Morris v. Twichell

• Court: North Dakota Supreme Court
• Writing for the Court: BURR
• Citation: Morris v. Twichell, 63 N.D. 747, 249 N.W. 905 (N.D. 1933)
• Decision Date: 10 August 1933
• Docket Number: No. 6174.,6174.
• Parties: MORRIS v. TWICHELL et al.

63 N.D. 747

249 N.W. 905

MORRIS

v.TWICHELL et al.

No. 6174.

Supreme Court of North Dakota.

Aug. 10, 1933.

Syllabus by the Court.

1. One who assumes and agrees to pay a debt secured by mortgage on real estate becomes primarily liable therefor.

2. Where one, primarily liable for the payment of an obligation secured by mortgage upon real estate, pays such obligation, it operates as an absolute satisfaction of the debt.

3. While our statute, section 6718 of the Compiled Laws, gives to the holder of an inferior lien the right of subrogation to all the benefits of a superior lien when, for the protection of his own interests, he satisfies a claim secured by the superior lien, yet such right of subrogation does not apply to cases where the inferior lienholder by contract assumed the payment of the superior lien.

4. Where an inferior lienholder has assumed and agreed to pay a superior lien, he cannot, either by assignment or by subrogation, keep the superior lien alive as against other liens on the land.

Appeal from District Court, Cass County; P. G. Swenson, Judge.

Action by Edwin B. Morris against Treadwell Twichell and others. From the judgment rendered, the defendant C. B. Little appeals.

Affirmed.

Zuger & Tillotson, of Bismarck, for appellant.

Conmy, Young & Conmy, of Fargo, for respondent.

BURR, Judge.

Plaintiff commenced this action to foreclose a mortgage executed by the defendant Treadwell Twichell on the lands involved herein, and in the complaint alleges the defendants claim interests in the land; but that these interests, if any, are subordinate to his.

The defendants answer admitting that Twichell gave the mortgage held by the plaintiff, but that the defendant Little is a holder, by subrogation, of a mortgage superior to that of the plaintiff. The defendant Little set forth this mortgage and asks for a decree of foreclosure of the same and for a judgment to the effect that his mortgage is superior to that of the plaintiff.

The trial court found in favor of the plaintiff and adjudged that the defendant Little had no right or interest under the mortgage which he claimed to be superior to the mortgage of the plaintiff.

From the judgment entered the defendant Little appeals demanding a new trial in this court.

An examination of the record shows:

In 1914, the owner of the real estate involved executed and delivered to the Travelers' Insurance Company a mortgage to secure the payment of $20,000, which sum was due and payable in five years. This mortgage is known as the first mortgage.

In 1916, the owner of the land made a contract with the defendant Twichell giving to the latter an option to purchase the land by paying $10,000 in cash and executing a mortgage for the remainder of the purchase price “over and above existing incumbrances,” agreeing to give a deed upon such payment being made and mortgage given. The contract was recorded December 1, 1916.

Twichell had made arrangements with Little whereby the latter advanced to Twichell “the sum of $10,000.00 used by him in the purchase of said real estate.”

The owner became incompetent, and the county court appointed a guardian. In 1917, T. gave written notice of the exercise of his option to purchase the land “upon payment * * * of the sum of $10,000.00 * * * and my executing and delivering to him of a mortgage upon the said premises for the balance of such purchase price over and above the amount of the existing encumbrances thereon.” Immediately thereafter T. filed in the county court a petition for conveyance of the real estate. A hearing was had and a decree entered directing the guardian to “make, execute and deliver to said Treadwell Twichell * * * a good and sufficient conveyance * * * free from lien or encumbrance other than existing mortgages of record and of a mortgage to be executed and delivered by said Treadwell Twichell as in such contract provided; upon the payment by the said Treadwell Twichell * * * of the sum of $10,000.00 and the execution and delivery by him * * * of a mortgage in terms as by said contract provided.”

The first payment was made on the land; the mortgage now owned by the plaintiff and known as the second mortgage was executed “for the balance of the purchase price over and above existing encumbrances,” and on January 24, 1918, was recorded. This deed recites that the owner of the land entered into a contract with T. whereby “he contracted and agreed to convey the premises * * * upon the performance of the conditions of said contract.”

At the same time defendants entered into a written contract wherein it is stated that:

“Whereas C. B. Little, of Bismarck, North Dakota, advanced to the said Treadwell Twichell the sum of $10,000.00 used by him in the purchase of said real estate, and it is the purpose of the parties hereto that the said premises shall be owned by them jointly in undivided half interests, that the said Treadwell Twichell shall farm the same and that the said C. B. Little shall be re-paid the one-half of the sum so advanced by him with interest on all of the sum so advanced until such one half of said sum be repaid him.”

“It is hereby agreed by and between the said Treadwell Twichell and the said C. B. Little, that the said C. B. Little is the owner of an undivided half interest in the said premises, subject to mortgage incumbrance thereon; and the said Treadwell Twichell hereby grants, bargains, sells and quit claims to the said C. B. Little, his heirs and assigns an undivided one half interest in the said premises hereinbefore described.”

The contract further makes provision for the farming of the land by T. and how he shall be paid for his services out of the crops and how the remainder of the crop shall be sold and proceeds disposed of, and the contract then says: “The balance remaining from such one third share * * * shall be paid said C. B. Little, and credited as a payment upon such $10,000.00 advancement until the payments so made thereon aggregate the sum of $5,000.00. That until such time as the payments so made as hereinbefore provided to the said C. B. Little shall aggregate the said sum of $5,000.00 and interest upon the full sum advanced by him, this agreement shall be and constitute a mortgage and lien upon the undivided one-half interest in the said premises of the said Treadwell Twichell, securing to the said C. B. Little, his heirs and assigns, the payment by said Treadwell Twichell, his heirs or assigns, of any part of the said sum of $5,000 remaining unpaid to him together with interest as hereinbefore provided. That upon the said C. B. Little being paid the said sum of $5,000 and interest as hereinbefore provided, either from crop proceeds or by said Twichell or his assigns in other manner, then the within mortgage shall be void and of no further force. * * *” This contract was recorded in February, 1918.

By March, 1919, a difference of opinion arose between T. and the holder of the second mortgage, as to the effect of the terms of the note, and at that time the note was altered and a provision inserted to the effect that the interest on the note was to be paid annually, the note already providing for payment of annual installment of $1,000 on the principal.

In December, 1919, the first mortgage became due and the defendants entered into a contract with the holder of this mortgage for an extension of time of payment for a period of five years. This extension agreement describes the Morris note and mortgage to the insurance company, describes T. and L. as owners of the land, and it says: “And whereas the parties of the first part are now the owners in fee-simple of said premises, subject to the above described mortgage, * * * and the said parties of the first part have agreed and do hereby agree to assume and pay said mortgage indebtedness, and whereas at the special instance and request of the said parties of the first part the time of the payment * * * has been extended * * * to the 1st day of December, 1924, now therefore, in consideration of said extension the parties of the first part do hereby covenant and agree with the party of the second part and assigns as follows: to pay the said principal note * * * and interest thereon * * * annually on the first day of December of each year” in accordance with five interest notes.

In August, 1921, defendant T. gave a mortgage on this land to one M. T. Dill to secure the payment of $11,000. This mortgage, known as the third mortgage, became the property of the defendant L. by assignment in August, 1923.

In November, 1921, the defendant T. gave to the defendant L. a mortgage upon this land, known as the fourth mortgage, to secure the payment of $10,000.

In November, 1924, the first mortgage again became due; a new extension agreement, similar in terms to the first, was executed, and the time of payment extended to December, 1929.

Defendant T. made annual payments upon the principal secured by the second mortgage now held by plaintiff up to and including November, 1921, and continued paying the interest on the entire amount annually up to and including December 9, 1930.

In April, 1927, L. foreclosed the fourth mortgage, and a certificate of sale was issued to him, but no deed issued until November 20, 1929.

By December 1, 1929, the time secured by the second extension of the first mortgage expired and negotiations were opened between L. and the holder of the first mortgage for a further extension of time. These negotiations were carried on with the Fargo agent of the insurance company. In this respect the defendant L. testified he told the agent that he was “willing to extend it at 5 1/2 if they would accept that. If not, I would prefer to take the loan over myself, and if they would send me an assignment of the mortgage I would give them a draft for the amount and pay the Travelers Ins. Co.” The agent, when asked if L. had asked for an assignment of the mortgage or whether an assignment was mentioned during the conversation,...