Price v. Lovins

• Decision Date: 16 June 1936
• Docket Number: (No. 8304)
• Citation: 117 W.Va. 624
• Parties: Julian Price, Trustee, et al. v. W. T. Lovins,Trustee, et al.
• Court: West Virginia Supreme Court

117 W.Va. 624

Julian Price, Trustee, et al.

v. W. T. Lovins, Trustee, et al.

(No. 8304)

Supreme Court of Appeals of West Virginia.

Submitted May 14, 1936.

Decided June 16, 1936.

1. Subrogation

One who discharges a first lien at the instance of the debtor is not, in the absence of agreement, entitled to be subrogated to the lien discharged as against a junior lien of which the party seeking subrogation was fully informed at the time of payment.

2. Subrogation

Subrogation, as a general rule, will not be decreed until the entire debt, the security for which the subrogee seeks, has been paid.

Appeal from Circuit Court, Wayne County.

Suit by Julian Price, trustee, and others, against W. T. Lovins, trustee, and others. From a decree, plaintiffs appeal.

Affirmed.

Litz, Judge, dissenting.

Peyton, Winters & Hereford, for appellants

Mar cum & Gibson and Via, Hardwick & Quintan, and Fred M. Vinson, for appellee Eugene Wallace.

Kenna, Judge:

This appeal is prosecuted from a decree of the Circuit Court of Wayne County by which that court failed to subrogate Jefferson Standard Life Insurance Company to the rights of certain prior lienors by trust deed against certain real estate located in the city of Kenova, and owned by L. W. Bowclen and Eula Bowden. The theory of the Jefferson Standard Life Insurance Company in this court is (1) that it advanced the sum of $1500.00 to the owners with the express understanding that it was to be secured by a first lien upon the real estate in question, and that since the money it advanced actually went to pay off and retire a part of the pre-existing liens against the land, it is entitled to be subrogated to the rights of such pre-existing lienors to the extent of the payment of its money for that purpose; and (2) that since a part of the money advanced by it was used to retire the first assigned of a series of notes secured by the pre-existing deed of trust, it is entitled to have a decree placing the first note to be assigned in preferential position with reference to priority over the notes of the same series that were later assigned. The Circuit Court of Wayne County held against both these contentions and it is from the decree fixing the priorities otherwise that the Jefferson Standard Life Insurance Company prosecutes this appeal.

On July 6, 1927, W. T. Wallace and T. B. Greenslait conveyed to L. W. Bowden and Eula B. Bowden certain property in the city of Kenova. The unpaid purchase money in the transaction was represented by one note for $700.00 due in twelve months and eighty notes of $50.00 each payable monthly. These notes were secured by a deed of trust made by the Bowdens to W. T. Lovins, trustee, bearing even date with the conveyance.

On July 7, 1927, the next day after the conveyance and deed of trust, W. T. Wallace indorsed the $700.00 note and seventy-nine of the $50.00 notes with the firm name of Wallace & Greenslait by himself, and took them to the Farmers & Merchants Bank of Catlettsburg, Kentucky. He discounted the $700.00 note outright to the bank and deposited the seventy-nine $50.00 notes with the bank as collateral security upon his own indebtness.

In March, 1928, W. T. Wallace and Greenslait had a settlement of their partnership affairs in the course of which Wallace withdrew from the Farmers & Merchants Bank of Catlettsburg $2,000.00 or more, face value, of the Bowden $50.00 notes that he had deposited there as collateral and turned them over to Greenslait.

In March, 1928, the same month in which he acquired them, Greenslait sold forty-four of the $50.00 Bowden notes to Eugene Wallace. These notes matured from sixteen to fifty-nine months from date, and all but eighteen of them had been paid at the time this suit was instituted.

On September 9, 1930, L. W. Bowden and Eula B. Bowden having previously applied for a loan of $1500.00 from the Jefferson Standard Life Insurance Company, a deed of trust to Price, trustee, upon the same real estate that had been conveyed to Lovins, trustee, securing Jefferson Standard Life Insurance Company in the amount of $1500.00, was recorded in the office of the clerk of the county court of Wayne County. This deed of trust is dated August 19, 1930.

It appears from the proof that the Jefferson Standard Life Insurance Company had employed an attorney at lawr of Huntington, West Virginia, to examine and report upon the state of the title to the land that the Bowdens intended to convey as security. Their attorney had reported certain unpaid taxes and the prior trust deed. He was instructed by his client that it would only make the loan upon condition that it could procure as security a first lien upon the land in question. He got in touch with W. T. Wallace and with the Farmers & Merchants Bank, and was assured that W. T. Wallace was the owner of all of the Bowden notes outstanding, a part of which were held by the bank as collateral security. The company's attorney did not discover that a part of the unpaid Bowden notes were at that time held by Eugene Wallace. He does not seem to have inquired of the Bowdens as to the number of their notes that remained unpaid.

On October 6, 1930, a partial release or waiver, signed by W. T. Wallace and the Farmers & Merchants Bank, was recorded in the office of the clerk of the County Court of Wayne County, West Virginia. This release was dated September 29, 1930, and it recites that W. T. Wallace is the owner and holder of all of the notes secured by the trust deed to W. Lovins, trustee, and that the Farmers & Merchants Bank is the holder of a part of them as col lateral security only. The release waives priority in favor of the deed of trust securing the Jefferson Standard Life Insurance Company in their $1500.00 loan to the Bowdens.

The money advanced by the Jefferson Standard Life Insurance Company was sent to the company's attorney in the form of a check made payable to him and L. W. Bowden jointly. It seems to have been disbursed about the first of October, and enough was paid to the bank to discharge the $700.00 note that had been transferred outright to it. The balance of the money seems to have been disbursed by W. T. Wallace, who paid $413.20 to Eugene Wallace, and this sum was applied to retire a part of the Bowden notes held by Eugene Wallace. After this money was applied by Eugene Wallace, he still had eighteen of the Bowden notes in his possession unpaid.

The foregoing facts were developed in evidence upon a bill of complaint brought by the Jefferson Standard Life Insurance Company seeking to enjoin the enforcement of the deed of trust made by the Bowdens to Lovins, trustee, at the instance of Eugene Wallace. The theory of the bill of complaint is that the notes held by Eugene Wallace either had been paid or were in fact not secured by the trust deed made to Lovins; that at the time of taking its trust deed, the Jefferson Standard Life Insurance Company had procured a release signed by the holders of all of the outstanding notes secured by that trust deed and that therefore its lien was the first lien upon the property. The bill of complaint does not seek relief upon the theory of subrogation. It seeks relief on the theory that Eugene Wallace, who was insisting upon the foreclosure of the trust deed made by the Bowdens to W. T. Lovins, trustee, was not the holder of any of the notes thereby...