Swain v. Stockton Savings & Loan Society , 78 Cal. 600 ( 1889 )

Foote, C.

— This action was brought under section 2904 of the Civil Code, to subrogate the plaintiff to certain superior lien rights of the defendant. The defendant demurred to the complaint, which was overruled. Upon answer filed a trial was had, and a judgment as prayed for passed for the plaintiff, from which the defendant appeals.

1. It is contended by the appellant that the complaint does not state facts sufficient to constitute a cause of action.

2. That there is a non-joinder of parties defendant.

3. That the findings do not support the judgment.

• a. The first point made by the -defendant as to the insufficiency or the complaint rests upon the assumption that the plaintiff has no lien which would entitle him to subrogation under the section of the Civil Code, supra.

The argument is made that after a sale of real property under a judgment to the plaintiff, a judgment creditor, but before the deed is made by the sheriff, and before the time of redemption has passed, the judgment creditor who has purchased at the sale has no lien; that it ceased when the sale was made.

This is fallacious, and is in opposition to the plainly expressed views of the appellate court in People v. Mayhew, 26 Cal. 661, where it is said: “If the right or interest that the purchaser or redemptioner holds prior to the execution of the sheriff’s deed is not a mere lien, and with the qualification only of a mere lien, we are unable to give it a legal designation. (See Vaughn v. Ely, 4 Barb. 159, and cases there cited.)”

b. It was necessary to the protection of the plaintiff’s interests that he should redeem the property he had purchased at sheriff’s sale from a superior lien, and hold the lien himself, which the defendant held as a cestui que trust, under a trust deed in the nature of a mortgage, which secured a debt from the Cornwalls, who were also the judgment debtors of the plaintiff and other junior judgment creditors.

The plaintiff had become a mere lien holder until the execution of the sheriff’s deed should be had. The Corn-walls were insolvent, other junior judgment creditors had a right to redeem the property from the plaintiff, and he could not look to them to repay what he might pay to the defendant, unless he could make it evident that he had paid the superior lien debt of the former, and held the lien.

If the defendant, as it wished to do, was permitted (upon the plaintiff’s paying to it its debt) to reconvey the property to the mortgagors, the Cornwalls, non constat but what the junior judgment creditors, without further proof that the plaintiff had paid the debt to protect his lien, might claim that the mortgage debt was canceled, the property revested in the Cornwalls, and that the plaintiff did not hold the superior lien given by the trust deed in the nature of a mortgage.

To prevent any such embarrassment, it was to the plaintiff’s interest to be subrogated to the defendant’s rights, and have satisfactory proof thereof.

c. What the plaintiff sought in this action was that he might be placed in the same situation as the defendant in relation to the trustees under the trust deed, and to the judgment debtors who were the mortgagors in that instrument.

This could only affect the defendant. It did not in any way impinge upon the rights of the trustees or the mortgagors, who were also judgment debtors of the plaintiff.

So far as the mortgagors are concerned, it could not fix the amount of their indebtedness; they could have been heard to resist the payment of a greater sum than they owed, under the trust deed, when an attempt should be made to execute the trust.

The trustees could act under the terms of the deed in trust, as well for one beneficiary as another. It could make no possible difference to them whether the plaintiff or defendant was their cestui que trust.

In so far as the subrogation prayed for was concerned if granted, it could not alter the relations of the parties any more than if the plaintiff had by agreement purchased the debt of the defendant, and had it and the lien securing it transferred to himself.

d. The finding complained of (as to what the defendant was willing to do, that is, to accept the payment of the money it claimed as due, under the deed in trust, and procure the trustees to deed the property back to the mortgagors, yet still refusing to subrogate the plaintiff) is entirely consistent with and supports the judgment.

Perceiving no prejudicial error, we advise that the judgment be affirmed.

Hayne, C., and Belcher, O. C., concurred.

The Court.

For the reasons given in the foregoing opinion, the judgment is affirmed.

Rehearing denied.