Conner v. Welch

LyoN, J. As we understand the testimony of the plaintiff, he accepted the quitclaim deed of the mortgaged premises from Osborne pursuant to an express agreement between them that the note and mortgage of February 21, 1878, for §229, was thereby satisfied and discharged. His testimony seems to admit of no other construction. By this agreement the §229 mortgage was discharged, and the satisfactions of the Huffy mortgages by Stein, in the proper records of the county, at the request of . the plaintiff, discharged those mortgages. Hence, by the acts and procurement of the plaintiff, the four mortgages in controversy were cancelled and ceased to be liens — 439 — upon the land covered by them. "Were these subsisting mortgages, we might not find it very difficult to hold, under the authorities cited, that the interest represented by the $229 mortgage was not merged in the legal title conveyed to the plaintiff by Osborne, arid that the plaintiff should be subro-gated to the rights of the mortgagees in' the Duffy mortgages, so that all of these mortgages could be made available to protect the plaintiff against the lien of the Stein judgment, which is junior thereto. But before the questions of merger and subrogation can be raised at all, the mortgages now cancelled and discharged must be restored and vitalized. This can only be done by cancelling and holding for naught the satisfactions of the Duffy mortgages, which the plaintiff caused to be entered of record, and his express agreement with Osborne to accept the conveyance of the legal title in full satisfaction and discharge of the $229 mortgage. The precise question is, therefore, whether, under the circumstances of the case, the plaintiff is entitled to be relieved of those satisfactions and of such agreement. Has he shown himself entitled to have them set aside, cancelled and held for naught.? The circuit court found (no doubt correctly) that there was no fraud or collusion on the part of the defendant Welch, the owner of the Stein judgment, and granted the relief prayed on the sole ground that plaintiff acted in ignorance of the existence of that judgment, in the matter of the satisfaction and discharge of the mortgages. Undoubtedly the plaintiff knew nothing of the judgment, and, presumably (although he has not so testified), had he known of its existence, he would not have had the mortgages discharged, or made the contract he did with Osborne for the conveyance. But that alone is not sufficient to entitle him to have the discharged mortgages reinstated as valid liens upon the land. He must also have exercised reasonable diligence to ascertain whether subsequent liens had been put upon the property. A court of equity never relieves a man from the consequences of — 440 — his own culpable negligence. Discussing- the rules upon which courts of equity proceed in relieving, or refusing to relieve, against contracts made or acts done through mistake or in ignorance of material facts, Judge Story says that “where an unconscionable advantage has been gained by mere mistake or misapprehension, and there was no gross negligence on the part of the plaintiff in falling into the error, or in not sooner claiming redress, and no intervening rights have accrued, and the parties may still be placed in statu quo, equity will interfere, in its discretion, in order to prevent intolerable injustice.” 1 Eq. Jur., § 138i. In section 146 the learned author says: “ It is not, however, sufficient in all cases to give the party relief, that the fact is material; but it must be such as he could not by reasonable diligence get knowledge of when he was put upon inquiry. For if, by such reasonable diligence, he could obtain knowledge of the fact, equity will not relieve him, since that would be to encourage culpable negligence.” In a note to the section last cited is the following: “ If a court of equity is asked to give relief in a case not fully remediable at law, or not remediable at all at law, then it grants it upon its own terms and according to its own doctrines. It gives relief only to the vigilant and not to the negligent; to those who have not been put upon their diligence to make inquiry, and not to those who, being put upon inquiry, have chosen to omit all .inquiry, which would have enabled them at once to correct the mistake, or to obviate all ill effects therefrom. In short, it refuses all its aid to those who, by their own negligence, and by that alone, have incurred the loss, or may suffer the inconvenience.”' In Mamlock v. Fairbanks, 46 Wis., 415, this court made an application of the rule above stated. That was an action to rescind a contract of. sale of a certain note and mortgage by the defendant to the plaintiff, and to recover the money paid therefor. The ground upon which relief was claimed was, that the defendant misrepresented the identity of the debtors, — 441 — which misrepresentation affected the value of the securities. It was held that if, by the exercise of reasonable diligence, the plaintiff had the present means of ascertaining the identity of the debtors, and was not prevented from doing so by any artifice of the vendor, there could be no recovery. The opinion contains some of the authorities for the rule, not specially cited herein, and the case^is a very strong one against the plaintiff. Levy v. Martin, 48 Wis., 198, is not in point. There the mortgage sought to be revived was discharged without the consent of the plaintiff, and against an express agreement between him and the personal re]>resentatives of the deceased mortgagor, that it should be assigned to him. Under these circumstances we found no difficulty in cancelling the satisfaction and subrogating the plaintiff to the rights of the original mortgagor. There was no question of diligence in the case. We have examined the cases cited by the learned counsel for the plaintiff on the subject of the rescission of contracts or instruments for ignorance or mistake of material facts; but in none of them, so far as we have perceived, is the question of diligen.ee raised or passed upon. We are now to consider the question whether the present plaintiff used proper diligence to ascertain the condition of the title when he made his agreement with Osborne, and when he paid and procured the discharge of the Duffy mortgages. The plaintiff is a man of some wealth, and is apparently familiar with the usual modes of transacting ordinary business. He evidently knew that a judgment against Osborne would be a lien upon the mortgaged premises, and also the effect upon the title of a discharge of the mortgages. He knew also that Osborne was utterly insolvent and thriftless. The number and amount of mortgages which the latter had put upon his land during the preceding seven years, absorbing its whole value, was sufficient notice to him of Osborne’s pecuniary condition. The known insolvency of Osborne would naturally make an — 442 — ordinarily prudent man more cautious when dealing with the title to his land. Then again the mortgage of Allen represented nearly or quite one-half of the value of the land, and was paramount to all the others. Stein is a merchant in Madison, and plaintiff knew him well. It does not appear that' he is a dealer in real estate to any considerable extent. The very fact that he had purchased the Duffy mortgages, which were junior to the Allen mortgage, would seem to suggest to a reasonable mind that he must have had some special reason for doing so, and that such reason might well be that he had become interested in some way in the land. But these circumstances, suggestive as they were, failed to open the lips of the plaintiff. ITe made no inquiry concerning the title, either of Stein or Botkin or Osborne. Had he done so, and. been told that no incumbrance had been placed upon the land subsequent to his mortgage for $229, he might stand in a very different position in this action. But this is not all. A month after he took the conveyance from Osborne, he went with Stem to the office of the register of deeds to have the latter discharge the two oldest Duffy mortgages, and some weeks later went again to the saíne office to have the other Duffy mortgage discharged. Of course, he was in close proximity to the office of the clerk of the circuit court, and could easily have gone there and ascertained whether any judgments had been entered against Osborne. It seems to us that common prudence required him to do so, or else to interrogate Stein or Osborne or Botkin as to the condition of the title. Yet he made the agreement and took the conveyance from Osborne, and procured Stein to discharge the Duffy mortgages, without doing either. He suffered the matter to rest in statu quo until an execution was issued on the judgment, and (so far as it appears) first asserted the rights claimed in. this action, on the day the land was sold by the sheriff under the execution, which was about ten months after the last Duffy mortgage was discharged. — 443 — Our minds are impelled to the conclusion that, under these circumstances, the plaintiff was guilty of most culpable negligence in failing to inform himself of the existence of the Stein judgment; and hence, that he has no standing in a coui’t of equity to obtain the relief he seeks. If there is any case in the books which grants such relief where the act sought to be relieved against was the result of negligence so gross and inexcusable, we have failed to find it. Certainly no such case is cited by counsel. The application of this rule may work hardship in some cases; perhaps it does in this case. But the rule requires nothing unreasonable, and is a most salutary one. It is infinitely better that men should be held to the consequences of their own culpable carelessness, than that courts of equity should undertake to relieve therefrom. The rule requires reasonable caution and prudence in the transaction of business, and is deeply imbedded in our jurisprudence. It is within the principle and reason of eaveat emptor. Mamlock v. Fairbanks, supra. The abrogation of the rule would' tend to encourage negligence and to introduce uncertainty and confusion in all business transactions. The judgment of the circuit court must be reversed, and the cause remanded with directions to that court to dismiss the complaint. By the Oourt.— So ordered.