Wormer & Son v. Waterloo Agricultural Works

Seevers, Ch. J. — As against the defendant, it was held in 50 Iowa, 262, that the plaintiff was entitled to a foreclosure of the mortgage. Two days prior to the jprocedendo being filed in the district court, Robert Waller intervened in the action by filing a petition, in which he claimed that the plaintiffs’ mortgage was junior to certain liens or interests he had in and to the mortgaged premises. The material facts upon which such claim is based are as follows: The premises had been sold under executions issued on judgments establishing mechanics’ liens thereon. These liens were prior to that of the mortgage, and one Rayless was the purchaser at the execution sale. The defendant’s right of redemption expired in June, 1875. The right of creditors, including the plaintiffs, to redeem had expired prior to that time. Unless, therefore, redemption was made by or in the interest of the defendant, the premises would be conveyed by the sheriff to Ray-less, and the interest of the plaintiffs under the mortgage, as well as that of defendant, would be cut off, and Rayless would become the absolute owner of the premises. A day or two prior to that on which the right to redeem expired, one Ackley, president of the defendant, and acting for it, applied to one Cain, an agent of the defendant at Du-buque, for a loan to redeem the property from the sale to Rayless. Ackley represented, or caused Cain to understand, that Rayless would assign the certificate of purchase upon being paid the amount required to redeem. Rut it was regarded as doubtful, for want of time, if this could be accomplished, as Rayless was a non-resident. Redemption had to be made [701] in Black Hawk county, and the conclusion at Dubuque was that Cain should go to Waterloo prepared to and to make redemption, if he saw proper. Ackley and Cain reached Waterloo about 7 o’clock in the evening, and redemption, if made at all, had to be made before midnight. Ackley made efforts to see the attorneys acting for Bayless, but failed to do so, and it was then certainly developed that the certificate of purchase would not be assigned to the intervenor, if he advanced the money required to redeem. Cain, therefore, determined to make statutory redemption in the name of the defendant, and did so upon Ackley’s promise to give what security he could, and it was agreed that he should execute to the intervenor a mortgage on the same premises upon which plaintiffs’ mortgage was a lien, and assign certain judgments which he held against the defendant. On cross-examination, the following questions were asked Cain: “Well, did you in effect or in substance agree with him, (Ackley,) before you made a deposit of the money, that you. would advance the money and take a mortgage, upon the property of the Agricultural Works, provided you failed to get an assignment of the certificate of the sale from Bayless?” He replied: “Well, that was about the understanding.” He was further asked: “And that was before you made the deposit, was it?” He replied: “Yes, sir.” The mortgage under which the plaintiff claims was executed in 1873, and duly filed for record and recorded. Besides this, Cain had express notice of the mortgage, but Ack-ley informed him that in his opinion it could not be enforced, except it was possible it could be to the extent of one of the notes secured thereby, and, as we understand, the plniniffs are now seeking to foreclose for said note. Ackley, during the negotiation as to the security to be given the intervenor, said to Cain that, if the collection of the note was enforced by a foreclosure of the mortgage, it would lessen the intervenor’s security “to that extent, but that the works would be ample security.” When Ackley came to execute the mortgage, it was as702 cerfcained that he did not have the authority to execute it, but that the power to sell the premises had been conferred upon him as president of the corporation. Whereupon ho executed for and in behalf of the defendant a conveyance of the mortgaged, premises to the intervenor. This conveyance is absolute on its face, and contains the following provision: that it was made “subject to any and all legal claims against said premises.” The intervenor insists that he in equity should be subro-gated to the rights of Bayless. That, as the lien of the latter was prior to the mortgage, he should be adjudged to be the owner thereof, and that it retain its priority in his hands to the extent of the money advanced to redeem. He contends that “subrogation does not depend upon contract, but rests upon the principles of justice and equity.” Many authorities have been cited by counsel in support of their respective theories. In the view we take of the case, we do not feel called upon to determine with any degree of exactness the rule as to subrogation. But, from a somewhat careful examination of the authorities ‘cited, we incline to think a person may be subrogated to the rights of another in the absence of any contract or understanding, where he is a surety, and pays the debt for his own protection, or where he is a junior lien holder, and ¡Jays the senior lien for his protection. In such cases he cannot be regarded as an intermeddler, because as a surety he is bound for the debt, and as a junior lien holder he has an interest in preserving and protecting the common property. But where a person is in no manner bound, and on his own motion, in the absence of a contract, or expectation that he will be substituted in the place o.f the creditor, pays the debt, he will be regarded as an intermeddler, and hot entitled to subrogation. Shinn v. Budd, 14 N. J. Eq., 234; Coe v. Railway Co., 31 Id., 105 (136); Building Association v. Thompson, 32, Id., 133; Ketchell v. Mudgett, 37 Mich., 81; Gilbert v. Gilbert, 39 Iowa, 657; Barber v. Lyon, 15 Id., 37. [703] The difficulty wliich. lies in the intervenor’s path is that he got all he contracted for or expected to get when he advanced the money and redeemed from Bayless. It is true that, in the first instance, the intervenor expected Bayless would assign the certificates of purchase upon being paid the amount required to redeem. But, when lie advanced the money and made redemption, he lmew the certificate of purchase could not.be obtained, and he then contracted for a mortgage and certain other securities. The money, therefore, was not advanced under the beliet or expectation that by so doing the intervenor would obtain all or any of the rights of Bayless. When the intervenor advanced the money under the belief that a mortgage would be executed to secure him, he was under no legal obligation to make the redemption, lie did not see proper to advance the money and take his chances that he could, by so doing, be subrogated in the place and obtain the rights of Bayless, but stipulated what security he should receive. However broad the equities may be in favor of the intervenor, we cannot make a new contract for him, nor establish equities in his favor, when he did not rely thereon, and in effect made a contract for the security he should receive if he made the advancement. The stipulation in the deed strongly tends to show that Cain made the advancement with the expectation of paying the mortgage, or at least so much of it as could be enforced. Tie knew of the mortgage, and took the conveyance subject thereto. It seems to us that it would be inequitable now to say that the inter-venor has a lien or right superior to the mortgage. At the time the premises were conveyed to the intervenor, there were taxes due thereon, and we believe he has paid subsequent taxes, and also those then due. There had been established, also, a mechanics’ lien in favor of Moore & Company on the real estate, or a building thereon — there is some dispute as to which. This lien has become the property of the intervenor, and was superior to the mortgage on the real estate, or a building thereon. The district court determined [704] that for the taxes and. the Moore & Company lien the inter, venor was entitled to priority over the mortgage. Ve think this is correct, and do not deem it necessary to extend this opinion by stating our reasons; and this portion of the decree below is affirmed. But so much of the decree as gives the intervenor a lien prior to the mortgage for the money advanced to redeem the premises from Bayless is Reversed.