Kay v. Castleberry , 99 Ark. 618 ( 1911 )

Wood, J.,

(after stating the facts). The court was correct in finding “that plaintiff had paid said debt, not with a view of extinguishing his lien, but for the purpose of protecting his own interests,” and in holding “that the .plaintiff should be subrogated to the rights of Godfrey, Frank & Company in said trust deed and note.” The testimony shows that the loan from Godfrey, Frank & Company to appellee of the $3,000 was really made to appellee for Kopelman at Kopelman’s request. Kopelman received the money, and Kopelman’s property was mortgaged to secure it. The debt, as between appellee and his grantees, was primarily that of Kopelman’s, and appellee was his surety. Appellee, in securing this loan, was acting for the accommodation of Kopelman. Of course, appellee, having signed the note, was also liable for its payment, but only in a secondary way, as surety; for, according to the agreement between himself and Kopelman, appellee was acting for the latter’s benefit and binding Kopelman’s property. The transaction between appellee and Kopelman was tantamount to a loan made by Godfrey, Frank & Company to Kopelman at the .request of appellee. In equity, the intention of the parties to the transaction should be carried out, and undoubtedly it was the intention of Kopelman and the appellee that Kopelman should be liable for this loan of $3,000, and that his property, the stone building, which he had received from appellee in exchange for the stock of goods, should be subjected to the payment of the debt. Appellee, as we have stated, having signed the note and deed of trust, to be sure, would be liable to Godfrey, Frank & Company for the payment of the debt, and this fact, taken in connection with the agreement that he had w-ith Kopelman, would justify him in acquiring -the note and the deed of trust, and, having done so, he would be subrogated to the rights of the holder of the note and deed of trust. Subrogation is allowed to enable one, secondarily liable, who has paid the debt, to get the benefit of the mortgage security. -14 Current Raw, page 902, and authorities -in note. It is undoubtedly true, as a general rule, that a mere volunteer, one who pays a note without having any interest to protect is not entitled to subrogation. Binford v. Adams, 104 Ind. 41, 3 N. E. Rep. 753. But this rule has no application to the facts as shown by the testimony in this -record; for the reason -that appellee, being liable for the debt under consideration, did have an interest to protect, and could not, from any viewpoint, be considered as a mere interloper or volunteer. So far as the note and deed of trust are concerned, the debt appeared to be, and was, that of appellee as between him and Godfrey, Frank & Company; but as between Kopelman and appellee the plaintiff shows that it was the intention of both that the debt was primarily that of Kopelman, and that the property should be subjected to its payment, no matter into whose hands the same might pass. This is shown by the fact that the various conveyances of the property from appellee to Kopelman, and from Kopelman to Widner, and from Widner to appellant, had a clause therein subjecting the property conveyed to the payment of the debt evidenced by the note and secured by the deed of trust. The testimony warrants the conclusion that -appellee, when he conveyed the property to Kopelman, did so with the understanding that Kopelman would be liable for the $3,000 debt which he (appellee) had previously -executed a deed of trust to secure. The transaction was equivalent to a deduction by appellee of the mortgage debt from the price of the land to Kopelman, for both parties understood that Kopelman was to pay the debt, and that the lands included in the deed of trust were to be subjected to its payment. “A grantee who takes a conveyance subject to a mortgage is presumed -to have included the mortgage debt in the purchase price, and is• not, • therefore, permitted to dispute-the validity of the mortgage.” 3 Pom. Eq. Jur. § 1205. While there is no clause in the various conveyances making the appellee personally liable for the debt, there is a clause that we have stated showing that appellee and his grantors purchased the property subject to the mortgage debt, and therefore they are not in a position to oppose or defeat the rights of one who holds the .prior incumbrance, either through rights of .subrogation or by a straight out purchase thereof.

In Pratt v. Buckley, 175 Mass. 115, in. a parallel case under the facts, the court said:

“The principal question in the case is whether the transfer of the note and the assignment of the mortgage to the original mortgagor, after the premises had been sold subject to the mortgage, constitute in law a discharge of the mortgage, so that it could not be enforced against the property. We think it very clear that they did not. When the estate was sold subject to the mortgage, the mortgage was left as a primary charge upon the land, although the grantee did not make herself personally liable for it by assuming it. The grantor, who was the maker of the mortgage note, was entitled to have the mortgaged property applied in payment of it. To protect her own interests, she might have taken -an assignment of the mortgage and the debt and enforced the mortgage by foreclosure as effectually as if she was not the maker of the note.”

“In all such cases the intention of the parties must control. Here there was no intention upon the part of appellee, when he acquired the note and mortgage from Hogan, to pay the debt and so discharge the deed of trust, but on the contrary to obtain the note and deed of trust in order that he might subject the property therein to the payment of the debt. North End Savings Bank v. Snow, 83 N. E. 1099. See also Scribner v. Malinowski, 111 N. W. 1032. “Where -the mortgagor has sold his equity of redemption subject to the lien and mortgage, he has the same right as any third .person to purchase and take an assignment of the mortgage, and upon payment of a prior incumbrance to the holder thereof he would be entitled to be subrogated to his right, and substituted in his place as respects the land.” Gerdine v. Menage, 41 Minn. 417; Baker v. N. W. Guaranty Loan Co., 36 Minn. 185, and cases cited; 27 Cyc. 1329, and cases cited in note.

By accepting the deed containing the clause quoted in the statement, appellant was advised of the conditions specified therein, .and he should not be heard now in a court of equity to say that the property contained in the deed of trust should not be subjected to the payment of the debt for which it was pledged. The facts show that he purchased knowing that the debt secured by the deed of trust was to be deducted from the purchase price.

The facts, ¡as we view them, give him no standing in a court of equity. The finding of the court as to the cotton .platform is sustained by the evidence. It being shown that the property in the deed of trust is liable for the amount of the note, and it being further shown that appellee credited the note with the rents he was to pay appellant, should he seek to redeem, he would get the benefit of this payment, and can not complain.

It appears that there was no final judgment on the question as to the cost of the receivership, as that was continued by the court for further consideration.

The judgment upon the whole case is correct, and it is therefore affirmed.