Polchow v. Rose

POLLEY, J. On the ist day of March, 1919, defendants Guy Rose and Harriet Rose had title, subject to a mortgage for $8,000, to a tract of land in Hand county. On said xst day of March, 1919, said defendants gave to plaintiff a second mortgage on said land for $1-2,500. On the 16th day of March, 1921, said' defendants gave to the defendant State Bank of Tulare a third mortgage on the same tract of land for something over $6,000. Oil the 8th day of March, 1922, defendants Guy Rose and Harriet Rose, being ‘unable to make payments due to plaintiff on -his mortgage, gave plaintiff a warranty -deed to the said mortgaged premises. This deed was duly recorded in the office of the register of deeds of Hand county on the 16th -day of March, 1922, and was given by sai-d defendants and accepted by plaintiff in satisfaction of plaintiff’s said mortgage. On the 29th day of May, 1922,. plaintiff and the defendants Guy Rose and Harriet Rose executed the following- written agreement : “Cancellation of Deed. “Whereas, on the 15th ctoy of March, 1922, Guy Rose and Harriet M. Rose, his wife, .of Hand County, South Dakota, did make and execute to August Polchow- of Redfield, S. D., a Warranty Deed, covering the [tract of land described in said mortgage], * * * Which said deed was duly recorded in the office of the Register of Deeds of Hand County, '.South Dakota, on the 16th day of March, 1922, in Book 73, at page 450, at two o’clock p. m. of said- day; “And whereas said deed was made, executed and delivered by error and -a misunderstanding of the said parties, and whereas said deed -was recorded under like error and1 misunderstanding, and whereas the consideration in said deed has failed,; [233] “Now therefore, to correct said error and misunderstanding and to place the said parties in their former position with their former rights, it is hereby agreed and understood by and' between the said August Polchow and Guy Rose and Harriet M. Rose, that the said Warranty Deed be and hereby is cancelled and declared void in all respects, and that the said parties are hereby restored to their former rights in said premises in all respects, and that the said Guy Rose is and continues to be the owner in fee of the premises described in said deed.” Thereafter plaintiff commenced this action to foreclose his said mortgage as though no attempt to satisfy the same had been made. Findings and judgment were for plaintiff,' and defendant State Bank of Tulare appeals. It is the contention of appellant that when plaintiff took the deed from the Roses, it was done for the purpose and -with the intent to merge his said mortgage with the title to the property, that said mortgage was entirely extinguished by the said deed, and that its mortgage became prior in right to plaintiff’s mortgage. Plaintiff testified that when he took tlie said deed he had no knowl-' edge of the said third mortgage; that he inquired of the said Roses if there were any incumbrances on the said property other than the first and second mortgages, and that he was positively assured 'by them that there was no such incumbrance, and upon this question the court made the following finding of fact: “That plaintiff relied upon such representation and accepted said deed and placed same of record with the understanding and in the belief that no other mortgage or lien than his mortgage and the said Federal Rand Bank mortgage existed upon said real estate, and without knowledge of the said mortgage of the defendant State Bank of Tulare; that there was no intention on the part of plaintiff to merge his mortgage in the said deed as against the said mortgage of the defendant State Bank of Tulare, and that it was against the pecuniary interest of plaintiff that his said mortgage be so merged; that on or about May 20, 1922, plaintiff for the first time learned of the existence of the said mortgage of the defendant State Bank of Tulare, and did thereupon enter into a written agreement with the defendants Guy Rose and Harriet Rose to cancel said warrant}'- deed and restore the parties to their former rights and privileges.” [234] Plaintiff’s intent and purpose in taking the said deed from the Roses is the only disputed question of fact involved in the case, and the above finding of the trial court is final upon such question. In Perry v. Perry (S. D.) 221 N. W. 674, this court said: "The question of whether the conveyance of the mortgagor’s equity to the mortgagee results in the merger of the mortgage and the fee is primarily one of intention of the mortgagee” — citing 41 C. J. 776. Other cases by this court reaching the same result, but which were overlooked by the majority of the court in the preparation of the opinion in Perry v. Perry, supra, are Bennett v. Campbell, 48 S. D. 285, 2014 N. W. 177; Fruth v. Bolt, 39 S. D. 351, 164 N. W. 105; Rasmussen v. Stanfield, 49 S. D. 120, 206 N. W. 475. Upon the authority of these cases, the judgment appealed from is affirmed. SHERWOOD, P. J., and BURCH and BROWN, JJ., concur.