Sarles v. McGee

Decision Date03 February 1891
Citation1 N.D. 365,48 N.W. 231
PartiesSarles et al. v. McGee et al.
CourtNorth Dakota Supreme Court
OPINION TEXT STARTS HERE
Syllabus by the Court.

A senior incumbrancer is not bound to respect the equitable rights of a junior incumbrancer in the property unless he has notice, either actual or constructive, of such rights. The recording of the junior mortgage is not constructive notice to the prior mortgagee of the existence of such mortgage, or of the mortgagee's equitable right thereunder, to insist that the prior mortgagee shall not release from the lien of his mortgage any property upon which the subordinate incumbrancer has no lien, to his prejudice.

Appeal from district court, Stutsman county; Wm. H. Francis, Judge.White & Hewett and Edgar W. Camp, for appellant. John S. Watson, for respondents.

Corliss, C. J.

Viewed in the light of the record, the plaintiffs sought and obtained against the defendant unwarranted relief by invoking that equitable principle whose peculiar office it is to create a duty enforceable in a court of equity which a court of law does not recognize as of binding force. They prayed that they might be relieved from the injurious consequences of defendant's alleged disregard of an equitable duty which they claimed she owed to them. Did she owe such duty? The facts, so far as disclosed by the record, compel a negative answer to this inquiry. Defendant held a first mortgage upon certain premises. Plaintiff owned a second mortgage thereon. There were buildings on the land. Upon them was insurance effected by the mortgagor in his own name; the policy stating that the loss, if any, should be paid to the first mortgagee, the defendant, as her interest might appear. These buildings were destroyed by fire, and the loss adjusted and paid. The amount exceeded the amount of defendant's mortgage. We will assume that it was all paid to her personally, and paid after the mortgage debt had all become due, although the record by no means necessitates such a view of the facts. A large portion of the money she paid over to the mortgagor, retaining an amount for which she gave credit on the mortgage. We will also assume, without deciding, that it was the defendant's duty, as first mortgagee, to respect the rights of subsequent incumbrancers of which she had knowledge, and not suffer any of her security to pass from her control, to the prejudice of the subordinate lien; and that, it appearing that the value of the security held by the second mortgagees, the plaintiffs, was seriously impaired by the destruction of those buildings, it was the duty of defendant, if cognizant of plaintiffs' lien, to apply the insurance money in her hands to the extinguishment of her lien, and not suffer the greater portion of it to escape such lien by passing into the mortgagor's control. Still, not even in the forum of conscience would the relief sought for be granted upon the facts as shown by the record on this appeal. Defendant foreclosed her mortgage after this insurance money came into her hands, assuming that it did come within her control, and, having purchased on the foreclosure sale, in course of time secured a deed vesting in her the title to the property under this foreclosure. Plaintiffs in this action to foreclose their second mortgage ask that defendant's foreclosure proceedings, culminating in this deed, be annulled by the court on the theory that it was the defendant's duty to apply the insurance money in extinguishment of her lien, because of her equitable duty not to impair the subordinate lien...

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4 cases
  • Knauss v. Miles Homes, Inc.
    • United States
    • North Dakota Supreme Court
    • December 31, 1969
    ...mortgage therefore was not constructive notice to him of Miles's interest in the property. He cites the early case of Sarles v. McGee, 1 N.D. 365, 48 N.W. 231 (1891), in support of this contention. In Sarles, this court 'A senior incumbrancer is not bound to respect the equitable rights of ......
  • Baird v. Fischer
    • United States
    • North Dakota Supreme Court
    • August 2, 1928
    ...The senior mortgagee was not even charged with constructive notice of the existence of the junior mortgage. Sarles v. McGee, 1 N. D. 365, 48 N. W. 231, 26 Am. St. Rep. 633. If it had actual knowledge thereof, it also knew that the junior mortgagee owed no duty to pay the taxes or to redeem ......
  • Baird v. Stubbins
    • United States
    • North Dakota Supreme Court
    • July 26, 1929
    ...terms applies only in favor of a “ subsequent purchaser in good faith, and for a valuable consideration.” Sarles v. McGee, 1 N. D. 365, 48 N. W. 231, 26 Am. St. Rep. 633. This rule is as applicable to liens created by attachment or judgment and to titles derived through judicial sales as to......
  • Eynon v. Thompson
    • United States
    • North Dakota Supreme Court
    • October 29, 1921
    ...5529, C. L. 1913. The recording statutes apply as notice only to subsequent purchasers and incumbrancers. Sarles v. McGee, 1 N. D. 365, 48 N. W. 231, 26 Am. St. Rep. 633. In this case, the title involved is dependent upon a judicial sale, a sale in guardianship proceedings. Both parties, in......
1 books & journal articles
  • Latin 500.
    • United States
    • Revista Latin Trade Vol. 18 No. 4, July 2010
    • July 1, 2010
    ...7.0 361 Ferreyros, Perú $766.0 3.3 362 TV Azteca, México $762.9 7.5 363 Iochpe-Maxion, Brasil $756.7 -3.2 364 Açúcar Guarani, Brasil $742.1 N.D. 365 Sonda, Chile $738.8 8.8 366 Grupo Gigante, México $728.5 20.2 367 CIE, México $724.8 6.0 368 Saraiva, Brasil $719.6 53.8 369 M&G Poliester......

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