Bowen v. Gilbert

Weaver, J. Tbe defendant borrowed from plaintiff tbe sum of $650, and secured tbe repayment of tbe loan by a lien upon a tract of town property owned by her. In effecting this transaction, tbe defendant, instead of giving- a mortgage in tbe ordinary form, executed and delivered to plaintiff a warranty deed of tbe premises, and received tbe plaintiff’s written agreement to reconvey tbe same upon payment of tbe debt according to tbe terms incorporated in tbe writing. At tbe date of tbe conveyance and contract to reconvey there existed a prior duly recorded mortgage upon tbe same premises, held by a building- and loan association, for about $800, subject to certain credits for installments paid. Tbe subject of this mortgage was mentioned, and defendant undertook to keep up tbe payments thereon as they should fall due. Thereafter the.plaintiff paid to tbe building and. loan association tbe amount due on tbe prior mortgage, and procured the cancellation of tbe lien of record. Later be took possession of the property, or of some part of it, and excluded tbe defendant therefrom. He afterward began this action to reinstate the prior mortgage and to be subrogated to tbe lien thereof, and also asked a decree foreclosing both mortgages. Defendant resists the granting of the relief asked, and insists that tbe payment by plain tiff to the building and loan association was [450] without right, and without her knowledge, authority, or consent, and was not required for the protection of the plaintiffs security. In other words, defendant claims that the payment of the debt by plaintiff was voluntary, and she is under no legal obligation to repay it. The district _ court found for plaintiff-that he was entitled to a reinstatement of the lien, and to be subrogated to its protection-but denied the prayer for a foreclosure of the mortgages. I We think it unnecessary to go into a review of the testimony. In our judgment, the findings of the trial court upon the facts are abundantly sustained. There is, it is true, 1. Liens: subrogation. a dispute in the testimony whether at the time -the loan was made there was any agreement or understanding that plaintiff might take up t~ue prior mortgage, but it is not material to our determination which party is right in this conte~itiou. Beiiig a jimior lien holder, plaintiff had an undoubted right, without defendant's consent, to fortify his ciwn security by paying the sum due on the prior incumbrance, and to be subrogated to its lien. 3 Pomeroy's Equity Jurisprudence (2d Ed.) 1212. He was not required to await foreclosure proceedings by the prior lien holder before exercising the right. Hammond v. Leavitt, 59 Iowa, 407. These propositions we regard as elementary. Iii vieW of this conclusion, the numerous precedents cited upon the rule applicable to payments by a mere volunteer or stranger in interest do not require our consideration. IL Much stress is laid by appellant upon the fact that plaintiff caused or permitted the prior mortgage to be canceled of record. This is not a controlling circumstance. No 2. Same. rights of third parties have intervened. No increased burden is placed ~ipon defendant by re-quiririg her to pay the debt to plaintiff, instead of to the building and loan association. She pledged the property to secure the payment of both claims, and the decree of the district court simply recognizes the obligation thus voluntarily and for a valuable ~onsideration entered into by her. More-ever, the evidence tends to show that, after plaintiff had paid [451] off tbe prior mortgage, defendant recognized Mm as her substituted creditor upon that claim by paying Mm one or more installments thereon, and tendering Mm still others; thus, in effect, ratifying and confirming his act. That a payment made by a ’volunteer or stranger may be ratified, and such ratification held equivalent to an original request,- see Winsor v. Savage, 9 Metc. (Mass.) 348. The effect of the cancellation of the mortgage depends upon the intent with which it is done, and it is entirely clear from the evidence that plaintiff, relying upon his deed, supposed that there was no occasion to foreclose Ms junior lien, and canceled the prior lien, thinking he could thereby perfect an absolute and un-incumbered title in Mmself. In other words, he intended thereby to protect his interest in the premises, and the fact that he was mistaken as to the legal quality of his right affords no reason in equity why the court should permit defendant to reap the benefit of his payment without any consideration or equivalent of any kind. The cancellation of record of the lien has often been held no bar to relief by sub-rogation where the situation has not been complicated by intervening rights of third persons. Ward v. Seymour, 51 Vt. 320; Elliott v. Tainter, 88 Minn. 377; Elbert v. Gerding, 116 Ill. 217 (5 N. E. Rep. 591); Gardner v. Astor, 3 Johns. Ch. 53 (8 Am. Dec. 465). That a mistake of law as to the effect of the payment of the prior mortgage will not necessarily defeat the right of subrogation, see Arlington Bank v. Paulsen, 57 Neb. 717 (78 N. W. Rep. 314.) The decree entered below works equity between the parties, and is affiemed.