Tracy-Collins Trust Co. v. Goeltz

• Decision Date: 01 October 1956
• Docket Number: No. 8476,TRACY-COLLINS,8476
• Citation: 5 Utah 2d 350,301 P.2d 1086
• Parties: d 350 TRUST COMPANY, a corporation, Plaintiff and Respondent, v. Francis Boydell GOELTZ, Defendant, and Marian Story Goeltz, Defendant and Appellant.
• Court: Utah Supreme Court

Page 1086

301 P.2d 1086

5 Utah 2d 350

TRACY-COLLINS TRUST COMPANY, a corporation, Plaintiff and Respondent, v. Francis Boydell GOELTZ, Defendant, and Marian Story Goeltz, Defendant and Appellant.

No. 8476.

Supreme Court of Utah.

Oct. 1, 1956.

W. D. Beatie, Owen, Ward, Sheffield & Greenwood, Dean W. Sheffield, Salt Lake City, for appellant.

Franklin Riter, Salt Lake City, for respondent.

WORTHEN, Justice.

Appeal from a judgment foreclosing a mortgage on certain real property, and declaring the plaintiff to be subrogated to rights under a previously existing mortgage and ordering the real property sold to satisfy first the claim under the subrogation and second the subsequent mortgage.

The real property in question was acquired by the defendants as joint tenants on July 31, 1936. The defendants owned the property as joint tenants from the date of acquisition to March 31, 1952, when the property was awarded to appellant Marian Story Goeltz in a divorce action. At all times herein mentioned up to March 31, 1952, the defendants were husband and wife.

On October 27, 1936, defendants executed a mortgage covering the real property in question in favor of Tracy Loan and Trust Company, the name by which the plaintiff corporation was formerly known, to secure the payment of their promissory note in the principal amount of $6,000. On May 5, 1937, the said $6,000 mortgage was assigned to the R.F.C. Mortgage Corporation, which on July 21, 1938, assigned the mortgage to Pacific Mutual Life Insurance Company.

On the 10th day of May, 1948, defendant Francis Boydell Goeltz executed a promissory note for $7,100 to plaintiff, together with a real estate mortgage covering the real property in question to secure the same. The said note and mortgage for $7,100 purported to bear the signature of appellant; the purported signature of appellant was not affixed to said note and mortgage by appellant.

At the time defendant Francis Boydell Goeltz discussed with officers of plaintiff the possibility of obtaining the loan of $7,100 he was advised that if said loan were made, it would be upon condition that the mortgage for $6,000 given October 27, 1936, was paid off. The papers were prepared and defendant Francis Boydell Goeltz signed the same at plaintiff's place of business. Mr. Goeltz represented that his wife, the appellant, was ill, and requested that he be permitted to take them out for her to sign. Defendant Francis Boydell Goeltz returned the papers with what purported to be appellant's signature affixed to the note, the mortgage and the other paper.

One check was issued by plaintiff in favor of Pacific Mutual Life Insurance Company for $3,224.41 to pay off the 1936 mortgage, and after deducting certain expenses, a check for $3,851.60, the balance of the $7,100 loan, was issued to defendant Francis Boydell Goeltz.

Appellant first learned of the existence of the 1948 mortgage for $7,100 in 1951. The evidence justifies the conclusion that the monthly payments made on the 1936 mortgage up to 1948, when the same was paid off, were made by Francis Boydell Goeltz. Had appellant been making the payments on the $6,000 mortgage, she would have found out in June, 1948, that that mortgage had been paid and satisfied. The record discloses that she did not learn of the payment of the $6,000 mortgage by proceeds of the 1948 mortgage until 1951.

The trial court ordered that respondent have and recover from the defendants, jointly and severally, the sum of $3,227.15, together with interest, and ordered that respondent have and recover from defendant Francis Boydell Goeltz alone the sum of $3,576.70, together with interest, attorney's fees and costs.

The trial court ordered that respondent be subrogated to all of the rights, estates, claims, liens and interest of the Pacific Mutual Life Insurance Company under the $6,000 mortgage executed by both defendants in favor of respondent, and further ordered that the property be sold to satisfy the amount due plaintiff on its joint and several judgment against both defendants.

The trial court ordered that the undivided one-half interest of the defendant Francis Boydell Goeltz in said property owned by him on May 10, 1948, (other than the interest of said Francis Boydell Goeltz ordered sold with the interest of Marian Story Goeltz to satisfy the amount due plaintiff on its joint and several judgment against both defendants) be separately sold to satisfy the amount due plaintiff on its judgment against defendant Francis Boydell Goeltz alone under the note and mortgage executed by said defendant on May 10, 1948, in favor of plaintiff.

Appellant assigns and argues as error: first, the order of the trial court subrogating respondent to all the rights, liens and interest of the Pacific Mutual Life Insurance Company under the $6,000 mortgage by reason of the payment of the sum of $3,224.41, the balance due on said mortgage, and second, the holding of the trial court that the joint tenancy of defendants in said property was severed and a tenancy in common created by the execution by defendant Francis Boydell Goeltz of the $7,100 mortgage dated May 10, 1948, since said mortgage was void and could not effect a severance of the joint tenancy interest of defendants.

Appellant contends that respondent is not entitled to be subrogated to the rights of Pacific Mutual Life Insurance Company by reason of having paid the balance due under the 1936 mortgage to retire the same. She contends that the respondent had no interest to protect, that the mortgage was void, and contends further that respondent was guilty of culpable negligence.

As heretofore observed, it is established that the monthly payments on the 1936 mortgage were made by Francis Boydell Goeltz up to the time the mortgage for $7,100 was given on May 10, 1948. Respondent was in 1948, when the mortgage for $7,100 was given, acting as agent for Pacific Mutual Life Insurance Company to receive the payments from defendants under the 1936 mortgage.

Defendant Francis Boydell Goeltz talked with an officer of respondent about securing an increased mortgage loan on the security of the mortgaged premises. He was informed that the indebtedness could be increased only by a new loan, with part of the proceeds of such loan going to pay the balance due on the 1936 mortgage, and that no loan would be made unless the same was secured by a first mortgage on the property. Defendant represented to respondent that he desired additional funds to meet the cost of remodeling the house situated on the mortgaged premises.

Defendant Francis Boydell Goeltz agreed to the requirement of respondent. The note for $7,100 and the real estate mortgage were signed by defendant Francis Boydell Goeltz at the office of respondent. Upon the return of the note and mortgage with what purported to be the signature of appellant, the respondent paid out the $7,100 by paying off the balance due the Pacific Mutual Life Insurance Company on the 1936 mortgage, and delivered the balance of the new loan to Francis Boydell Goeltz.

Appellant's contention that the mortgage was void cannot be sustained. It is admitted that the obligation owing from defendants to the Pacific Mutual Life Insurance Company was a valid joint and several obligation. The interest of each defendant in the property in question was subject to the lien of said mortgage.

Appellant contends that since the note and mortgage for $7,100 were prepared with the understanding that they would be signed by both defendants and would be secured by the entire interest of both defendants in the property, and since it appears certain that respondent only intended to make the loan if secured by the full interest of both defendants, that the mortgage was conditioned upon appellant's executing the note and mortgage in question. Ap...