Wingate v. Peoples Building & Loan Savings Ass'n

FISHER, Chief Justice. Opinion.—N. T. Jones and wife and H. M. Greene and wife on the 16th day of November, 1891, and on the 2nd day of December, 1891, executed in favor of appellee deeds of trust or mortgages with power of sale conveying lot No. 12 in block No. 8 in the town of Ballinger, to secure the payment of two notes executed by Greene & Jones payable to appellee, one for two thousand dollars and the other for five hundred dollars. At the time these deeds of trust were executed the property therein described was the business homestead of Greene & Jones, who were then using the property as their place of business in selling goods, etc., as merchants and as partners. Subsequent to the execution of the deeds of trust and at a time when it is not shown that Greene & Jones had abandoned said property and had ceased to use it as a place of business, they, by absolute deed, conveyed the property to the appellant, Wingate, who thereafter brought this suit to cancel the deeds of trust as clouds upon his title, on the ground that they were void, because executed and delivered at a time when the *419 property was the business homestead of appellant’s vendors, Greene & Jones. The court below in effect held that appellant Wingate, as a part of the consideration of his purchase, agreed to or was bound to pay off the mortgage debts due the appellee by Greene & Jones, and rendered judgment against the appellant and decreed that the property in question was subject to the deeds of trust in favor of appellee. The principal question in the case is whether this result is warranted by the facts. It appears that about four hundred and twenty-five dollars of the amount which the deeds of trust were executed to secure was advanced by appellee for the purpose of paying off and discharging a vendor’s lien note due by Greene & Jones to the original vendor, and the balance of the amount stated in the deeds of trust was in effect a loan to Greene & Jones. The deeds of trust were undoubtedly valid in so much as they secured the payment of the amount used in paying off and discharging the prior vendor’s lien, but they were void as to balance of the amount for which they were executed. After the deeds of trust were executed Greene & Jones paid to appellee about six hundred dollars, before they sold to appellant, without any instructions as to the application of these payments as to any particular portion of the entire debt secured by the deeds of trust. Generally, in the absence of an application by the parties of the payment to any particular debt, the court will direct the application according to the justice and equity of the particular case. If a payment is made by a debtor upon a mortgage debt that is an incumbrance upon his homestead it is supposed to be made on the debt secured and to the end that the lien may be discharged; and the circumstances connected with the payment may indicate that it was the purpose to so apply the payment, although there is no express direction to that effect. It can not be supposed that Greene & Jones, whose business homestead was covered by the mortgages, in making the payments did not intend that they should be applied to the discharge of this lien; and no other conclusion can be reached but that they in making the payments considered and intended thereby that the mortgages were released and discharged to the extent of the payments made. Hence, if they, as men of ordinary prudence, had actually exercised their discretion in making an application of the payments, they would have been applied to the discharge of the valid lien upon the property. If property is covered by a lien upon the homestead which is valid in part and void in part, and payment is made without specific directions as to its appropriation, it would be fair for the court to apply it to the extinguishment of the lien, for such a ruling would be in keeping with the supposed intention of the parties and what they understood from the circumstances of payment as to how it was intended to go. First Nat’l Bank v. Hollingsworth, 6 Law. Rep-. Ann., 93; Kuker v. McIntyre, 20 S. E. Rep., 976; Pattison v. Hull, 9 Cowen, *420 759; Windsor v. Kennedy, 52 Miss., 165; Laeber v. Langhor, 45 Md., 478. With these views, we are prepared to hold that the payments made by Greene & Jones extinguished the vendor’s lien, and that the deeds of trust as to the balance of the debts secured were void. We next consider the main question in the case, whether the appellant, as a part of the consideration of his purchase of the property from Greene & Jones, agreed or became bound to pay the debts due appellee by Greene & Jones. If this was the case the appellee upon this promise could hold the appellant liable for the debt and could enforce the vendor’s lien upon the property. In other words, by reason of this promise and agreement, they would have the same right to enforce a lien upon the property in their favor as would exist in favor of the vendors of appellant, as by such agreement the rights of the vendors are conferred upon the appellees. But, in our opinion, the facts do not establish such promise or agreement upon the part of appellant. There are some facts and circumstances in the record which tend to show that the appellant did after his purchase pay to appellee some of the amount due it by Greene & Jones; but the evidence of all of the parties who were present when the property was purchased by appellant, as well as the recitals contained in his deed, clearly show that he expressly refused and declined to purchase the property upon the part consideration that he would pay the debt due appellee, and that such debt was in no wise assumed by him and did not enter into and become a part of the consideration for such purchase. The evidence upon this question did not warrant the judgment of the court below, and it would seem logical, in the view we take of the question, to render judgment here, but in view of recent rulings by the Supreme Court we doubt our power to do so, and therefore will reverse and remand the case. We express no opinion as to right of appellee, if any, arising from the promise by Jones to pay the debt due by his vendor, Rape, as a part of the consideration for his purchase of a half interest in the property from Rape, because this question is not raised by the pleadings. In view of another trial, we express the opinion that we seriously doubt if under the facts the appellant occupies the position of a purchaser without notice. He knew of the existence of the deeds of trust when he purchased, and therefore we are inclined to the opinion that he is charged with inquiry into the consideration upon which they were based. For the reason stated the judgment below is reversed and the cause remanded.