Peenahele v. Toomey

OPINION OP THE COURT BY FREAR, J. The facts are undisputed and are substantially as follows: One Kailipnabilo executed a mortgage of all bis right, title and interest in certain parcels of land to D. Toomey, wbo was acting as agent for Grinbaum & Co. At tbat time Kailipuabilo bad no title to tbe land. His wife owned it. Sbe after-wards died and be inherited all or one-balf of it. Afterwards [45] the mortgage debt having become due, Kailipuahilo asked Kahewahewanui to pay the amount then owing on the mortgage, representing at the time that the mortgage was a good and valid mortgage on all the property named therein, and that he was in danger of losing the property by foreclosure, and agreeing to convey to Kahewahewanui the property subject to a life interest in himself. Kahewahewanui, relying upon this promise and representation, paid the amount due. Kailipuahilo never executed the promised conveyance, but just before his death he executed without consideration a conveyance of the property in fee to the defendant, Maria Makiha, who had notice of the transaction between her grantor and Kahewahewanui. The latter having died, the administrator of his estate, J. M. Peenahele, brought a bill in equity, alleging the above facts and praying for a decree that he be subrogated to the rights of the mortgagee under the mortgage and have a first lien on all the right, title and interest that Kailipuahilo hr.d in the land to the amount paid by his decedent with interest, and for a foreclosure of the mortgage and a sale of the property. A decree was signed in accordance with these prayers and the case comes here on appeal therefrom by defendant Maria Makiha. It seems equitable, reasonable and in harmony with the numerous authorities on the subject, that- the complainant should be subrogated to the rights of the mortgagee under the circumstances above set forth. See Kapena v. Kaleleonalani, 6 Haw. 579; Hawaiian Government v. Cartwright, 8 Haw. 697; Gans v. Thieme, 93 N. Y. 225; Detroit, &c., Co. v. Aspinall, 48 Mich. 238; Lockwood v. Marsh, 3 Nev. 138; Muir v. Berkshire, 52 Ind. 149; Morgan v. Hammett, 23 Wis. 30. Defendants’ counsel does not appear to dispute this. His contention is that, since the mortgage purported to convey to the mortgagee only the right, title and interest of the mortgagor (which was nothing) and contained no covenants that would cause the after acquired title to inure to the benefit of the [46] mortgagee, the complainant would gain nothing if he were subrogated to the rights of the mortgagee. But complainant’s counsel does not rely on an estoppel by deed arising from the language of the mortgage in favor of the mortgagee, but upon an estoppel in pais arising directly in favor of the complainant’s decedent from the promises and representations made to him by the mortgagor at the time the mortgage was paid, and more particularly from the mortgagor’s representation that the mortgage was a valid lien on the 'land and that he was in danger of losing the land by foreclosure, and his promise that he would convey an interest in the land to said decedent, that is, substantially, that the land should be applied to compensate or reimburse said decedent for the money advanced. If the mortgagor would be estopped by his subsequent conduct towards complainant’s decedent from setting up that the mortgage was nugatory because he had no title at the time it was executed, his grantee, the defendant Maria Maldha, with notice, would also be estopped. It seems to us that the mortgagor would be estopped under the circumstances. No case has been brought to our attention in which a mortgagor has been held estopped by such subsequent conduct from setting up the particular defense of no title at the date of the mortgage, but there are analogous cases in which somewhat similar subsequent representations have been held to estop the mortgagor from setting up other defenses, such as fraud, usury, payment, and failure of consideration. See Smith v. Newton, 38 Ill. 230; Scott v. Sadler, 52 Pa. St. 211; Lesley v. Johnson, 41 Barb. 359; Wilcox v. Howell, 44 N. Y. 398; Bush v. Cushman, 27 N. J. Eq. 131. Complainant’s decedent paid the mortgage debt at the request of the mortgagor and on the belief induced by him that the mortgage conveyed a good title. The mortgagor or his grantee with notice should not be permitted to assert the contrary to the prejudice of the party who relied on the representation, or the administrator of his estate. Kinney & Ballou, for complainant. A. S Humphreys, for defendants. Tbe decree appealed from is affirmed with costs, and the ' case is remanded to the Circuit Judge for such further proceedings as may be proper.