Gaskill v. Wales's Executors

The opinion of the court was delivered by The Chancellor. This is an appeal from a decree of the Burlington circuit court533 in a suit for foreclosure of a mortgage held by the respondents’ testator, Hr. Edmond L. B, Wales, on land in that county. The mortgaged premises are a tract of twenty-two and seventy-one hundredths acres. They were owned on the 11th day of May, 1874, by Joseph Grubb, and were then subject to two mortgages thereon, given by him to Caleb Wilkins, one for $1,000 and interest, and the other for $200 and interest. On that day Grubb borrowed of Dr. Wales $2,000 on mortgage of the property, and it was agreed between them that the mortgage should be the first lien thereon. It was given accordingly. With part of the $2,000 the Wilkins mortgages were paid, and they were then, by direction of Dr. Wales’s attorney, canceled of record. On the 1st of May, 1874, a few days before the Wales mortgage was given, Grubb began the building of a dwelling-house on part of the property. The firm of Laumaster & Wright and Samuel E. Hancock furnished materials for the house, and Nathan Gaskill did work thereon. They filed and prosecuted to judgment lien-claims under the mechanic’s lien law, for money due them therefor, and under executions on those judgments the dwelling-house and the curtilage thereof were sold, December 11th, 1875, to Hancock and the firm of Laumaster & Wright. The respondents claim that they are in equity entitled to be subrogated to the rights which Wilkins had under his mortgages when they were paid off, to the extent to which the money lent by their testator was used in the payment of those mortgages, and that for that amount and interest they are entitled ’ to priority over the purchasers of the property under the lien-claims. The principle of subrogation is one of equity merely, and it will accordingly be applied only in the exercise of an equitable discretion, and always with a due regard to the legal and equitable rights of others. In the case in hand, the Wilkins mortgages were canceled of record, and the purchasers under the executions had no notice of any kind of the existence of any claim to the equity. They had no notice except what the records afforded. To give the respondents’ mortgage priority over the lien-claims would therefore manifestly be highly unjust to the purchasers who bought — 534 — in ignorance of any right or claim to such priority. In the absence of any other notice they, of course, had a right to rely on the condition of the records, and having done so they cannot be defeated or prejudiced by a latent equity. Their title, therefore, to the dwelling-house and curtilage is paramount to the respondents’ mortgage. The decree will be reversed, with costs, with directions to the circuit court to enter a decree for the foreclosure and sale of the rest of the property only. Deoree unanimously reversed.