State Sav. Trust Co. v. Spencer

• Decision Date: 11 March 1918
• Docket Number: 2192
• Citation: 201 S.W. 967
• Parties: STATE SAV. TRUST CO. v. SPENCER et al
• Court: Missouri Court of Appeals

201 S.W. 967

STATE SAV. TRUST CO. v. SPENCER et al

No. 2192

Court of Appeals of Missouri, Springfield

March 11, 1918

Appeal from Circuit Court, Greene County; Guy D. Kirby, Judge. Suit by the State Savings Trust Company against George W. Spencer and others. Decree for plaintiff, and defendants appeal.

Affirmed.

Watson & Page, of Springfield, for appellants.

Mann Todd & mann, and Barbour & McDavid, all of Springfield, for respondent.

BRADLEY J. STURGISS, P. J., and FARRINGTON, J., concur.

OPINION

BRADLEY, J.

Plaintiff and the Holland Banking Company in a separate suit proceeded in equity against defendant Spencer, sheriff and acting trustee, et al., to enjoin the sale of certain real estate under a trust deed, and to be subrogated to the rights of lienors, prior in time to the deed of trust being foreclosed. The trial court granted the relief prayed for, and defendants appealed.

July 15, 1909, defendant Ida S. Blanton and her husband, W. E. Blanton, owned, unincumbered, certain real estate in the city of Springfield, Mo.; and on that day the Blantons borrowed $ 2,500 from A, B. Crawford, and gave therefor their three notes, one for $ 500, one $ 750, and one $ 1,250, due in one, two, and three years, respectively. These notes were secured by deed of trust on the real estate above mentioned, and were the property of one Quick at the time of the transactions which gave rise to these cases. On September 7, 1912, the Blantons gave a second trust deed on this property to secure their note of $ 650 due in four months, to one Carter, which note and trust deed were held by the Holland Banking Company at the time of the transactions referred to giving rise to this litigation. December 14, 1912, the Blantons gave a third trust deed on this property to secure their note of $ 1,800, due in one year, to defendant West. All these notes were for borrowed money, and drew 8 per cent. interest, and little was paid on them, except interest, and not all interest. There were also some tax liens against the property superior to any of the trust deeds. The Holland Banking Company held part of the tax bills. On June 1, 1914, Quick was pressing the Blantons on their notes of July 15, 1909, there being due on these notes at that time $ 2,220.87. Quick was threatening foreclosure, and the Blantons could not pay. In this extremity W. E. Blanton, representing himself and wife, applied to plaintiff to borrow $ 2,500 on the note of himself and wife, secured by first lien on the above-mentioned property. The object of the loan was to pay the Quick notes and avoid foreclosure, and to pay the taxes. Blanton assured plaintiff that he could arrange matters so that plaintiff's lien would be first. Plaintiff examined the property offered as security, and agreed to make the loan if matters could be so arranged that its lien would be first. The Holland Banking Company which held the Carter note and trust deed, and held some tax bills, agreed to take a new note and trust deed, second to plaintiff's, to secure it on the Carter note and tax bills. The tax bills, held by the Holland Banking Company, it was to pay off, and the amount it advanced for this purpose was to be added to the Carter note and interest in the new note and trust deed, which was to be a second lien. W. E. Blanton represented that West, who held the third deed of trust, was a friend to him (Blanton), and that he could secure the release of the West lien. Blanton produced a note purporting to be indorsed by West exactly like the one he and his wife had given West, and the usual marginal satisfaction was entered on the record of the West trust deed. Plaintiff, in good faith, believing that the West lien was released, and the Holland Banking Company agreeing to take a second lien, made the loan of $ 2,500, taking a trust deed on the property. The Blantons executed five $ 500 notes, drawing 7 per cent. interest due in five years. Plaintiff gave its check for $ 2,220.87 to Quick to pay off his notes, and his trust deed was released of record; and plaintiff paid the Holland Banking Company $ 154.13 to apply on taxes. This made a total of $ 2,375 paid out by plaintiff. The remaining $ 125 of the $ 2,500 was retained by plaintiff; this amount being 1 per cent. of the five $ 500 notes, which drew only 7 per cent. interest. Taxes, general and special, amounted to $ 293.57. The Holland Banking Company paid taxes on the property amounting to $ 139.44, and this with what plaintiff paid on taxes discharged all tax liens. The Holland Banking Company then took a note and second trust deed from the Blantons amounting to $ 850 to secure it for the Carter note and trust deed, and taxes it paid, and released of record the Carter trust deed. The Carter note and interest amounted to $ 668.60, and this amount, plus the $ 139.44 which the Holland Banking Company paid out on taxes, amounted to $ 808.

The plaintiff's note and trust deed, and the Holland Banking Company's note and trust deed, were duly entered of record, the papers being executed on June 1 and 2, 1914. West, who lived in Michigan, heard in August following that the record of his trust deed was satisfied, and he came to Springfield. It turned out that the note which Blanton produced to have the West trust deed satisfied was a forgery, and West began foreclosure proceedings under his trust deed of December 14, 1912, and plaintiff and the Holland Banking Company brought separate suits to enjoin the West foreclosure; plaintiff asking to be subrogated to the rights under the Quick trust deed, and the tax liens it had discharged amounting in all to $ 2,375, the amount it had paid out, and asking that this amount be declared a first lien, and that the land be sold, and that it be paid the amount it had thus paid out, with interest, and that the remainder be distributed among the other parties as their interest might appear. The Holland Banking Company asked that it be subrogated to the rights of the Carter trust deed, and the lien rights in the holder of the tax liens it discharged, and otherwise its prayer is similar to plaintiff's. A temporary injunction was granted in each case, and the cases were consolidated and tried together below, but separate decrees rendered. The trial court granted the relief prayed for in each case, and defendants appealed. Separate appeals were prosecuted here, that is, separate judgments and orders granting appeal were filed here and each given a separate number, but were consolidated so far as abstracts and briefs are concerned.

There is but one question of moment here for, determination. In the circumstances is plaintiff entitled to be subrogated to the rights under the Quick deed of trust, and the tax liens it discharged? Briefly, is plaintiff entitled to a first lien? The controversy is, of course, essentially between plaintiff and defendant West. Their respective rights must be considered as of June 1, 1914, as that is the date on which plaintiff's rights, if it has any in the premises, accrued, and on that date occurred the transactions which defendant West claims modified or changed his rights if plaintiff prevails. Defendant does not point out how he was injured, and indeed we cannot see any room for such a contention. His lien was subject to the Quick lien, the Carter lien, and the tax liens. This was the status of his lien on June 1, 1914, before any new liens were executed, and before any old ones were released. On June 3, 1914, after all new liens had been executed, and recorded, and old ones discharged, if such new liens by the route of subrogation so to speak to illustrate be held superior to defendant's lien, still he is left in the same status. On June 1, 1914, the Blanton property at the best estimate was worth about $ 5,000 with liens against it, and superior to defendant's lien, as follows: The Quick Hen $ 2,220.87; the Carter lien $ 668.60; taxes $ 293.57; total $ 3,182.97. There was due on West's note that day $ 2,050. The better estimate on the property as shown by the record perhaps is $ 4,500. If plaintiff and the Holland Banking Company prevail, the status of defendant's lien will be exactly the same as on June 1, 1914, except for accrued interest, and depreciation in the value of the property; but accruing interest and depreciation of the security could not operate to change the relative rights of the parties on June 1, 1914. If the security is depreciating in value, then the act of the plaintiff in the premises, if it is not subrogated, will be a decided advantage to defendant. The highest estimate on the value of the property on June 1, 1914, would not have discharged liens prior to defendant's, and his. If the property was worth only $ 4,500, it would have fallen some $ 733 short of paying defendant, after paying prior liens.

But the fact that the relative status or value of defendant's lien will not be changed does not entitle plaintiff to be subrogated; but in determining plaintiff's claim to subrogation, the status or relative status of defendant's lien should be considered. 37 Cyc. 363, defines "subrogation" thus:

"Subrogation is the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt. The doctrine is one of equity and benevolence, and like contribution and other similar equitable rights, was adopted from the civil law, and its basis is the doing of complete, essential, and perfect justice between all the parties without regard to form, and its object is the prevention of injustice. The right does not necessarily rest on contract or privity, but upon principles of natural equity, and does not depend upon the act of the creditor, but may be independent of him, and also of...