Moore v. Olive

• Decision Date: 15 October 1901
• Citation: 87 N.W. 720,114 Iowa 650
• Parties: MOORE ET AL. v. OLIVE ET AL.
• Court: Iowa Supreme Court

114 Iowa 650

87 N.W. 720

MOORE ET AL.

v.OLIVE ET AL.

Supreme Court of Iowa.

Oct. 15, 1901.

Appeal from district court, Carroll county; Z. A. Church, Judge.

Suit in equity to quiet title to certain real estate, and to restrain and enjoin defendants from enforcing a mortgage thereon. Decree for defendants, and plaintiffs appeal. Reversed.Geo. W. Paine, for appellants.

Rose & Henderson, for appellees.

DEEMER, J.

Richard C. Moore at one time owned the north half of section 18, township 83, in Greene county. He sold 40 acres off the west side thereof, and thereafter executed the following mortgages: May 15, 1886, one to State Agriculture College, covering the northeast quarter of the section, to secure the sum of $1,600; April 13, 1889, one to Luther Lowell, covering the northwest quarter, less the 40 acres theretofore sold, to secure the sum of $1,500; April 13, 1889, one to Robert L. Pitcher, covering all the land owned by the mortgagor, to secure the sum of $1,000; May 2, 1889, one to defendant Olive, covering all the land, to secure the sum of $681. This last mortgage was foreclosed in the district court of Greene county, and on February 27, 1894, the land, except the 40 acres selected by Moore as his homestead, and which is the property in dispute, was sold at sheriff's sale (Olive being the purchaser) for the full amount of the judgment rendered in the foreclosure proceedings, with interest and costs. The land in the northwest fractional quarter was sold subject to the mortgages to Lowell and Pitcher. At the time of the sale Olive owned the Pitcher mortgage, and after the sale, and on the 10th day of April, 1894, he purchased the Lowell mortgage, which, as we have seen, covered the northwest quarter of the section, less the 40 acres previously sold, and also covered the land selected by Moore as his homestead. In due course of time Olive obtained a sheriff's deed to the land purchased by him at the foreclosure sale, which did not include the homestead. After acquiring the deed and the assignment of the Lowell mortgage, he placed the mortgage in the hands of his attorneys, who demanded the payment of the notes secured thereby. This action was commenced to cancel that mortgage in so far as it covered the plaintiff's homestead, on the ground that Olive's purchase at sheriff's sale was subject to the mortgage, and that his purchase thereof merged the mortgage in the legal title held by him to the lands purchased at sheriff's sale. Olive's mortgage covered the whole tract owned by Moore, including the homestead, and the Lowell mortgage covers the west half of the tract, less the 40 acres theretofore sold, including the homestead. It is affirmatively shown that Olive did not intend when he purchased the Lowell mortgage to merge it in the legal title. Indeed at that time all that he held was a sheriff's certificate of sale for the entire tract except the homestead. None of the prior mortgagees were made parties to Olive's foreclosure suit, but the land was sold subject to their mortgages. The Lowell mortgage was signed by Moore and his wife, as also was the one originally made to Olive. It is, of course, conceded that the homestead could not be sold under either mortgage, except to supply a deficiency remaining after exhausting the other property pledged for the payment of the debt; and it is contended that when Olive purchased at foreclosure sale, subject to the Lowell mortgage, he received the property charged with the payment of that mortgage, and could not thereafter take an assignment thereof and enforce it against the homestead. The Pitcher mortgage held by Olive at the time he instituted his foreclosure proceedings is not involved in this controversy, and we give it no further attention, except to state that it has not been paid, unless the facts above enumerated constitute a payment in law. The mortgage to the Agriculture College is still unpaid. The priorities of these liens will appear in the preceding statement.

Preliminary to a discussion of some of the propositions involved, it may be well to state that merger, as a rule, depends on the intention of the owner, and, if there be no evidence of intent, equity will not treat a mortgage as merged when it is to the interest of the owner, or those claiming under him, that it should continue in force. Linscott v. Lamart, 46 Iowa, 312;Patterson v. Mills, 69 Iowa, 755, 28 N. W. 53; Vannice v. Bergen, 16 Iowa, 555, 85 Am. Dec. 531. The doctrine is of equitable origin, and is governed by equitable considerations. In the instant case it clearly appears that Olive did not intend a merger when he purchased the Lowell mortgage. Hence there was no merger, and plaintiffs are not entitled to a decree unless they show that under the facts disclosed by the record the Lowell mortgage should be treated as extinguished by reason of the foreclosure proceedings. It is familiar doctrine that the purchaser of an equity of redemption by deed without covenants takes the estate charged with the payment of the mortgage debts, and it is presumed, in the absence of any special contract, that the amount paid or agreed to be paid was the value of the property, less the amount of the incumbrances, and it is for the purchaser, and not the seller, to discharge these liens. Trust Co. v. Mowery, 67 Iowa, 113, 24 N. W. 747;Clift v. White, 12 N. Y. 534;Sweetzer v. Jones, 35 Vt. 317, 82 Am. Dec. 639;Guernsey v. Kendall, 55 Vt. 201;Tice v. Annin, 2 Johns. Ch. 125. This same rule has been applied to purchasers at execution and foreclosure sales. Wade v. Howard, 6 Pick. 492;Bunch v. Grave (Ind. Sup.) 12 N. E. 514;Shuler v. Hardin, 25 Ind. 386;Atherton v. Toney, 43 Ind. 211. In such cases the premises in the hands of the purchasers are primarily liable for the payment of the mortgage debt, and the judgment debtor is neither legally nor equitably bound to pay off the prior mortgage for the benefit of the purchaser. Russell v. Allen, 10 Paige, 249. Where land is purchased subject to a mortgage, the purchaser is not personally liable for the mortgage debt, but it remains an incumbrance on the estate. Jones, Mortg. § 738. After having paid...