Witt v. Rice

KiNNE, J. I. This record discloses the following facts: .On December 1, 1885, the defendant H. 0.' Rice owned in fee the southwest quarter of- section 28, the east half of southeast quarter of section 29, and east half of northeast quarter of section 32, township 76, range 41; and he held a bond for a deed of the northwest quarter of section 28, township 76, range 41, from one Adolph Graffen, which tract will hereafter be referred to as the Graffen quarter. This bond provided for the conveyance of the fee title on the payment by H. 0. Rice of two thousand and fifty dollars, such conveyance to be made subject to two mortgages, aggregating one thousand, seven hundred dollars and interest, which Rice assumed and agreed to pay, making the total consideration three thousand, seven hundred and fifty dollars. December 1, 1885, there was still due on this Graffen quarter about three thousand, five hundred.dollars. Rice procured a loan running to one Squire, trustee, for five thousand dollars, and executed his note therefor, secured by a mortgage upon all the real estate heretofore described, including the Graf-fen quarter. After this, H. 0. Rice sold his equity in the north eighty acres of the Graffen quarter to his brother, T. M. Rice, who took possession, and has since occupied the land as a farm, and has paid in all about one thousand, eight hundred dollars on the purchase price, as provided in said bond, and has also made improvements of the value of several hundred dollars. May 24, 1886, H. 0. Rice executed to one Clapp a mortgage for two thousand, six hundred and ninety one dollars on all the land described in the Squire mortgage, except the Graffen quarter. On Sep-' tember 30, 1886, H. 0. Rice executed to C. D. Dillin a mortgage for one thousand, one hundred and twenty dollars on same land that was embraced in the Clapp mortgage. November 27, 1886, H. 0. Rice executed to C. M. Witt a mortgage for five hundred and sixteen [453] dollars and forty-three cents on same land as that included in the Clapp and Dillin mortgages. The Clapp mortgage was assigned to Lodge & Henry, and hy them foreclosed, and the land covered by it sold to satisfy the judgment recovered in the foreclosure suit; they also having become the owners, by assignment from H. 0. Rice, of all his interest in the Grraffen contract, subject to the equity of T. M. Rice in the north eighty acres. Lodge & Henry are not parties to this action. March 10, 1890, and within nine months after said sale, C. D. Dillin, as a junior lienholder, redeemed the land from the sale under the Lodge & Henry foreclosure, paying three thousand, six hundred and eighty-eight dollars and fifty-seven cents to the clerk, which was afterward paid Lodge & Henry, and the sheriff’s certificate assigned to Dillin. In December, 1885, the five thousand dollar note and mortgage made to Squire as trustee, were sold to-the Rutland Savings Bank, and it remained the owner of them until July, 1890. July 8, 1890, the bank began suit in the Hnited States court on said note and mortgage, and on August 6, 1890, plaintiff herein purchased the same, paying therefor five thousand, seven hundred dollars. The case was dismissed, and suit commenced in the state court. Soon after this suit was begun, plaintiff released of record from the lien of the mortgage in suit all of the land included therein, except the Grraffen quarter, and credited upon the note two thirds' of the amount then due thereon, and asked judgment against Rice for the balance and a decree of foreclosure against the Grraffen quarter for the one third remaining due upon the note. H. O. Rice testifies, and the record so shows, that he has no interest in this land. T. M. Rice intervened in the case, and asked, in the event that the Squire mortgage was found to cover the Grraffen quarter, that he might be subrogated to the extent of payments made by him on the Grraffen contract, and that such payments might. [454] be decreed to be a lien prior to plaintiff’s mortgage. The court found for plaintiff, and that he should have judgment for one thousand, six hundred and fifty-one dollars and thirty-six cents, with attorney’s fees, costs, and interest, against H. O. Rice, and ordered the mortgage foreclosed for said sum as against said G-raffen quarter. II. It is contended by the defendants that the Graffen quarter was fraudulently put in the Squires mortgage; that it was expressly agreed and understood between all the parties that it should not be embraced therein. Now, it is incumbent upon the defendants to establish this claim. In favor of their contention is the evidence of H. O. Rice and his wife. They are corroborated to some extent by the indorsement and cancellation made upon the Graffen bond. Against this is the testimony of Somers, who drew the mortgage, that it is just as it was drawn by him; of both the Squires that the instrument has never been changed and that Rice and his wife fully understood the mortgage, and what was described therein, when they signed and acknowledged it. Then we have the original mortgage before us, and it clearly appears that no change has ever been made in the description of property therein set forth. Again, on the same day, a mortgage was given to Squires covering the same real estate as the five thousand dollar mortgage, which second one was given for commission on the loan. The application for the loan embraced the Graffen land. It is clear that defendants have failed to establish this defense, and we must hold that the Graffen quarter section was rightfully embraced in the Squire mortgage. III. T. M. Rice insists upon the right of subro-gation as to the money payments made by him to Graf-fen on the eighty acres of the Graffen land purchased of H. 0. Rice. The trial court dismissed his petition of intervention, and must have found that he was not [455] entitled to be subrogated. Authorities are cited by counsel announcing correct principles of law applicable to the subject of subrogation, but not applicable to the facts as they appear in this case. T. M. Rice purchased the land with record notice of the Squires mortgage thereon. In law, he knew that the Squires mortgage covered this land, subject only to the Graffen claim for purchase money. When he made his several payments to Graffen he had no. thought that he could or would be subrogated to Graffen’s rights. But it is immaterial as to what T. M. Rice thought. The fact is, he purchased the land of H. 0. Rice. He took the latter’s place, and stood in his shoes, so far as the obligation to Graffen was concerned, and agreed to pay this Graffen claim as a part of the purchase price of the land; and he did in fact pay part of it. Now, T. M. Rice, by his agreement and acts, made H. O. Rice’s debt to Graffen his own. His obligation to Graffen became an actual primary liability, and in such a case the right of subro-gation does not exist. Sheld. Subr. section 26; 3 Pom. Eq. Jur., section 1212, note 1; Id. section 1213; Goodyear v. Goodyear, 72 Iowa, 329, 33 N. W. Rep. 142; Kellogg v. Colby, 83 Iowa, 513, 49 N. W. Rep. 1001. IV. It is said that plaintiff must exhaust the three hundred and twenty acres of land before he can proceed to sell the Graffen land under the mortgage. It is not necessary to discuss the rule contended for. If it be correct, still, when applied to the facts of this case, it does not impose such a duty upon the plaintiff. The rule contended for requires the plaintiff to enforce his judgment by levying upon and selling land which H. 0. Rice still owns, and would permit the land purchased by T. M. Rice to be sold for any balance remaining after thus exhausting the other mortgaged property. Now, this record shows that H. O. Rice has no title to any of this land, and has not owned it for some time. His interest therein has passed to other parties who [456] have hecome purchasers of the property. Hence it is not a case where the rule is applicable. V. Lastly, it is claimed that the court below charged too much of the incumbrance to the Graffen quarter. Plaintiff credited two thirds of the amount due on his mortgage as paid by reason of the release by him of the half section, and asked a decree foreclosing his mortgage against the Graffen quarter section for one third of the mortgage debt. The district court found that the Graffen quarter should bear five seventeenths of the entire mortgaged debt, and entered a decree accordingly. The established rule in this state is that when mortgaged property is alienated it must bear its share of the mortgage debt pro rata according to value, and without regard to improvements placed thereon by purchasers subsequent to the time of the execution of the mortgage. Bates v. Ruddick, 2 Iowa, 423; Massie v. Wilson, 16 Iowa, 390; Taylor v. Short’s Adm’r, 27 Iowa, 361; Barney v. Myers, 28 Iowa, 472; Tufts v. Stanley, 42 Iowa, 628; Buff v. Farwell, 67 Iowa, 298, 25 N. W. Rep. 252. Under the evidence, we think the court was justified in its finding. True, the rule in this particular case seems to work a hardship in requiring the value of the land to be ascertained without regard to the amount actually paid thereon at the time the mortgage was made. But the rule has been too long established to be set aside because in its enforcement an occasional injustice may seem to result; besides, it is doubtful if any rule could be established which would in all cases prove satisfactory. We see no reason for disturbing the judgment below, and it will be aeeibmed.