Lipscomb v. Goode

The opinion of the Court was delivered by Mr. Justice Pope. This is an action to foreclose a mortgage of land described in the complaint. The facts are set out in the decree of his Honor, the Circuit Judge, which will be reported. The appellants’ exceptions will not be considered in detail, but under the classification of the questions raised by them, made by the respondents’ attorney, to wit: “1. Did Rufus Goode and others have the right to mortgage their interest in the land in question to the plaintiffs? 2. Is the appellant, George PI. Taylor, with his grantee, Thomas Waller, estopped from disputing the validity of the said mortgege? 3. Was the equitable interest of the defendant, George IT. Taylor, merged in his legal title to the mortgaged premises ?” 1 We will first consider whether the equitable interest of Rufus Goode and others was the subject of a mortgage? This question is so conclusively settled by the case of Lake v. Shumate, 20 S. C., 23, and the cases therein cited, that we deem it only necessary to refer to that case to show that there was no error -on the part of the Circuit Judge in ruling that the said equitable interest could be mortgaged. The exceptions raising this question are overruled. [185] The Court will next consider whether there was error on the part of the Circuit Judge in deciding that George PI. Taylor and Thomás Waller were estopped from disputing [186] the validity of the said mortgage. The following is the testimony of the witnesses upon this question: Rufus Goode says : “I got burned out, and went to Mr. Taylor to see if he would help me out, and told Mr. Taylor Mr. Lipscomb would get me a pair of mules if I would give him a second mortgage on the place. Mr. Taylor said there was nothing wrong about that — if Mr. Lipscomb would get the mules, let him get them. (Objected to by defendants’ attorney.) Mr. Taylor said he was willing for me to give the mortgage, if Mr. Lipscomb would get me the mules. (Objected to by defendants’attorney.) I had this conversation with Mr. Taylor before I gave the mortgage to Mr. Lipscomb.” E. M. Lipscomb testifies: “I never had any talk with Mr. Taylor, I took a second mortgage, and there remains now $i22.29, with eight per cent, interest from January 1st, 1895. Cross-examined: I had no conversation with Mr. Taylor before taking the mortgage. Rufus Goode showed me receipt from Mr. Taylor. I do not remember any conversation with Mr. Taylor. I understood Mr. Taylor had a first mortgage. I never made Mr. Taylor any offer to pay him the amount due on his mortgage, the purchase money of the land. I don’t know when Mr. Taylor sold the land to Thomas Waller. I don’t remember to have had any conversation with Thomas Waller in reference to the amount due me on mortgage. I never offered to pay Thomas Waller the amount due by the Goodes on the mortgage for purchase money. The money advanced to the Goodes under my mortgage was $500. Goode told me Mr. Taylor was willing for me to take a mortgage on the land for the 'mules. I never saw Mr. Taylor in regard to the matter. The price of the mules was $300; the mules cost me $250. The Goodes paid me on the mortgage debt $377.71.” George H. Taylor, a witness for the defense, testifies: “When the Goodes were burned out, they came to me, and I told them they had better go to Mr. Lipscomb, as they had been running an account there. Rufus said something [187] about giving Mr. Lipscomb a mortgage, and I told him I had nothing to do with that. I did not know he had given him a mortgage; I never knew Goode had given a mortgage until this suit was started. Mr. Lipscomb never said anything to me about this mortgage. He never offered to pay me anything.” In reply, Jackson Goode testifies: “I was present when this mortgage to Lipscomb & Co. was executed. We three who signed were present, also Thos. Waller was present. Mr. L. Rice drew up the papers. Mr. Rice read these over and, Thomas Waller was standing by. Rufus told Thomas Waller that he was going to give Mr. Lipscomb a second mortgage on the place for the stock.” ■ We are unable to discover in the foregoing any testimony whatever that George H. Taylor waived his-rights in the premises in favor of the plaintiff herein; on the contrary, the testimony shows that the mortgage executed in favor of the plaintiff was only intended as a lien upon the equitable interest of Robert Goode and others. The exceptions raising this question are sustained. 3 Lastly, we will consider whether his Honor, the presiding Judge, correctly applied the doctrine of merger. Even if the Goodes abandoned their contract with George H. Taylor, who was the owner of the legal title, and surrendered to him their equitable interests in the land, it does not necessarily follow that the Court would apply the doctrine of merger. This is a case on the equity side of the Court, and the rule in such cases is thus stated in Michaelson v. Myrick, 47 S. C., 299: “Merger is not favored either in the courts of law or of equity. ‘At law, when a greater and a lesser or a legal and equitable estate coincide in the same person, the lesser or equitable estate is immediately merged and annihilated; but this rule is not inflexible in equity— whether or not a merger takes place, depending upon the intention of the parties, and a variety of other circumstances. Notwithstanding the technical rule of law, equity will prevent or permit a merger as will best subserve the purposes [188] of justice, and the actual and just intention of the parties; and in the absence of an expression of intention, if the interest of the person in whom the several estates have united, as shown from all the circumstances, would be best sub-served by keeping them separate, the intent will ordinarily be implied * * * A merger will be prevented by equity only, however, for the purpose of promoting substantial justice; it will not prevent a merger, where such prevention would result in carrying a fraud or other conscientious wrong into effect.’ Ency. of Law, vol. 15, pages 314, 315; Boykin v. Ancrum, 28 S. C., 486; Morgan v. Piester, 16 S. C., 330.” At the time, however, it is claimed the Goodes abandoned their contract and surrendered their equitable rights aforesaid, there was a subsisting lien on the equitable interests, to wit: the mortgage executed by them in favor of the plaintiffs. The mortgage was not a lien on the land, but only on the equitable interests of the Goodes. It could not be foreclosed on the land but on the equitable interests of tire Goodes, and the only relief to which the plaintiffs were entitled, as against George H. Taylor, was to have title made to them upon payment of the balance due by the Goodes. The relief to which they were entitled as against the Goodes was to have it adjudged that they had no farther interests in the premises. Lake v. Shumate, supra. To apply the doctrine of merger would destroy the foundations upon which the plaintiffs’ mortgage rests. If merger should be allowed in this case, it would enable the Goodes to destroy the rights of third parties, to wit: the mortgage executed in favor of the plaintiffs. It is the judgment of this Court, that the judgment of the Circuit Court be reversed.