Gerrish v. Bragg

The opinion of the court was delivered by Ross, J. I. The decree in the Sanborn suit is not a bar nor an estoppel to the prosecution of this suit by the orator. The orator was not a party to that suit, nor does he .stand upon the right of any one who was a party to that suit, and is not bound by its result, although the note then disallowed was secured by the same mortgage now sought to be foreclosed, and Sanborn took his title thereto from the orator. If the orator had been made a party to that suit, he might have produced other and different proof from that adduced by Sanborn, and so have secured a different decree. The U. S. Circuit Court held that the decree in that suit was no bar to the foreclosure of the mortgage on the note in contention, when prosecuted at the expense of the orator against Culver, C. W. Porter and defendant Bragg in the name of the Tilton Bank, which held the note as collateral security for the orator’s indebtedness to the bank. There is quite as much ground for holding that the decree in the latter suit bars or estops the defendants, who were all defendants in that suit, or stand on the right of those who were defendants therein, as that the decree in the Sanborn suit bars or estops the orator from the prosecution of this suit. The findings of the-master in this suit demonstrate — 336 — • the justice of the well-established rule, that no one is barred or estopped by a judgment, except those who are parties or privies thereto, and so have had, either by themselves or by those into whose rights they have succeeded, an opportunity to produce testimony, and be heard in the adjudication. It is manifest that either the orator has been able to produce different testimony before the master from that produced before this court in the San-born suit, or he has been able to induce the master to consider and weigh the evidence produced in a different light and manner from that in which this court considered it. On the facts found by the master, we think the orator is entitled to a decree of foreclosure.of the mortgage for the amount due on the note. The note prima facie evidences a consideration therefor. No want of consideration is found by the master. The orator and his agent in the negotiation for the purchase of the note knew the same was given for the purchase of a patent right, but knew not what patent right, nor its character or value. He paid value for the note. The discount was not large, in the condition in which the money market was at the time of the purchase. It is not found that the note was without consideration, nor that it was possessed of any infirmity in the hands of the original payee. The law which secures to inventors the exclusive right to make and vend patented articles recognizes such secured rights as property and valuable. Some such rights are very valuable ; others are valueless. Granting that the latter class is much the more numerous, no legal presumption arises that the patent right for which this mortgage note was given was therefore without value. It was the first step in the defence to show that the patent right for which it was given was without value,' and for that reason the note was without consideration and void in the hands of the original payee. Without this fact established, there is no ground for inquiring whether the orator took the note under such circumstances that he was put upon inquiry in regard to an infirmity which would avoid the note in the hands of the original payee at its inception. There was no infirmity established of which the orator could learn by inquiry, and therefore he was not bound, under any circumstances, to make inquiry. — 337 — II. But the defendant Bragg contends, that if the orator is entitled to a foreclosure of the mortgage against Culver, and those who stand upon rights in the mortgage premises acquired through Culver subsequently to the giving of the mortgage, he has no right to foreclose the same against him, inasmuch as he is entitled by subrogation to stand upon the mortgage given by Culver to John Porter in 1851, which was long before the giving of the mortgate in contention. . If this be so, and the defendant Bragg is shown to have such relation to the Porter mortgage that he is entitled to assert it in his favor, we think he may make this defence by way of answer, and is not compelled to resort to a cross bill. It is only necessary for the defendant Bragg to establish that in equity he has a better and prior right to the mortgage premises than the orator to defeat the orator’s foreclosure thereof as to him. If he shows himself entitled to the rights which John Porter had under the mortgage of 1851, before the same was discharged upon the record, he can avail himself of this defence in an answer the same as Mr. Porter could have done. He defeats the orator’s right to a foreclosure of his mortgage against him when he shows that he stands upon an earlier mortgage which he has the right to assert as against the orator’s mortgage. The orator can thereafter move no further as against him in his foreclosure'until he has redeemed the defendant’s prior mortgage. The doctrine of subrogation is purely an equitable doctrine. It is generally asserted in favor of a surety, or one who to protect his own interest in property has been compelled to pay the debt of another, by putting such person in the place of the original payee of such debt in regard to security upon the property af- - fected. A party is never allowed to invoke it -in his aid where it would .be inequitable for him to do so. When a party would invoke it to raise a right which he or his predecessor in that right has discharged, he must show that the discharge was through a misapprehension of the facts inducing it; that no rights have intervened to be injuriously affected ; that he has been guilty of no delay in its assertion ; and that he is so related to that right and the subject-matter thereof that he is entitled to succeed thereto. — 338 — These, in general terms, are some of the things he must establish. On consideration of the facts found by the master on this branch of the case, we do not think they place the defendant Bragg in such relation to the John Porter mortgage of 1851 that he is entitled to have that mortgage revived as against the orator. The facts found by the master, in brief, are as follows: The mortgag’d which the orator is seeking to enforce was given June 3, 1870. At that time there was resting upon the premises the mortgage from Culver to John Porter given in 1851. January, 1873, John Porter and Culver settled all their deal to that date. Porter gave up the old notes and discharged upon the record the mortgage of 1851. He togk Culver’s note for 15,596.14, secured by a new mortgage of the same premises running to Charles W. Porter. Neither Porter nor Culver had any intention of keeping the old mortgage on foot, though they then knew of the orator’s mortgage, and that the note in suit was outstanding. They had heard of the result of the Sanborn suit, and did not regard the orator’s note and mortgage of any account. . How much of the old mortgage debt went into the ,new note of 15,596.14 the master is unable to ascertain. Prom the amount of the new note as compared with the old one, it is to be presumed that some indebtedness not secured by the old mortgage entered into the new note, which was the balance found due on a settlement of all their deal. In the fall of 1874, Culver leased the mortgaged premises to the defendant Bragg and sold him his personal property. John Porter, who was still the real owner of the new note taken to his son C. W. Porter, caused the personal property to be attached on a writ issued to enforce collection of the new note. He then induced Bragg to become obligated to pay the new note if Culver did not, • and released the attachment. Bragg received back the personal property attached, and took a mortgage of the premises from Culver to secure him for assuming the obligation. Culver not having paid the note, C. W. Porter enforced collection thereof against Bragg, and discharged the mortgage given in 1873. Bragg then foreclosed his mortgage against Culver, but did not make the orator a party defendant thereto. In 1875 the Tilton Bank foreclosure suit on the note and mortgage in contention was brought in — 339 — the U. S. Circuit Court against Culver, C. W. Porter and defendant Bragg, and resulted in a decree in its favor against them to the extent of the orator’s indebtedness to it, for which the note in suit was pledged. Neither C. W. Porter nor Bragg asked to be subrogated to the rights of John Porter under the mortgage of 1851 in that suit. It is to be observed that when Porter attached the personal property which Bragg had purchased of Culver, Bragg had no interest in the mortgaged premises which was imperiled by that attachment. He was under no obligation or compulsion, to protect his interest in the mortgaged premises, to assume the payment of Culver’s debt to Porter. Porter claimed that he had not effected a sufficient change of possession of the personal property to protect it from attachment on Culver’s debt. It was no fault of the orator’s that he had not. If the attachment had prevailed, the debt to Porter would have been reduced by the application of what in law was Culver’s property. Rather than risk this result Bragg assumed the payment of Culver’s debt and took security therefor on the mortgaged premises. By the record he had constructive notice of the orator’s prior mortgage. If what in law was Culver’s personal property had been applied to pay the mortgage debt to Porter, all right to revive' the former mortgage to the extent of the value of the personal property attached would have been gone. Bragg has by receiving back the property attached, and by the foreclosure of Culver’s mortgage to him, received just what he bargained for when he became obligated to pay Culver’s debt to Porter. So far as he was thus compensated by Culver for paying his debt to Porter, Bragg has no more right to have the mortgage of 1851 revived against the orator than Culver himself has. When he paid that debt C. W. Porter discharged the mortgage securing the same. The debt to C. W. Porter was not wholly the continuation of the debt of 1851. John Porter had no intention of keeping the mortgage of 1851 alive to secure so much of the old debt as had been merged in the new note. The defendant Bragg by himself or C. W. Porter, to whose right he asks to be allowed to succeed, has had two opportunities to assert the right if he had it, to be subrogated to the security furnished by the mortgage of 1851, and neglected them. — 340 — He had such opportunity when he foreclosed his mortgage, and either he or C. W. Porter had it when they were made defendants in the foreclosure suit in favor of the Tilton Bank. In the meantime defendant Bragg has had the use of the mortgage premises, and no interest has been paid on the orator’s mortgage note. Culver has left the country. Under these circumstances it would be unheard of, and outside of nearly all the equitable principles that govern the application of the doctrine of subrogation, to allow this defendant, who, as the consideration for assuming the payment of Culver’s note to C. W. Porter, has received both Culver’s equity of redemption in the mortgage premises and the use of them for eight years as well as the personal property which was liable to be taken as Culver’s property in payment or reduction of that debt, not only to revive the discharged mortgage given to C. W. Porter to secure.that debt, but also to pick out and ascertain how much of the debt of 1851 went into that debt, and moreover, to revive and stand upon the discharged mortgage of 1851, and that too, when he or C. W. Porter, to whose right he claims to succeed, has had and neglected two prior opportunities to assert this right if it existed, the orator’s debt meanwhile constantly becoming larger. If under such circumstances the mortgage of 1851 can be revived, and the defendant Bragg can stand, upon it as a defence, when and under what circumstances is the discharge of a mortgage absolute, and beyond the reach of the doctrine of subrogation ? If revived, what debt secured thereby has the defendant Bragg, paid for which he has not already been repaid ? What is the amount of such debt ? Who can find out from any facts found by the master ? On the facts found this is not a case in which the defendant Bragg can call to his aid the equitable doctrine of subrogation. The decree of the Court of Chancery is affirmed and cause remanded.