Plum v. Studebaker Bros.' Manufacturing

Black, J. This is an appeal from a decree of the Johnson circuit court enjoining the defendants from selling the property in question under their deed of trust. [164] On the twenty-third of April, 1879, H. C. Bettes, and Amanda, his wife, made a deed of trust to Cope'to secure a debt of nine thousand dollars due from W. H. Bettes & Company to Mary Atherton. This firm was composed of W. H. and J. J. Bettes, and they and their wives also joined in the deed which conveyed the ten or eleven’ acres of land here in question, owned by Amanda, and a storehouse and two out lots not owned by her. In March, 1881, the same grantors made another deed of trust on the same property to secure a debt of II. C. Bettes & Sons, due to the defendants, the Studebaker Brothers. This deed, on its face, is made subject to the prior one, and is the deed under which the sale was about to be made. Thereafter, and in September, 1881, W. H. Atherton, who represented the Mary Atherton debt, purchased the whole of the property at the trustee’s sale under the first deed of trust, for $6,155, paying for the property in question the sum of .two hundred and fifty dollars. Subsequently, and in the same month, Atherton, by warrnty deed, conveyed the ten acres in question to Amanda Bettes for her sole and separate use, at the price of $1,156.00. In October, 1882, Amanda Bettes sold and conveyed the property to the plaintiff, Plum, who paid therefor the full value. These deeds and deeds of trust were put to record at their respective dates. Whatever rights the defendants as second mortgagees have, must be determined from the face of the recorded deeds ; for there is no evidence in the case which impeaches the fairness of any of the deeds or sales through which the plaintiff derives Ms title. The claim of the defendants is, and must be, that when Amanda Bettes acquired the property back from Atherton, the purchaser under the first deed of trust, their deed of trust became a subsisting charge on the property and continued such as against Plum. The general rule is stated in 2 Jones on Mortgages [3Ed.] section 1887, as follows : [165] 41A mortgageor may purchase at a sale under his own mortgage; but. if he has given a subsequent mortgage upon the same property his parchase will not defeat this, but will operate for the benefit of it in the same way as a discharge or a transfer of the mortgage to himself.” In Hilton v. Bissell, 1 Sandf. Ch. 407, B purchased the premises subject to two mortgages, both of which he assumed to pay. The senior mortgagee foreclosed his mortgage, making the junior mortgagee, the mortgageors, and B, defendants. B became the purchaser at the sale for the amount payable on the first mortgage, under the decree of foreclosure. The second moitgagee subsequently sought to foreclose his mortgage, and B set up his purchase under the first foreclosure sale, and claimed to hold the premises discharged of the second mortgage. This plea the court disallowed and said, looking beyond the forms through which B affected the arrangement, it was a payment of the first mortgage, and that he was bound by his covenants to make such payment, and would not be permitted to take advantage of his own wrong; and that he would be considered the owner of the land subject to the second mortgage. The cases of Tompkins v. Halstead, 21 Wis. 118, and Stiger v. Mahone, 24 N. J. Eq. 426, are like Hilton v. Bissell. In all these cases the purchaser of the equity of redemption had assumed and agreed to pay the mortgages as part of the consideration of the purchase. So in Otter v. Vaux, 6 DeG., M. & G., 638, it was the debtor himself, as well as mortgageor, who sought to defeat the second mortgage by a purchase indirectly under a power contained in the first mortgage. In some of these cases, as also in Thompson v. Heywood, 129 Mass. 401, there was also an element of fraud on the part of the purchaser under the first mortgages. Taking no special account of this element of fraud in those cases, and which is not found in the case at bar, still the present case is essentially different from them. Here Amanda [166] Bettes did not undertake to pay the debts secured by either of the deeds of trust. They were the debts and obligations of other persons, and in no event could she be held liable for their payment. She made no such undertaking, express or implied. She being a married woman, and the property being her general estate, she was not liable on any covenants contained in the second deed of trust with respect to the title to the property, if any.there had been. But the second deed of trust was in express terms made subject to the Mary Atherton deed of trust. She owed no contract duty to the defendants to pay off the first deed of trust, and we see no reason why she might not have become the purchaser at the trustee’s sale under the first deed of trust, and have thus acquired the property discharged of the lien of the second deed of trust. But in this case the transaction stands on still firmer grounds; for, under our system of deeds' of trust, the trustee’s sale operated as a complete foreclosure, and cut off the second deed of trust as completely as if there had been a decree of foreclosure with all the parties, before the court. - Atjierton got a perfect title as. against the defendants, and it was entirely competent for Amanda Bettes to acquire that title, for she owed no duty inconsistent therewith. Plum took the title, freed from any lien, legal or equitable, of the second deed of trust. In Otter v. Vaux, supra, it was said ’if the purchase had been strictly from a third person who had for himself purchased under the power contained in the first mortgage, that might give rise to a difficult question. It was there contended that the purchase by the mortgageor should be treated as a purchase from a stranger,, and that contention gave rise to the suggestion. In Episcopal Church v. Mack, 17 Cent. L. J. 372, the church owned "the lot subject to a mortgage to Bell, and then sold the same to Mack, reserving an easement in [167] .the lot for light and air to their adjoining property. Mack had assumed to pay the mortgage, and sold the property to his wife through a third person, but without any liability on her part to pay the mortgage. • Upon the foreclosure of the mortgage she became the purchaser, and it was held she acquired the title divested of the easement to which the property was subject in the hands of the husband. The mortgage sale was made under a statute which provided that the deed should vest in the purchaser, “ the same estate (and no other) that would have vested in the mortgagee if the equity of redemption had been foreclosed.” The effect thus given to such sale is not materially different from that which is to be accorded to sales under our deeds of trust. We have held, where, by the terms of an ante-nuptial contract, the wife took an estate in fee in her husband’s Lands in lieu of dower, and after marriage he satisfied a mortgage which existed upon the land' at the date of the ante-nuptial contract, with money raised by a new, mortgage, that the wife’s estate was discharged from the first mortgage. Anglade v. St. Avit, 67 Mo. 434. While these authorities are not decisive of the question here in hand, we think they in a general way support the conclusions before announced in. this case. There being no other question here for consideration, the judgment is affirmed. All concur.