Porter v. Title Guaranty & Surety Co.

• Decision Date: 06 December 1909
• Citation: 17 Idaho 364,106 P. 299
• Parties: JOHN PORTER, Respondent, v. THE TITLE GUARANTY AND SURETY COMPANY, Appellant, and JOHN W. MONARCH and WM. S. PORTER, Doing Business Under the Name of MONARCH & PORTER, Respondents
• Court: Idaho Supreme Court

106 P. 299

17 Idaho 364

JOHN PORTER, Respondent, v. THE TITLE GUARANTY AND SURETY COMPANY, Appellant, and JOHN W. MONARCH and WM. S. PORTER, Doing Business Under the Name of MONARCH & PORTER, Respondents

Supreme Court of Idaho

December 6, 1909

MORTGAGE-PAYMENT-ASSIGNMENT-SUBROGATION-ATTORNEY'S FEES.

1. Held, that the evidence in this case supports the finding of the court, to the effect that the plaintiff's mortgage was given in good faith for a valuable consideration and without intention to hinder, delay or defraud the creditors of the mortgagor.

2. Where it appears that money due and belonging to a mortgagor has been paid to the mortgagee upon the indebtedness secured by such mortgage, such debt thereby becomes liquidated and extinguished, and such mortgage is no longer the subject of sale and transfer.

3. Payment is the discharge of a debt and is not a contract. The purchase of a note and mortgage is a contract of sale requiring the mutual assent, either express or implied, of a buyer and seller and a consideration.

4. Where a firm has a contract with the government for the construction of irrigation works and receives payment from the government on such contract, and turns the money over to a creditor to be applied upon a debt due from such firm to such creditor, and it further appears that a third person made certain advances and loans to such contracting firm to aid them in carrying out their contract with the government the payment made by such firm to its creditor will be deemed a payment by such firm and not by the person advancing or loaning such money in aiding such firm to carry out said contract.

5. Where a mortgagor makes payments upon the mortgage debt out of money belonging to the mortgagor, and such payments amount to the sum secured by such mortgage, such mortgagor cannot have such mortgage assigned to another creditor to secure a debt due such creditor, to the prejudice of a creditor or subsequent mortgagee.

6. Subrogation is the creature of equity and will not be permitted where it will work injustice to the rights of those having equal or superior equities; and where it appears that money belonging to a mortgagor is paid to a mortgagee upon the mortgage indebt- edness, and it further appears that there is a second mortgage upon such property it is the right of the second mortgagee to have the money paid by the mortgagor upon the first mortgage applied in discharge and in liquidation of such mortgage, and a third mortgagee cannot claim that he is subrogated to the rights of the first mortgagee by reason of the fact that he made advances and loans to the mortgagor which enabled the mortgagor to earn the money which was applied in payment of the first mortgage.

7. Where a mortgagee agrees in writing that his mortgage although prior in date, shall be held subject to another certain mortgage, and there is no consideration stated in such agreement; and it appears as a fact that no consideration passed to the first mortgagee for making such agreement, and the only consideration claimed is that the second mortgagee made advances and loans to the mortgagor which he would not otherwise have made, and it further appears that advances and loans have been made by the second mortgagee prior to the making of such agreement and that there was no change in the method of making such advances or loans, and that the second mortgagee was under bond to see that the mortgagor carried out and fulfilled a contract for which such advances were made, held, that the evidence is sufficient to support a finding of the court that there was no consideration for such agreement and that the party making such agreement was not estopped to claim that his mortgage was prior to that held by the other party to such agreement.

8. In this state to entitle a plaintiff to recover attorney's fees upon the foreclosure of a mortgage, where it is stipulated that a certain specified sum may be recovered as attorney's fees in such foreclosure proceedings and that the same are reasonable, the plaintiff must also prove that he has agreed to pay his counsel a stipulated or reasonable fee for his services in such action, and the reasonableness of the fee agreed to or what would be a reasonable fee in such action.

(Syllabus by the court.)

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Fremont Wood, Judge.

An action to foreclose a chattel mortgage. Judgment for plaintiff. Defendant and cross-complainant appeals. Affirmed.

Judgment affirmed. Costs awarded to respondent. Petition for rehearing denied.

Neal & Kinyon, for Appellant.

The undisputed facts in this case entitle the appellant as against the plaintiff to an "equitable assignment by way of subrogation" of the First National Bank mortgage, to the extent that the appellant has furnished money which directly or indirectly was used in the payment of the bank's mortgage. (3 Pomeroy Eq. Jur., 3d ed., secs. 1211, 1212; Wilson v. Wilson, 6 Idaho 597-607, 57 P. 708; In re McGuire, 137 F. 967; Union Mortgage B. & T. Co. v. Peters, 72 Miss. 1058, 18 So. 497, 30 L. R. A. 829, 833.)

If money is advanced to a debtor to discharge an existing first mortgage upon his property, and in pursuance of an agreement that the lender is to have a first lien upon the property for the repayment of the sum loaned, the lender is entitled, as against a junior encumbrancer, to be treated as the assignee of the first mortgage which has been paid off and discharged with the money loaned, whenever it becomes necessary to do so to effectuate the agreement with the lender and to prevent the junior encumbrance from being raised accidentally to the dignity of a first lien contrary to the intention of the parties. (Building etc. Assn. v. Sparks, 111 F. 647-652, 49 C. C. A. 510; Home Savings Bank v. Bierstadt, 168 Ill. 618, 61 Am. St. 146, 48 N.E. 161; Thompson v. Connecticut etc. Co., 139 Ind. 325, 38 N.E. 796; Farm Land etc. Mortgage etc. Co. v. Elsbree, 55 Kan. 562, 40 P. 906; Straman v. Rechtine, 58 Ohio St. 443, 51 N.E. 44, Fievel v. Zuber, 67 Tex. 275, 3 S.W. 273.)

The doctrine of subrogation has nothing of technicality about it; and he who in administering it would "stick in the letter" forgets the end of its creation and perverts the spirit which gave it birth. It is the creature of equity, and real essential justice is its object. (Enders v. Brune, 4 Rand. (Va.) 447; Hawker v. Moore, 40 W.Va. 49, 20 S.E. 848, 68 L. R. A. 521, and note; 1 Jones' Mortgages, 5th ed., sec. 877.)

Where it is equitable that a person furnishing money to pay a debt should be subrogated for the creditor or in the place of the creditor, the person making such payment will be subrogated to the creditor's rights as mortgagee. (Jones' Chattel Mortgages, sec. 659; Walker v. Stone, 20 Md. 195; Crippen v. Chappel, 35 Kan. 495, 57 Am. Rep. 187, 11 P. 453; Yaple v. Stephens, 36 Kan. 680, 14 P. 222; Bradley v. Bond, 101 Md. 691, 61 A. 504.)

Consideration to the plaintiff may be either benefit received by the plaintiff or received by some other person at his request, or may be detriment incurred by the other party to the contract (the appellant). (Page on Contracts, sec. 274; Rucker v. Bolles, 80 F. 504, 25 C. C. A. 600; Violett v. Patton, 5 Cranch, 142, 3 L. ed. 61, 63; Dyer v. McPhee, 6 Colo. 174, 193; Clark v. Sigourney, 17 Conn. 517; Ballard v. Burton, 64 Vt. 387, 24 A. 769, 16 L. R. A. 664, 667; Bank of New Hanover v. Bridgers, 98 N.C. 67, 2 Am. St. 317, 319, 3 S.E. 826; Barrett v. Mahnken, 6 Wyo. 541, 71 Am. St. 953, 955, 48 P. 202.)

"A written instrument is presumptive evidence of consideration." (Secs. 3314, 3222, Rev. Codes; Brumback v. Oldham, 1 Idaho 711.)

Under no view of the law had the court the right to wholly disallow attorney's fees, and under any view of the evidence before the court the court must allow at least $ 1,500 to the appellant on that behalf. (11 Cyc. 105, 106; Hurni v. Sioux City Stock Yds. etc., 138 Iowa 475, 114 N.W. 1074, 1076.)

S. L. Tipton, A. A. Fraser, C. H. Libby, and John Porter, for Respondent.

The so-called relinquishment fails to show or recite any consideration for its support, and there was no proof offered upon the trial in support of the alleged consideration named in appellant's answer. (Clark on Contracts, pp. 147, 152, 184.)

If the indebtedness of Monarch & Porter to the First National Bank of Idaho, or to C. W. Moore, trustee, was paid, it is immaterial who paid the debt, or at whose request it was paid. The indebtedness being paid, the property mortgaged and the securities pledged were thereby discharged and released. (Moran v. Abby, 63 Cal. 61.) When the indebtedness is paid out of the debtor's funds, though with an agreement of subrogation, such payment will not entitle the party to subrogation. (Denton v. Cole, 30 N.J. Eq. 244.)

STEWART, J. Sullivan, C. J., and Ailshie, J., concur.

OPINION

STEWART, J.

On July 8, 1905, the firm of Monarch & Porter, composed of John W Monarch and William S. Porter, entered into a contract with the United States for the construction of certain canals, ditches, etc., under what is known as "The Minadoka Irrigation Project." Afterward said firm of Monarch & Porter executed three several chattel mortgages on their plant and personal property as follows: A mortgage dated Dec. 13, 1905, to C. W. Moore as trustee of the First National Bank of Idaho, to secure a promissory note in the sum of $ 10,000; a mortgage dated Mar. 6, 1906, to John Porter, to secure a note in the sum of $ 15,000; a mortgage dated Mar. 12, 1906, to the Title Guaranty & Surety Company, to secure a promissory note in the sum of $ 20,000. Afterward this action was commenced by John Porter to foreclose the chattel mortgage given to him on ...