Butts v. Swan , 217 Mo. App. 451 ( 1925 )

^* Headnotes 1. Mortgages, 27 Cyc., pp. 1386, 1387; Subrogation, 37 Cyc. pp. 443, 472; 2. Mortgages, 27 Cyc., p. 1987; Subrogation, 37 Cyc., p. 472; 3. Mortgages, 27 Cyc., p. 1828. This cause is in equity to redeem and be subrogated. Relief was denied and plaintiff appealed.

A.T. Swan and wife, Margaret, were married May 13, 1918. The husband's father and mother gave him $500 as a wedding present. September 30, 1918, A.T. Swan purchased from M.B. Kincheloe a five-acre tract of land, and used the $500 in making the first payment, but there remained a balance due on the place of $2600. A.T. Swan and wife, Margaret, gave their note payable at $50 per month to Kincheloe for the $2600, and to secure this note gave Kincheloe a deed of trust on the five acres. The wife, Margaret, made the payments on the note. We gather that the matrimonial sea did not remain calm. Anyway, on September 23, 1920, the husband, A.T. Swan, and wife Margaret conveyed to McDonald, the wife's father. This conveyance was made to protect the wife for what she was putting into the place. September 30, 1922, McDonald and wife conveyed to the plaintiff in this cause. All these conveyances were made subject to the Kincheloe deed of trust. Plaintiff was endeavoring to assist the wife, Margaret, to raise the money to pay off the Kincheloe deed of trust, and there was a written agreement between plaintiff and the wife, Margaret, disclosing the purpose and character of the conveyance to plaintiff. June 14, 1921, Kincheloe assigned the note held by him together with the deed of trust to Mrs. M.F. Swan, the mother of A.T. Swan. The wife, Margaret, continued to make payments until 30 payments of $50 each with accrued interest had been paid, as we understand the record. Plaintiff was able, ready and willing to pay off the note, but, on account of an attachment suit and other suits against A.T. Swan, he, plaintiff, wanted Mrs. M.F. Swan to assign the note and security without recourse to him, so that he would have all the security the Kinchloe deed of trust would give. Mrs. M.F. Swan, because her son A.T. Swan was on the note, refused to assign as desired by plaintiff, but offered to accept payment, cancel the note and deed of trust and satisfy the record. Plaintiff declined to pay off the note on such terms.

Margaret, the wife, ceased to make payments, and Mrs. M.F. Swan proceeded to foreclose, and this suit followed, and was commenced before the day of the foreclosure sale. The sheriff who was acting trustee in the foreclosure was made a party defendant, but his interest is only nominal.

Subrogation is the real object sought. While redemption is discussed and considered in the briefs, yet the briefs are for the most part devoted to the question of subrogation. Was plaintiff occupying a position which would entitled him to subrogation?

The general rule is that any person having an interest in mortgaged property which he is obliged to protect by paying the mortgage, will, if not primarily liable, be entitled, by paying off the mortgage, to an assignment of the mortgage or to be subrogated to the rights of the mortgagee. And this rule applies to one who advances to the mortgagor the money necessary to pay the mortgage debt under an agreement that he shall have the benefit of the mortgage security for his own reimbursement. [27 Cyc. 1386.]

The agreement between plaintiff and Margaret Swan is as follows: "This agreement between the parties undersigned, for and in consideration of their mutual promises, witnesseth, and it is understood and agreed that W.L. Butts holds and has held the title to the tract in the deed described and located at Oakland in Jasper County, Missouri, as beneficial owner for the purpose of securing him for counsel and services rendered and advances in respect thereof and to be rendered in and about pending litigation in which the undersigned Margaret Swan and her interests might or would be involved; and it is now further agreed, because of a trustee sale now being advertised by the sheriff of Jasper County of said tract or a part thereof to satisfy the balance due on a first incumbrance on said land, the said W.L. Butts will advance and for the benefit of said Margaret Swan furnish the money necessary to lift said debt, accrued interest and costs, and redeem said property from said incumbrance, and the said Margaret Swan in consideration thereof conveys to said W.L. Butts the full benefit of the said first incumbrance, transferring and assigning the same to him, and substituting him in all respects as the owner and holder thereof."

There was no complaint as to the offers and tenders of plaintiff except as to the condition of assigning the security to him. If he was entitled under the law to have the note, and trust deed assigned to him, he was entitled to a decree, upon payment of the mortgage debt, subrogating him to the rights of the mortgagee and his assigns. The general rule stated, supra, from 27 Cyc., is given approval in Speer v. Home Bank,200 Mo. App. 269, 206 S.W. 405. Plaintiff had not, so far as appears, actually advanced the money to Margaret Swan to pay off the mortgage debt, but he had obligated himself to do so. We think that plaintiff comes under the rule and was entitled to a decree, upon payment of the mortgage debt, subrogating him to the lien rights of Mrs. M.F. Swan, who held the Kincheloe deed of trust. Also the deed from McDonald to plaintiff, coupled with the agreement between plaintiff and Margaret Swan, was no more, as between plaintiff and Margaret Swan, than a lien and in the nature of a mortgage to secure plaintiff. Therefore reasoning thus plaintiff in a sense was a junior mortgagee, and would be entitled to the right of subrogation as such.

It appears in the record that the foreclosure sale was held notwithstanding the commencement of this cause. If complications have arisen because of such it was not plaintiff's fault. The judgment should be reversed and the cause remanded with directions to enter a decree in favor of plaintiff subrogating him to the lien rights of Mrs. M.F. Swan in the Kincheloe deed of trust, upon the payment by plaintiff of the mortgage debt, and it is so ordered. Cox, P.J., concurs. Bailey, J., not sitting.