Murray v. O'Brien

Chadwick, J. This appeal involves only matters in controversy between plaintiff and the Mercantile Investment — 368 — Company, intervener. No reference will be made to other parties. On the 22d day of April, 1897, one John Sullivan made, executed, and delivered, to the United States Mortgage & Trust Company of New York, a certain note for the sum of $76,000. This note was secured by a mortgage of even date, covering lots 4 and 5, in the addition to the city of Seattle platted by Carson D. Boren and Arthur A. Denny. On the 26th day of September, 1900, John Sullivan died in King county, and the defendant Terrence O’Brien was thereafter appointed administrator of his estate. The estate being without present funds to meet the note and mortgage on the due date, the administrator, acting under the order and direction of the court, obtained an extension of the mortgage until the first day of May, 1907. Further extensions were made, so that the note has been at all times a live demand and • the mortgage a subsisting lien upon the property charged. On the 30th day of April, 1906, the United States Mortgage & Trust Company, in consideration of the then present worth of the note and mortgage and a bonus of $500-, assigned the securities to James A. Murray, the plaintiff, and he has been at all times since, and is now, the owner and holder thereof. Sullivan in his lifetime had reduced the principal indebtedness in the sum of $15,000, so that on the 20th day of April, 1908, the date upon which this action was begun, there was due the principal sum of $60,000, with interest from April 1, and $1,500 being the interest from November 1, 1907, to April 1, 1908. The latter amount was evidenced by a promissory note executed by the administrator under the order and direction of the court. Plaintiff asked that the property be sold in accordance with the usual forms in such cases. On March 23, 1909, the Mercantile Investment Company asked leave to intervene. Its petition was granted by the court. Its complaint in intervention sets up, among other things, that ever since the 5th day of December, 1908, it — 369 — has been, and is now, a corporation duly organized under the laws of the state of Washington, and is authorized to purchase, hold, acquire, sell, and dispose of real and personal property. After reciting the death of. Sullivan and the consequent probate proceedings, the execution of the note and mortgage, and plaintiff’s claim to be the owner and holder thereof, it is alleged that, ever since the 4th day of January, 1909, it has been the owner of an undivided interest in the property, and that the other interest, being one-half thereof, is owned by Corwin S. Shank and wife and Edward Corcoran and Charles P. O’Neill and wife; that plaintiff had refused to grant an extension of time for the payment of the note and mortgage, or to assign his securities without recourse or otherwise; that it was ready, able, and willing to take up the mortgage, and to pay to plaintiff the principal, interest, costs, and attorney’s fees; that the amount thereof had been furnished by attorneys for plaintiff; that it was willing to pay the same if the note and mortgage was assigned to it without recourse against plaintiff, or if, upon its making such payment, it be subrogated to the rights of plaintiff in the note and mortgage and in the foreclosure suit. Intervener further alleged that its co-owners were unable to pay the one-half of the amount then due, and that plaintiff, with intent to embarrass and defeat the right of the intervener, had threatened to dismiss his foreclosure suit and satisfy the lien of his mortgage and the debt secured thereby, if it paid the whole thereof. On the 20th day of March, 1909, the intervener had begun an independent action against plaintiff, setting up in substance the same matters which are recited in its petition for intervention, and praying for an order enjoining and restraining plaintiff and his attorneys from satisfying the mortgage or dismissing the foreclosure proceeding in the event of payment by the intervener. After formal proceedings had, an order was made by the court, restraining plaintiff and his attorneys of record, and all other agents and — 370 — attorneys then employed or thereafter to be employed by him, from satisfying the note and mortgage and from dismissing the foreclosure suit in case a tender of the amount due was made by the- intervener, which the order recited it was about to do. Accordingly, on the 25th day of March, 1909, the intervener tendered plaintiff’s attorneys, at their office .in Seattle, the full sum of $68,654.67, being the full amount of principal, interest, costs, and attorney’s fees then due upon the mortgage. In this tender the intervener said: “The Mercantile Investment Company has instituted suit against you in the superior court of the state of Washington for King county, and seeks to be subrogated to all of the rights of James A. Murray under the notes and mortgage mentioned in the above entitled suit, and also in the above entitled suit. The Mercantile Investment Company has also intervened in the above entitled suit, and in its complaint in intervention also seeks to be subrogated to all of the rights of James A. Murray under such notes and mortgage and in the above entitled suit. This tender is made for the purpose of protecting the title of the Mercantile Investment Company in the property described in your complaint in the foreclosure suit and to obtain subrogation by the Mercantile Investment Company to all of the rights of said James A. Murray.” Upon the written offer of tender, attorneys for plaintiff, indorsed over their signature the following: “Said tender is refused for the reason that it is not made for the purpose of paying and discharging said mortgage.” Thereupon a tender was made, in all respects similar to the first, omitting only the last sentence. This offer was. also acknowledged, and upon the writing the attorneys indorsed the following: “The above refused for the purpose set forth in the notice.” A third notice of tender was then written out, in words and figures following: “The Mercantile Investment Company now makes you a third tender of the amount mentioned in the previous tenders this day made, being the full amount of the notes and mortgage, principal, interest, costs and attorney’s fees. The Mercantile Investment Company is the owner of an undivided — 371 — half interest in the property described in the mortgage; is not personally liable for the amount or any part thereof, and now tenders you the above amount without any qualification, and requests you to accept such tender.” Upon this offer, the attorneys wrote over their signature the one word “Refused.” Following these tenders, the intervener obtained leave to, and did, file an amended complaint in the intervention, in which, in addition to the allegations contained in its first complaint, it set up the several tenders to which we have alluded, and ashed that, because of the refusal to accept them or any of them, the court enter a decree holding that the lien of plaintiff’s mortgage be cancelled, and further, that the court decree the debt to be discharged, for the reason that there having been no formal presentation of the debt to the administrator of the Sullivan estate, the lien being lost, the debt was barred by the statute of nonclaim. Bal. Code, § 6228. We have endeavored to epitomize the record so as to point out only the particular facts which moved the trial court to enter its decree in favor of the intervener. Appellant suggests a number of reasons why the decree of the court should not be sustained; among others, that the intervener is not entitled to intervene or to any standing as a party; that the facts set up by it are insufficient to state a cause for intervention ; that being the owner of one-half of the property, it cannot make a valid tender; that no valid tender was made; that a tender made out of court during the pendency of an action does not discharge the lien of a mortgage, and that, in any event, the court erred in denying his right to recover the debt from the estate of John Sullivan. The first several grounds upon which appellant stands are without merit. The pleadings and the proofs show that respondent has a valid and subsisting interest in the property, and its right to protect that interest in any manner or by any method sanctioned by the law cannot be questioned. The right of subrogation under the better rule applies in cases — 372 — where a party who has an interest in the property and who does not stand as a mere volunteer pays a debt owing in whole or in part by another, to protect his own rights or to save his own property. The remedy is no longer limited to sureties and quasi sureties, but is freely applied by courts of equity in all cases where good conscience and equity dictate that a debt paid by one under any sort of legal coercion ought to be paid by another. Arnold v. Green, 116 N. Y. 566, 23 N. E. 1; Parsons v. Urie, 10 Am. & Eng. Ann. Cases 280 [104 Md. 238, 64 Atl. 927, 8 L. R. A. (N. S.) 559]; Pomeroy, Equity Jurisp., §§ 798, 799; In re Bruce, 158 Fed. 123; Beach, Modern Equity, Jurisp., 802-804; Twombly v. Cassidy, 82 N. Y. 155; Kinkead v. Ryan, 65 N. J. Eq. 726, 55 Atl. 730. In Cottrell’s Appeal, 23 Penn. 294, the court said: “Subrogation is founded on principles of equity and benevolence, and may be decreed where no contract or privity of any kind exists between the parties. Wherever one not a mere volunteer discharges the debt of another, he is entitled to all the remedies which the creditor possessed against the debtor.” Chief Justice Marshall said, in Lidderdale v. Robertson,. Adm’r, 159 Fed. Cases No. 8,337: “When a purchaser has paid money for which others were responsible, the equitable claim which such payment gives-him on those who were so responsible, shall be clothed with the legal garb with which the contract he has discharged was invested, and he shall be substituted, to every equitable intent and purpose, in the place of the creditor whose claim he has discharged.” Under these rules respondent had a right to invoke the aid of the court, and so long as appellant was not asked to take less than the burden of his bond, he cannot complain or question the procedure when the court is acting within its jurisdiction. The interest creates the right, and puts in motion the maxim that a court of equity having acquired jurisdic — 373 — tion of the property will do complete justice as between the parties interested therein. The reasons assigned by appellant for refusing the relief sought by respondent are fanciful rather than real. It is hinted, rather than openly asserted, that it was manifest to him that respondent was undertaking to gain an advantage over its co-owners, and if he had met the demands of respondent, under the orders of the court, some damage or prejudice would have resulted to them. Testimony is also cited showing that the co-owners were willing to pay their share of the debt. It is enough to say that the law puts upon appellant no duty to protect others. Reason and experience alike teach us that the courts may be relied upon to apply those general rules of equity ample in all cases to protect the rights of all who invoke them. In this case there is nothing to indicate any outrage upon, or attempted infringement of, the rights of the co-owners; certainly nothing that would warrant the interposition of appellant in their behalf. As for their willingness to pay their share of the debt, the answer is that there is nothing in the record to show that that privilege was, or is now, denied them. On the other hand, we think it was entirely unnecessary for the respondent to approach an attempted settlement of this case in the manner in which it did. It might and should have relied upon the court whose jurisdiction it had also invoked. Respondent might have paid the money into court without the formal declarations of tender, and the court would have been warranted in making such orders as might be necessary for its protection. A satisfaction of the debt by appellant would not have killed the obligation. or worked a forfeiture of its rights. The court had jurisdiction of the property, with power to enter an order recognizing the subrogation, for it is not created by the order, but follows as the legal consequence of the acts of the parties. Look v. Horn, 97 Me. 283, 54 Atl. 725; Shaffer v. McClos — 374 — key, 101 Cal. 576, 36 Pac. 196; Pomeroy, Equity, 1211 et seq.; Pomeroy, Equitable Remedies, 921. The point is also made that the pleadings and the tender show that they were made in behalf of another, or others who had been induced to loan the amount then due appellant, and might therefore be ignored for that reason. What we have already said disposes of this contention. Where, and upon what terms, respondent got the money to tender is of no concern to appellant. The law does not give him the right to reject an offer because he objects to the source from which the money comes. Eslow v. Mitchell, 26 Mich. 500. Being of the opinion that the intervener has a right to maintain its standing in court, we now come to the main issue. The trial court was controlled in its judgment by the case of Thomas v. Seattle Brewing & Malting Co., 48 Wash. 560, 94 Pac. 116, wherein the court held that a tender of the amount due on a mortgage on law day, which by construction has been extended to any time before suit brought, discharged the lien of the mortgage, and that having been so made, the tender need not be kept good by bringing the money into court. We are satisfied with that decision and, unless the contention of the appellant that action having been begun the lien of the mortgage cannot be discharged by a tender made out' of court is well founded, the judgment of the lower court must be affirmed. In justice to the trial court we feel bound to say that the decree rendered by it is sustained by the leading case of Kortright v. Cady, 21 N. Y. 343, 78 Am. Dec. 145, and other cases upon which the Thomas case is made to rest. But a reexamination of that case, and of the other cases referred to in the Thomas decision, and those cited and relied upon by the respondent, convinces us that the reason for the rule ceases when an action is instituted to recover the debt, and that it should be given no application except in those cases where at common law a party was entitled to a discharge of a lien upon property by payment or tender of payment inter partes, before or upon law day. — 375 — From the first the courts have been fertile in their reasons for refusing to extend the doctrine here invoked to cases where questions other than the mere payment of money were involved. In all the cases cited by respondent to sustain the judgment of the lower court, it appears that the primary purpose of the tender was to discharge the debt. But in this case it was not entirely so. In Kortright v. Cady the law was exhausted by the learned judge who wrote the opinion. It was there held that the law day of the common law should be held to be, considering the changed character of the mortgage, any day before foreclosure and sale. Accepting the rule that the tender will be effectual to discharge the lien if made at any time before foreclosure, it becomes material to inquire the meaning of that term; whether it means the commencement of an action, or a final decree of foreclosure and sale. Considering the reasons upon which the rule of discharge by tender rests; that is, that the law day continued after the due date of an obligation and until action brought, and that a Ken can be defeated by a tender made within that time, it would seem to follow, as of course, that “foreclosure” and “law day” are synonymous terms, in the sense that it is a time when the mortgagor declares a default and submits his cause to a court of competent jurisdiction. The word “foreclosure,” as it is used in the authorities bearing on this question, must be taken in that meaning which is common and generally accepted by the laity as well as the bar; that is, the institution of a suit, or the “law day” as contradistinguished from the “law day” of the common law. The logic of the decisions is that a Ken should be discharged by tender only when made before action brought, and that thereafter it ought to be tendered in court or, if made after the writ has issued, it should be at least kept good by the plea tout temps prist. In speaking of the subject of tender generally, it is said in Coghlan v. South Carolina R. Co., 32 Fed. 316: “But when an action has already been commenced and is pending, if the defendant be disposed to admit the demand in — 376 — part, it is not only necessary that he should offer to pay the amount admitted in the same way as 'the tender before suit should be made, but he must go further, and either pay the sum admitted into court, or, at the least, offer to submit to a judgment for that sum.” In the case of Whittaker v. Belvidere Roller-Mill Co., 55 N. J. Eq. 674, 38 Atl. 289, a case somewhat similar to the one at bar, it was held that, when a tender is made after suit is begun and is then urged as a defense, the money must be paid into court. In Weeks v. Baker, 152 Mass. 20, from which quotation is made in the Thomas case, the court said: “The rights of a party to an action are ordinarily to be determined as of the time of bringing the suit.” We make this distinction between the case of Kortright v. Cady and the rule as we believe it should be. The logic of the Kortright case is that the law day continued from the due date, of the obligation to the final decree of foreclosure and sale; whereas we hold that the law day within which a lien may be discharged by tender inter partes, continues only to the time of the issuance of the writ or, under the code practice, until the commencement of the action. Because of the unusual importance of this case we feel warranted in going further and calling attention to another limitation upon the rights of a mortgagor, or one claiming under him, to discharge the lien of a mortgage by the tender of the mortgage debt. Although the rule as contended for was originally declared in New York, it has been repeatedly held, even in that state, that it will not avail one who is seeking affirmative relief. Tuthill v. Morris, 81 N. Y. 94; Becker v. Boon, 61 N. Y. 317; Halpin v. Phenix Ins. Co., 118 N. Y. 165, 23 N. E. 482. Also, Landis v. Saxton, 89 Mo. 375, 1 S. W. 359. While we cannot indorse all of the reasons upon which some of the foregoing cases are made to rest, they are pertinent at least to show the disposition of the courts to evade the full rigor of the rule as laid down in the Kortright case. — 377 — Counsel for the respondent rightfully contends that his last tender cannot be measured by the two qualified or conditional tenders immediately preceding it, but the law day having been declared by the institution of the action to foreclose the mortgage in which respondent had appeared as a party, its tender can, and should in the interest of that equity which shuns the suggestion of a forfeiture, be measured • by the prayer of its complaint in the independent action as well as the original petition for intervention. When so considered, it requires no far reach of the imagination to say that it was made in aid of the affirmative relief there sought, and as a basis for the filing of the amended petition in intervention in which a cancellation of the debt was asked and obtained by order of the court. In other words, respondent now asks that, since the substance (the mortgage) has been annihilated, the cloud (the record and the debt) which overshadows the title be removed. It seeks to turn a shield of defense into a weapon of offense. We feel sure that no cases will be found which carry the rule of tender and discharge of a mortgage lien to this extent. It is not equity. Orderly procedure, as well as the assurance that the rights of litigants will be protected to their fullest extent, alike require that those who submit their causes to the courts should not go beyond the forum to establish their own case or to destroy that of their adversary. It does not follow from what we have said in this opinion that respondent did not have the right to tender the amount of the debt, and thereby secure such other advantages as may come to it under the accepted rules of law and equity. While at law the rule that a tender must be kept good by payment in court is well-nigh universal, it is not so in equity. A willingness to pay may be sufficient. Bal. Code, §§ 5176 and 5177, provides that money may be paid into court and thus arrest interest and costs. But independent of these statutes, courts will apply the rules of equity when it is necessary to do equal justice between the parties. In the following cases the equities were such that the benefit of a tender was not lost — 378 — by a failure to pay the amount in court. Whelan v. Reilly, 61 Mo. 565; Parker v. Beasley, 116 N. C. 1, 21 S. E. 955, 33 L. R. A. 231; Hill v. Carter, 101 Mich. 158, 59 N. W. 413; Mankel v. Belscamper, 84 Wis. 218, 54 N. W. 500. Appellant is here seeking equity. He must do equity. Remembering that respondent has gone into court averring its willingness to pay all that was due appellant, which was followed by an unconditional tender and appellant’s unwarranted refusal to accept it, apparently hoping to gain some personal advantage over respondent, it would seem that in equity he should not claim anything for the use of the money. The law of tender is as much for the benefit of the creditor as the debtor. The creditor cannot refuse a tender believing it to be to his advantage to do so, and thereafter insist in equity that an unqualified tender has not been made good. Under such conditions, willingness to pay is all that the law requires. The plea of willingness being in the record, we hold that appellant is estopped to claim interest from-the date of the tender. In the case of Cheney v. Bilby, 74 Fed. 52, where similar equities were involved, and many relevant cases are cited, Judge Caldwell said: “Upon the soundest principles of equity and fair dealing, Cheney is estopped, on the facts of this case, from claiming interest on the notes after tender of payment. . . When he refused payment of the principal of the notes, and, in the hope of winning a great stake, asserted a conscienceless forfeiture, which he could not maintain, even in a court of law, he put the interest on the money tendered to the hazard. He chanced it, and lost.” The case is reversed, with instructions to the lower court to enter a judgment and decree of foreclosure for the sum of $68,654.67,' unless such sum be theretofore paid by respondent to appellant, in which event the court will make such order as will protect the equities of all parties to the suit. Rudkin, C. J., and Gose, J., concur. Fullerton, J., concurs in the result.