Rice v. Winters

Decision Date19 June 1895
PartiesRICE v. WINTERS ET AL.
CourtNebraska Supreme Court
OPINION TEXT STARTS HERE
Syllabus by the Court.

1. The mere stipulation of counsel in a case that the clerk of a court may sign and allow a bill of exceptions is not sufficient to confer authority upon him to do so. To confer authority upon the clerk of a district court to sign and allow a bill of exceptions, it must appear that the judge is dead, or that he is prevented by sickness, or absence from his district, from signing and allowing the bill, or the parties to the litigation, or their counsel, must agree upon the bill of exceptions, and attach thereto their written stipulation to that effect. Scott v. Spencer (Neb.) 60 N. W. 892, followed.

2. A. owned real estate on which B. had a first, and C. a second, mortgage. D. loaned A. money to pay off B.'s mortgage. A. agreed to, and did, secure D.'s loan by an apparent first mortgage on the real estate. The loan made by D. was used in paying off the mortgage of B., and he released the same. When the mortgage of A. to D. was delivered, the mortgage records showed a marginal release of C.'s mortgage, signed: “C., by J.” It turned out that C.'s mortgage had never been paid, and was released by J. without authority. Held, that D. was not entitled to be subrogated to the lien held by B., by virtue of his mortgage, against the real estate.

3. “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.” Bank v. Wright (Neb.) 63 N. W. 126, followed.

4. A person seeking the benefit of subrogation must have paid a debt due to a third party, before he can be substituted to that party's right; and in doing this he must not act as a mere volunteer, but on compulsion, to save himself from loss by reason of a superior lien or claim on the part of the person to whom he pays the debt. The right of subrogation is never accorded in equity to one who is a mere volunteer in paying a debt of one person to another. Insurance Co. v. Middleport, 8 Sup. Ct. 625, 124 U. S. 534, followed.

5. The fact that a subsequent mortgagee's lien will occupy the same relation to the property, if one who has advanced money, secured by a mortgage on the real estate, to pay off the prior mortgage, is subrogated to the rights of the holder of such first mortgage, affords no reason why equity should permit the party so advancing the money to be subrogated to the rights of the holder of the first mortgage.

6. When a first mortgage lien existing against real estate is paid off, the lien of a second mortgage thereon becomes at once, by operation of law, a first lien on the property; and this first lien, and the right to enforce it as such, are vested rights.

7. Courts of equity will not apply the doctrine of subrogation where to do so would be to deprive a party of a legal right.

8. An intending purchaser or mortgagee of real estate relies and acts upon the recitals of an abstract made of the title to such real estate at his peril.

9. An abstract of title of certain real estate recited that a mortgage recorded thereon in favor of C. had been released on the margin of the record where recorded. Held:

(1) That an intending mortgagee of the property was bound to take notice of the mortgage records, and if C.'s mortgage had not in fact been released, and the mortgagee was prejudiced by relying upon the recital of the abstract, that his injury was the result of his negligence.

(2) That if C.'s mortgage appeared released on the margin of the record where recorded, by some one else, purporting to act for him, the intending mortgagee was bound to know, at his peril, that the party pretending to act for C. had authority to do so.

(3) That whether the mistake of the mortgagee was one of law or fact, or both, whatever injury he sustained by reason of such mistake was attributable to his lack of care, and afforded no reason for subrogating him to the rights of the holder of a mortgage on the premises prior to C.'s, which the said mortgagee had paid off with the proceeds of a mortgage he took on said property, relying upon the correctness of said abstract.

Appeal from district court, Buffalo county; Neville, Judge.

Action by W. B. Rice against William Winters and others to foreclose a mortgage. There was a decree for plaintiff, and defendants Grommes & Ullrich appeal. Reversed.Calkins & Pratt and Winston & Meagher, for appellants.

R. A. Moore and Marston & Nevius, for appellee.

RAGAN, C.

From the transcript of the record and the briefs of counsel, we understand the facts in this case to be substantially these: On the 15th of June, 1887, William Winters became indebted to one R. A. Moore, and, as an evidence of such indebtedness, executed and delivered to Moore, on said date, two notes of $700 each, due, respectively, on the 15th days of June, 1888 and 1889, and secured said debt by a mortgage upon certain real estate. On the 30th day of April, 1888, Winters also became indebted to Grommes & Ullrich in the sum of $3,829.76, and, as an evidence of said debt, gave to them a series of notes, the last two of which were for $600 and $429.76, respectively, and due October 31 and November 30, 1888. To secure this debt, Winters executed to Grommes & Ullrich a mortgage upon the same real estate which he had previously pledged to Moore. The Grommes & Ullrich mortgage became a second lien upon the property, the incumbrance of Moore being a first lien. Winters subsequently paid all the mortgage debt owing to Grommes & Ullrich, except the aforesaid last two notes of the series. In June, 1889, one John M. Lay resided in the city of Kearney, Neb., and was in the habit of taking applications of persons desiring to borrow money, and of referring such applications to one W. B. Rice, who, if the security proved acceptable, would make the loan applied for. About this date one E. B. Jones, an attorney at law at Kearney, seems to have had in his possession, for collection, the Moore mortgage. At least, he was then pressing Winters for its payment. Lay, learning of this fact, took Winter's application for a loan of $1,300, to be secured by a first mortgage on the premises already mortgaged by Winters to Moore; such loan to be used for the purpose of paying the Moore mortgage. June 1, 1889, Rice accepted Winter's application, and loaned him $1,300, taking his note therefor, secured by a mortgage on the same premises mortgaged by Winters to Moore; and with the $1,300 the Moore mortgage was paid off, and by Moore duly discharged of record on the 6th of June, 1889. About the same date said Jones released and discharged, on the margin of the record where it was recorded, the Grommes & Ullrich mortgage, or attempted to do so. It seems, also, that an abstract of the title of the real estate mortgaged was furnished to Rice before he parted with the money loaned to Winters, and that this abstract contained a notation of the abstractor that the Grommes & Ullrich mortgage had been released on the margin of the record where recorded. Rice brought this suit in equity to the district court of Buffalo county to foreclose the mortgage given him by Winters on the 1st of June, 1889; prayed for an accounting of the amount due him on said mortgage from Winters, and that he might be given a first lien upon the real estate described in said mortgage, to secure the payment of the amount found due. Winters was made a party defendant to this action, but his connection with the case need not be further noticed. Grommes & Ullrich were made, or became, parties to the suit, and filed an answer in the nature of a cross-petition, setting out the execution and delivery to them of the mortgage above mentioned by Winters; that the last two notes which the mortgage was given to secure, namely, the notes for $600 and $429.76, with interest, remained past due and wholly unpaid. They prayed for an accounting of the amount due them from Winters, and that they be given a first lien upon said mortgaged premises for its payment. To this answer and cross petition of Grommes & Ullrich, Rice replied (1) that the Grommes & Ullrich mortgage had been fully paid, and that there was nothing due thereon; (2) that it had been duly released and discharged of record by one E. B. Jones, acting as the agent and attorney for Grommes & Ullrich; (3) the execution of the mortgage of the 15th of June, 1887, by Winters to Moore; that the mortgage he (Rice) sought to foreclose in this action was made for the purpose of, and the proceeds used in, paying off this Moore mortgage. And he prayed as in his petition he had already, and, further, that he might be subrogated to the lien which Moore held against the premises by virtue of the mortgage which Winters had given him thereon, and which had been paid by the proceeds of the mortgage now sought to be foreclosed.

The district court made, among others, the following special findings: “The court further finds that one E. B. Jones, an attorney at law, undertook to release the security mortgage of Grommes & Ullrich by a release entered upon the margin of the record, but that the said Jones undertook to release said mortgage without first obtaining authority therefor, and that said Jones never was authorized by the said defendants Grommes & Ullrich to release said mortgage, and that said mortgage was never released, and has been at all times since the recording thereof, and now is, a valid and subsisting mortgage lien against said premises. That there is due to the said defendants Grommes & Ullrich from the said defendant William Winters, upon their mortgage, the sum of $1,455.39, with...

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    ... ... 374, ... 84 Am. St. Rep. 204; Crippen v. Chappel , 35 ... Kan. 495, 11 P. 453, 57 Am. Rep. 187; Kent v ... Bailey , supra; Rice v. Winters ... (1895) 45 Neb. 517, 63 N.W. 830; Washburn v ... Osgood , 38 Neb. 804, 57 N.W. 529; Wallace ... v. Benner , 200 N.C. 124, ... ...
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