Equitable Mortgage Co. v. Lowe

The opinion of the court was delivered by Ho ETON, C. J.: [46] 1- ® heí,'proper, [45] If the southwest quarter and the southeast quarter of section 33, township 5, range 18, were the only real estate mortgaged by John W. Lowe to the Equitable [46] Mortgage Company, we would promptly dispose of the case in favor of the mortgage company, upon the equitable doctrine announced in Everston v. Central Bank, 33 Kas. 352. But 800 acres of land in Phillips county were included in the mortgage recited in the petition. This mortgage, according to the petition, was executed on the 21st of January, 1889, and filed for record on the 6th of April, 1889. It was to secure. $3,500, but the only money paid thereon was $934.13. It appears from the evidence that the mortgage company received the mortgage on the 11th day of April, 1889. This action was commenced on the 3d day of May, 1889. The petition alleges, and the evidence shows, that Lowe, the maker of the mortgage, had no title to the southeast quarter of section 33, township 5, range 18, but there are no allegations in the petition showing that he had no title to all the other land described in the mortgage. There are allegations in the petition that Charles H. Smith, Philip Yountz and the American Investment Company had mortgages at one time upon a part of the 800 acres of land other than the southwest quarter and the southeast quarter of section 33, but there are no allegations in the petition that these mortgage liens actually existed at the commencement of this action, or that they were of the full value of all the land, or that the other land not incumbered by mortgages was worthless as a security for the debt. For all that appears in the petition or evidence, the 480 acres of land alone, not embraced in the mortgages paid off, may have been sufficient to satisfy the $934.13, advanced upon the mortgage of John W. Lowe to pay off the four mortgages upon the southwest quarter and the southeast quarter of section 33. This, therefore, is somewhat like a case in which a mortgagee has a lien on two properties or funds and other mortgagees have junior liens on a part of the same properties or funds. In such cases, equity demands that the mortgagee who is secured by two properties or funds shall resort first to that property or fund which is not bound to the other mortgagees or creditors, in order that the others may receive the benefit [47] of their security so far as maybe practicable. (Sheldon, Sub., §63; Ferry Co. v. Jersey Co., 1 Hopk. Ch. 460; Everston v. Booth, 19 Johns. Ch. 486; and Hayes v. Ward, 4 Johns. Ch. 123.) It was in the power of the Equitable Mortgage Company, in this very action, to pursue and. exhaust its remedy against the 480 acres of land included in the mortgage before being subrogated to the four mortgages paid off by it upon the southwest quarter and the southeast quarter of section 33, upon which the Kansas Trust and Banking Company and the Mortgage Trust Company of Pennsylvania also have mortgages. The right of subrogation or of equitable assignment is not founded upon contract, but upon the' facts and circumstances of the particular case, and upon principles of natural justice. (Eversion v. Central Bank, supra; Crippen v. Chappel, 35 Kas. 499; Yaple v. Stephens, 36 id. 680.) The Equitable Mortgage Company should have proceeded first against the 480 acres; and it is not equitable or just that it exhaust, in the first instance, the southwest quarter and the southeast quarter of section 33, so as to exclude the mortgagees or creditors having junior liens upon that property or fund only. The Equitable Mortgage Company showed in its petition that the defendant John W. Lowe had failed and neglected to pay the taxes for the year 1888 upon the lands embraced in his mortgage, and that the mortgage and debts secured thereby, on account of such default, were due and payable at the time this action was commenced. If, therefore, the mortgage company had proceeded against all of the land mortgaged, all of the mortgages could have been foreclosed and the liens of all the mortgagees adjusted accordiug to equitable principles; but it is contrary to equity and natural justice, without a further showing, to permit the Equitable Mortgage Company to exhaust all of the property or fund upon which there are junior liens, when its mortgage embraces other property which may be sufficient to satisfy its debt. [48] 2. judgment-courureme [47] Upon the trial, it was shown that Mrs. E. M. Lowe did [48] not sign the mortgage, and that the notarial certificate to the acknowledgment was a forgery, but this would not release John W. Lowe, or render the mortgage null and void as to him. If John W. Lowe and the other parties having interests in the 480 acres of land referred to, who were parties in the courts below, but have not been made parties in this court, were properly in this court, we might perhaps reverse the case and send it back for a full foreclosure upon the whole 800 acres of land, and have the proceeds properly distributed; but we cannot render any judgment that will necessarily affect defendants who are not parties in this court by summons in error or otherwise. (McPherson v. Storch, 49 Kas. 313.) Upon the petition, the other pleadings, and the evidence introduced upon the trial, the judgment of the district court must be affirmed. AlleN, J., concurring.