Cook v. Kelly , 200 Ala. 133 ( 1917 )

It is well established in this state that a party paying off prior liens or mortgages on real estate is entitled by subrogation to the rights of the prior lienholders in a proper case. It is further settled that one who advances money for the discharge of a prior lien, though he be without previous interest in the subject of the lien, is not a stranger, and that such an one is entitled to the benefit of the doctrine of subrogation where that course will best subserve the substantial purposes of justice and the true intention of the parties. In such a case equity will keep alive the prior incumbrance as against strangers and third parties, even though it has been actually canceled and satisfied of record, provided this can be done without injury to such third parties. Woodruff v. Satterfield, 74 So. 948;¹ First Ave. Coal Lumber Co. v. King, 193 Ala. 438, 69 So. 549; Fouche v. Swain, 80 Ala. 151; 3 Pom. Eq. Jur. §§ 1200, 1212; Sheldon on Subrogation, § 57. So much for advances made and used in the discharge of the vendor's lien.

To the claim of Kelly against George W. Cook, for $324, under the original agreement of purchase and improvement, which amount went into the erection of the buildings and other improvements on the land, the statute of frauds cannot apply. This contract is executed, in that a conveyance has been made by the mortgagor, vesting the legal title in accordance with the original parol contract. This mortgage related back to the inception of the contract and agreement which were in parol. A parol contract to convey land is void, because of the statute of frauds, unless it falls within the exception of the statute; but if a deed or mortgage is subsequently made, in pursuance of the parol agreement, such deed or mortgage cannot be annulled on the ground that the original contract was in parol. To the parol contract, when executed, the statute cannot apply, since it is as fully executed by being put in writing and signed by the parties having the legal title as the statute of frauds could possibly require.

The mortgagee's equity was prior and paramount to the homestead rights of the mortgagor or his vendee; and, as we have before shown, the mortgagee's title related back to the time of the original parol contract, so far as the parties to the contract were concerned; the rights of no bona fide purchaser being involved.

It is fortunate that the justice of this case is the law of it.

The case of Clark v. Bird, 158 Ala. 279, 48 So. 359, 132 Am. St. Rep. 25, cited by appellant's counsel, has no application.

The cause is affirmed.

ANDERSON, C. J., and MAYFIELD and SOMERVILLE, JJ., concur.

¹ 199 Ala. 477.