, 99 Am. St. Rep. 466. The authorities are also agreed that the doctrine since first recognized has been steadily expanding and growing in importance and extent in its application to various subjects and classes of persons. Home Sav. Bank v. Bierstadt [168 Ill. 618, 48 N.E. 161, 61 Am. St. Rep. 146], supra; Heuser v. Sharman [89 Iowa 355, 56 N.W. 525, 48 Am. St. Rep. 390], supra. The remedy is to be administered according to the established rules of equity jurisprudence."

In South Omaha Nat. Bank v. Wright, 45 Neb. 23, 63 N.W. 126, in the syllabus (by the court) it is stated:

" The doctrine of subrogation is not administered by courts of equity as a legal right, but the principle is applied to subserve the ends of justice, and to do equity in the particular case under consideration. It does not rest on contract, and no general rule can be laid down which will afford a test in all cases for its application. Whether the doctrine is applicable to any particular case depends upon the peculiar facts and circumstances of such case."

In Home Sav. Bank of Chicago v. Bierstadt, 168 Ill. 618, 48 N.E. 161, 61 Am. St. Rep. 146, it was stated:

"While these general heads include the doctrine and principles of subrogation, that doctrine has been steadily expanding and growing in importance and extent in its application to various subjects and classes of persons. This equitable principle is enforced solely for the accomplishment of substantial justice where one has an equity to invoke which cannot injure an innocent person."

In Emmert v. Thompson, 49 Minn. 386, 52 N.W. 31, 32 Am. St. Rep. 566, decided in 1892, it was stated:

"It has been well said that the doctrine of subrogation has been steadily growing and expanding in importance, and becoming more general in its application to various subjects and classes of persons. It is not founded upon contract, but is the creation of equity,--is enforced solely for accomplishing the ends of substantial justice; and, being administered upon equitable principles, it is only when an applicant has an equity to invoke, and where innocent persons will not be injured, that a court can interfere."

The assertion that subrogation is a growing and expanding doctrine applied to fit the particular facts of any case in order to work out an equitable and just result is amply borne out by a comparison of many of the cases decided before 1900 as compared with the more recent cases. Yet courts have striven to lay down rules of guidance to govern courts of equity in applying the doctrine, but these rules are largely a codification of principles stated in the cases and have themselves changed as the courts applied the doctrine to new sets of facts and gave it broader interpretation. In pursuance of this effort to formulate rules, it is said that subrogation is of two kinds, "legal" and "conventional." In Bingham v. Walker Bros., Bankers, supra, it is stated: "Legal subrogation" arises "where the person who pays the debt of another stands in the situation of a surety or is compelled to pay to protect his own right or property."

In passing, it may be said that the compulsion meant is not just one to prevent foreclosure, but extends to the case where the payor or his property are obligated and the creditor has the right to pursue them. The payment does not need to be made because of a present pressure by the creditor or present...