McNaughton v. Burke

Sullivan, J. This action was brought to foreclose a real estate mortgage and resulted in a decree in favor of the plaintiff, D. 5. McNaughton. One of the defendants, the George Burke Company, a corporation, complains of the decision and brings the record here for review by appeal. What seems to us to be the controlling question in the case has not been much discussed by counsel, but to other matters, which might be properly considered if the case were here on error, they have given very careful attention. It has been held time and again, and must now be regarded as settled doctrine, that in reviewing the judgments and final [705] orders of tbe district courts upon appeal this court will only inquire whether, upon the facts, as disclosed by the pleadings and evidence, the controversy has been rightly determined. Alling v. Nelson, 55 Nebr., 161; National Life Ins. Co. v. Martin, 57 Nebr., 350; Troup v. Horbach, 57 Nebr., 644; Zimmerman v. Zimmerman, 59 Nebr., 80; Orr v. Bailey, 59 Nebr., 128. Under this rule we must, in considering the case, leave entirely out of view the decisions of the lower court made before and during the trial. The only question remaining after these matters are eliminated is whether the decree subjecting appellant’s property to the lien of plaintiff’s mortgage is warranted by the established facts. The transactions in which the litigation had its origin are these: The land in question, being the northeast quarter of the southwest quarter, the northwest quarter of the southeast quarter and the south half of the southeast quarter of section 2, township 13 north, -range 31 west, in this state, was originally owned by M. Burke & Sons, a copartnership composed of Margaret, George, Louis, William, John, Peter, Milo and Charles Burke. This land and other partnership property, was, after the firm had ceased to exist, and while its affairs were being Avound up, conveyed by Margaret, George, Louis and William to John. It seems that Peter, Milo and Charles had no part in the transaction, at any rate, they did not join in the deed to John, although it purported to convey the interests of all the partners. John borrowed §2,500 of McNaughton and gave him a mortgage on the land above described as security. This money was, it seems, used in paying partnership debts: Afterwards," John sold and conveyed the property to Peter, Avho, after obtaining quitclaim deeds from Milo and Charles, sold and conveyed it to the George Burke Company. The mortgage and all the deeds, except those from Milo and Charles, were in the usual form and contained covenants of seizin and general warranties except as to incumbrances. The conveyance by John to Peter, and'by Peter to appellant, was expressly stated to be subject to incum [706] brances. From these facts it clearly appears that the plaintiff did not, by the mere execution of the mortgage, obtain a lien upon the interests of Milo and Charles in any part of the partnership property. Still we are well satisfied that the decree is right and that the trial court acted in accordance with the plainest principles of justice in directing those interests to be sold for the satisfaction of the mortgage debt. The effect of the provision in regard to incumbrances contained in the deeds by Avhicli the company claims title, is that the land is to be held subject to the mortgage. The contract is for the benefit of the mortgagor and mortgagee, and either is entitled to enforce it. In equity the land is the principal debtor and the mortgagor a mere surety. One who buys land subject to an incumbrance acquires only an equity of redemption; that is, the interest remaining after the incumbrance has been paid. The understanding between the grantor and grantee is that the former reserves for the benefit of the incumbrancer so much of the estate as may be necessary for the satisfaction of the debt.’ “A conveyance of land subject to a mortgage,” says Comstock, C. J., in Hartley v. Harrison, 24 N. Y., 170, 175, “is neither more nor less than a simple deed of Avhatever interest or estate the grantor has after the debt is satisfied out of it.” The mortgage Avas given to secure a note upon which the names of John Burke and M. Burke & Sons appear as makers. Whether this note was a binding obligation of the firm is a disputed question, but it is certain it was to the advantage of the firm to have it paid, and for that reason each of the grantors, instead of inserting in his deed a limited Avarranty, expressly stipulated that the debt should be a charge upon the whole of the estate granted. In other Avorcls, the intention of each was to reserve from the grant and place in the hands of the grantee as a trust fund for the benefit of the mortgagee so much of the projjerty as might be necessary to satisfy the mortgage. It can not be said that the company did not take the interests of Milo and Charles charged with the mortgage. Such a construction of the conveyances by [707] which it acquired title is not admissible. The intention of each of the grantors to charge the whole estate — the estate which he professed to own and assumed to convey — is as clear and free from donbt as language can make it. The land having come to the company burdened with the mortgage, it can not now repudiate its contract to hold subject to the mortgage; it can not claim under the deed and at the same time deny the validity of the clause limiting the interest conveyed; in short, it can not, consistently with equity and good conscience, assert that it is the owner of an interest which it neither bought nor paid for. Freeman v. Auld, 44 N. Y., 50; Sands v. Church, 6 N. Y., 347; Gibson v. Lyon, 115 U. S., 439; Hutchinson v. Chicago & N. R. Co., 37 Wis., 582, 602; Maynard v. Moore, 76 N. Car., 158; Stow v. Wyse, 7 Conn., 214; Orthwein v. Thomas, 127 Ill., 554; 2 Herman, Estoppel & Res Judicata, 636; 11 Am. & Eng. Ency. Law [2d ed.], 400. The judgment is right and is Affirmed.