New England Loan & Trust Co. v. Spitler

The opinion of the court was delivered by Allen, J.: The facts of this case are essentially different from those in either of the cases heretofore decided by this court, cited in the brief of counsel for plaintiff in error. In this case, it appears not only that the plaintiff was insane at [570] the time of making the deeds to McNaughton, but that he had been duly adjudged insane by the probate court, and a guardian of his person and estate appointed. These facts appeared of record in the office of the probate judge. Benjamin Spitler had been confined in the insane asylum, but was then out on a temporary leave of absence. There is nothing in the findings indicating that McNaughton acted in good faith, or in ignorance of Spitler’s mental condition. Under these circumstances, the court rightly held that the deeds to McNaughton were void. (Gribben v. Maxwell, 34 Kas. 8; Powell v. Powell, 18 id. 371; 1 Pars. Contr. 383.) The New England Loan and Trust Company having had actual notice before making the loan to McNaughton, through the abstracter who prepared the abstract on which the loan was made, of the fact of Spitler’s insanity, acquired no greater right through McNaughton than he himself had. It follows, then, that the mortgages of the plaintiff in error are also void. The only question remaining in the case is, whether the plaintiff is entitled to subrogation to the rights of the holders of any of the liens which were paid by it out of the loan made to McNaughton. As to the alleged mortgage to Alice M. Risdon: From the eleventh finding it appears that this instrument was executed on September 12,1885, by Sarah J. Spitler and John II. Ayers, guardian of Benjamin Spitler.' There is nothing in the record showing any authority in Ayers, as guardian, to execute this mortgage. It is apparent that it created no lien on the land, and the subrogation of the plaintiff to the rights of Alice M. Risdon is a subrogation to no right as against the plaintiff. The mortgage of Florence Chestnut holds a different position. From the eighth, ninth and tenth findings it appears that in June, 1884, the legal title to the 44 acres was not vested in either of the Spitlers; that John H. Ayers, who was the brother of Sarah J. Spitler, paid $220, the amount of purchase money due the holders of the legal title, and took the conveyance to himself to hold as security for the purchase [571] money advanced. By this transaction he acquired the same right to the purchase money paid that the former owner had. Afterwards, on the 14th day of February, 1885, he executed a mortgage to Florence M. Chestnut for $300 and interest. Benjamin Spitler being then insane, and the land a part of the homestead of the Spitlers, and the equitable title of the land being in Sarah J. Spitler, subject only to Ayers’s claim for the purchase money, Ayers had no right to mortgage anything more than his interest in the land'. But he had a right to mortgage that interest, and the mortgage executed to Florence M. Chestnut was a good and valid mortgage to the extent of the amount of purchase money due him. The legal title in the 44 acres of land remained in Ayers until his death. It never was vested in Sarah J. Spitler until conveyed to her by the administrators of the estate of John H. Ayers by order of the probate court. To obtain a delivery of this deed so as to vest the legal title in Sarah J. Spitler, the New England Loan and Trust Company paid the amount of the mortgage to Florence M. Chestnut, as well as the sum of $116.40 claimed to be due Ayers for expenditures in the purchase and improvement of and taxes-on said land. This payment resulted directly to the benefit of the Spitlers — it vested in than the legal title to the 44 acres of land. It seems to us equitable that they should be subrogated to the right of Ayers to retain a lien on this tract for the amount of purchase money included in the payments to Florence M. Chestnut and the administrators of Ayers’s estate, with interest from the time the money was advanced by Ayers. For the protection of his security, Ayers, and those deriving their rights through him, had a right to discharge tax liens on this land, and the land remains as security for them. We think the court should have found a valid lien on 44 acres in favor of the loan company, for the amount of the purchase money and of the taxes paid, which were a valid and legal charge on said tract. In this connection we might say, that neither Ayers nor his administrators could hold the land as security for a general balance of accounts. We are [572] unable to determine. from the findings whether the whole amount due Ayers’s estate included any other items than the purchase money and taxes paid by him; but we infer that it does, from the statement that it was for improvements as well as taxes and purchase money. The items stated in the nineteenth finding as paid out for expenses of the loan are none of them properly chargeable against the land. The judgment will be modified by awarding the plaintiff in error a lien on the 44 acres of land belonging to Sarah J. Spitler for the $220 of purchase money and interest, and valid taxes thereon paid by the plaintiff in error, with interest. In all other respects the judgment will be affirmed. All the Justices concurring.