Upton v. Betts

Sullivan, J. This action was brought by Hiram D. Upton to foreclose a mortgage on real estate in Saline county. Ernest C. Holland answered, setting up a junior mortgage on the premises described in the petition. E. L. Sims, who is the fee owner of the property, filed an answer claiming title through a sale under a decree foreclosing an equitable lien in favor of himself and. antedating the mortgage of both Upton and Holland. To this answer the mortgagees replied. The reply of Holland was a general denial, while that of Upton was a general denial, coupled with the statement that he had taken his mortgage on the faith of a decree rendered by this court in an action between George and Eliza Betts and Sims involving the ownership of the land here in controversy. The trial court found the issues in favor of Sims, and rendered a decree quieting his title. Upton and Holland filed a joint motion for a new trial, and they have also joined in the petition in error. The substance of their contention is that while the lien upon which Sims grounds his title was anterior to the mortgages, it was a secret lien and, therefore, not entitled to priority. It appears from the record that George Betts was at [728] one time the owner of the property; that he occupied it as a homestead; that Charles Bidleman had a valid mortgage thereon; that Sims purchased and paid for the land and was given possession of it; that he then paid off the Bidleman mortgage and caused it to be released of record; that afterwards Betts and wife sued Sims to quiet their title to the land, on the theory that it was a family homestead, and that, Mrs. Betts not having joined with her husband in the deed through which Sims claimed title, the deed was void; that the action was tried in the district court, and that the trial resulted in a finding and judgment in favor of Sims; that the cause was appealed to this court, where, on December 14, 1888, a decree was rendered in favor of George and Eliza Betts, quieting their title and awarding them possession and costs; that after the adjournment of the term at which the decree was rendered, and after the expiration of the time limited by the rule for filing a motion for a rehearing, Sims asked and obtained in this court leave to file an amended answer setting up the facts in regard to the payment by him of the Bidleman mortgage; that after such answer was filed, the cause was remanded to the district court, where a trial was had, and a decree rendered awarding Sims a lien on the property, on the ground that he had succeeded to the rights of Bidleman in relation to the debt which he had discharged; that Sims’ present title is derived from a sale of the property made in execution of that decree. It further appears that the mortgages involved in the present suit were given by George and Eliza Betts on March 13, 1889. There is in the briefs of counsel much discussion touching the power of this court to alter the decree rendered by it on December 14, 1888, but we think the question is not of vital importance. For present purposes we shall assume that the view of counsel for Upton and Holland is correct, and that a court of last resort has no rightful authority, after the adjournment of the term at which a judgment was pronounced, to grant a rehearing except [729] in response to a motion seasonably filed. Conceding, then, that the decree in favor of Betts and against Sims was a finality on March 13/1889, what fact did it conclusively establish? What was determined with respect to the property upon which persons dealing with it might safely rely? The action was brought to obtain an adjudication of the question of ownership, and that was the only point considered or decided. No issue was raised as to the existence or validity of any lien on the land in favor of Sims; and no such question was set at rest by the decree. The petition, which is set out in Betts v. Sims, 25 Nebr., 166, merely charged that Betts was the owner. of the property, and that a certain quitclaim deed through which Sims claimed title was void. It was not alleged that any other adverse right or interest was being asserted. That nothing but the validity of the quitclaim deed was adjudicated is further shown by the fact that this court, after final judgment, and without any modification thereof, permitted Sims to file an amended answer, which eventually became the basis of the decree establishing his right of subrogation. Had this matter been covered, either generally or specifically, by the decree in favor of Betts, it would not have been permissible to again litigate it without a vacation or modification of that decree. The plaintiffs in error may have loaned money on the faith of the judgment quieting Betts’ title, but they were certainly not induced by it to believe that Sims did not have a lien on the property. The mortgages involved in this litigation are junior incumbrances, and they are, therefore, not entitled to priority over Sims’ equitable lien, unless Upton and Holland were ignorant of the existence of that lien at the time their rights were acquiree This they have not shown; they have neither pleaded nor proved it. One who asks a court to give priority to a junior lien on the ground that it was obtained in ignorance of an elder latent equity must allege and prove that he acted in the transaction in absolute good faith. In 2 [730] Pomeroy, Equity Jurisprudence, section 785, it is said: “The allegations of the plea, or of the answer, so far as it relates to this defense, must include all those particulars which, as has been shown, are necessary to constitute a bona fide purchase.. It should state the consideration, which must appear from the averment to be ‘valuable’ within the meaning of the rules upon that subject, and should show, that it has actually been paid, and not merely secured. It should also deny notice in the fullest and clearest manner, and this denial is necessary, whether notice is charged in the complaint or not.” In Arlington State Bank v. Paulsen, 57 Nebr., 717, it was held: “That one is a subsequent innocent purchaser of real estate, is an affirmative defense, which the claimant, to avail himself of, must plead; and upon him is the burden of proof to establish it.” See Bowman v. Griffith, 35 Nebr., 361; Garmire v. Willy, 36 Nebr., 340; Phœnix Mutual Life Ins. Co. v. Brown, 37 Nebr., 705; Baldwin v. Burt, 43 Nebr., 245; American Exchange Nat. Bank v. Fockler, 49 Nebr., 713. Since Holland’s reply was a general denial, it is very clear that the court could not have rendered judgment in his favor on the theory that he was a bona fide mortgagee. And it is equally evident that Upton’s allegation, that he took his mortgage on the faith of the decree rendered by this court in favor of Betts, is not an averment that he was without knowledge of Sims’ equitable lien. There was no finding of the trial court that Upton and Holland were good-faith incumbrancers; but if there had been, it would not respond to any issue presented by the pleadings. Besides the failure to plead want of notice, there was also a complete failure to prove that fact. There was no evidence whatever bearing upon the question. Holland, who was acting for Upton as well as for himself, testified that he relied on the decree in favor of Betts, and had no knowledge that any steps were being taken to modify it. He did not, however, testify that he was ignorant of the right of Sims to be subrogated to the [731] Bidleman mortgage. Indeed, it would seem quite probable that he was aware of that right, for it' was disclosed at the trial of Betts v. Sims, supra, and appeared in the findings made by the district judge in that case. It also appeared in the opinion of this court filed on December 14, 1888. The conclusion of the district court is right, and is Affirmed.