French v. Grand Beach Co. , 239 Mich. 575 ( 1927 )

My views of this case are at variance with those expressed by Chief Justice SHARPE. The only important question involved is whether Mrs. French, the owner of the mortgage on defendant's property, can be compelled against her will to assign it to avolunteer. In many cases in many courts assignments of mortgages have been compelled, but, so far as I have been able to discover, it has always been upon the petition of some person who had an interest or equity in the mortgaged property, which would be difficult to protect unless an assignment or subrogation was ordered. This is, indeed, a just rule. But to allow a volunteer, a stranger to the property, to present himself to the mortgagee and say "I am a friend of the mortgagor, I am willing to loan him sufficient funds to pay your mortgage, and demand that you assign it to me," and be able to enforce the demand, will introduce an entirely new practice in the law of mortgages.

The rule which has been followed in like cases is well stated in 27 Cyc. p. 1294:

"A mortgagor cannot compel the holder of the mortgage to receive payment of the amount due from a third person and assign the mortgage to the latter; and when a third person has become entitled to succeed to the rights of the mortgagee, the courts will not generally order or compel the latter to execute a formal assignment of the security because the rights of such third person can be perfectly well worked out by the application of equitable principles, without his holding the formal title to the mortgage. But an assignment may be ordered where it is necessary to protect an unquestioned right, which cannot be made effective without the legal title to the securities, or to prevent a manifest injustice. The right to redeem a mortgage does not carry with it the right, on such redemption, to an assignment of the mortgage, unless the redeeming party has the position of a surety, or can be regarded as a surety for the mortgage debt."

The following cases support the text: McCulla v. Beadleston,17 R.I. 20 (20 A. 11); Holland v. Savings Bank, 16 R.I. 734 (19 A. 654, 8 L.R.A. 553); Bigelow v. Cassedy, 26 N.J. Eq. 557; Ellsworth v. Lockwood, 42 N.Y. 89; Gilpin v. Brooks, 226 Mass. 322 (115 N.E. 421); Hopkins Manfg. Co. v. Ketterer, 237 Pa. 285 (85 A. 421, Ann. Cas. 1914B, 558); Gooderham v. TradersBank, 16 Ont. 438; Strasbaugh v. Dallam, 93 Md. 712 (50 A. 417); Butler v. Taylor, 5 Gray (Mass.), 455; Lackawanna Trust Safe Deposit Co. v. Gomeringer, 236 Pa. 179 (84 A. 757).

Holland v. Savings Bank, supra, was a bill filed to compel an assignment of a mortgage upon payment of the amount due. The court, in denying the prayer of complainant, said in part:

"We will first consider whether the bill as originally filed showed that the said Julia had any right to have the mortgages assigned to her upon paying to the holder the amount due thereon, together with expenses incurred by the holder in advertising, etc. The rule which is the more generally recognized is that a mortgagee cannot be required to assign the mortgage upon receiving the amount due thereon unless the person making payment is entitled to such assignment for some equitable reason, but can only be required to release or discharge the debt and mortgage, or, if the person making payment prefers, to surrender them to him, uncanceled. This is because the mortgagee, like any other creditor, is not under any obligation to sell and transfer his claim to another, but is only under obligation to accept payment thereof when duly tendered, and because he is entitled, under his mortgage, if the debt is not paid as stipulated, to sell the estate for its payment, or to foreclose in some other mode as provided by law.Chedel v. Millard, 13 R.I. 461; Butler v. Taylor, 5 Gray (Mass.), 455; Lampson v. Drake, 105 Mass. 564;Lamb v. Montague, 112 Mass. 352; Hamilton v. Dobbs, 19 N.J. Eq. 227; Bigelow v. Cassedy, 26 N.J. Eq. 557;Gatewood v. Gatewood, 75 Va. 407; Chase v. Williams,74 Mo. 429; Ellsworth v. Lockwood, 42 N.Y. 89."

In Ellsworth v. Lockwood, supra, the same question was before the court, and it said in part:

"Upon the whole, I do not think it can be said to be the law of this State, that the right to redeem a mortgage, that is, the right to compel the holder of it to accept or receive payment of it, after it is due and payable, carries with it the right upon such redemption to an assignment of the mortgage and of the bond or other instrument evidencing the mortgage debt, or of either, unless the redeeming party has the position of surety or can be regarded as surety for the mortgage debt. As in the principal case, it is impossible in any way to regard the plaintiff as surety for the payment of Lockwood's bond and mortgage, my conclusion is that he was not entitled to an assignment of them at the time he, through MacGregor, demanded it."

In Strasbaugh v. Dallam, 93 Md. 712 (50 A. 417), where the same question was involved, the court said:

"We do not mean to decide that the appellant was under any obligation to sell and assign his mortgage at the request of Dallam's children. They, as devisees of the farm, were, of course, entitled to pay off and extinguish the mortgage debts, but they could not compel him to sell or assign it to any one."

25 R. C. L. p. 1324, has this to say on the question:

"While subrogation is founded on principles of equity and benevolence, and may be decreed where no contract exists, yet it will not be decreed in favor of a mere volunteer, who, without any duty, moral or otherwise, pays the debt of another; for such a person can establish no equity, and can obtain the right of substitution by contract only."

The other cases cited are to the same effect as those quoted from. Perhaps a word should be said concerning the case ofLackawanna Trust Safe Deposit Co. v. Gomeringer, 236 Pa. 179 (84 A. 757). Some doubt has been cast upon the holding in that case. That case is in accord with the other cases of similar facts where an attempt has been made to compel an assignment of a mortgage to a mere volunteer. A reference to a subsequent decision of that court will show it did not intend to overrule the holding in the Lackawanna Case:

"Generally speaking, he is not required, on receipt of the indebtedness, to assign or transfer the mortgage; he can only be required to satisfy it. The circumstances, however, may be such that when the debt is paid he may be required to assign the instrument for the protection of the party making the payment," etc. Hopkins Manfg. Co. v. Ketterer, 237 Pa. 285 (85 A. 421, Ann. Cas. 1914B, 558).

A reasonable amount of industry has failed to find a case which violates this rule. Wherever assignment has been compelled the petitioner has been a surety or has had some interest or equity to serve, which was difficult to protect in any other way. Why should a court of equity violate the rule to assist a volunteer, one who is not a surety for the obligation and has no interest or equity in the property mortgaged? Mr. Catherman, to whom an assignment has been ordered in this case, has no interest or equity in the mortgaged property. Neither is he a surety on the obligations of defendant. It will probably be admitted that defendant could do nothing but pay the mortgage debt and get a release. Catherman is the agent of defendant. How can it authorize Catherman to get larger rights than it is entitled to? Defendant is not entitled to an assignment, but, by some mysterious change, Catherman is said to be entitled to one, although whatever rights he has he gets from defendant.

The mortgagor cannot demand that a mortgage be assigned to a third person upon payment of the amount due thereon.Gilpin v. Brooks, 226 Mass. 322 (115 N.E. 421); Gooderham v.Traders Bank, 16 Ont. 438; Ellsworth v. Lockwood, 42 N.Y. 89.

Who is a volunteer?

"A person who is under no obligation whatever to pay the debt of another secured by a mortgage, and who has no interest in or relation to the property, is a volunteer, within the meaning of the rule." 25 R. C. L. p. 1325.

See, also, Boley v. Daniel, 72 Fla. 121 (72 So. 644, L.R.A. 1917A, 734); Good v. Golden, 73 Miss. 91 (19 So. 100, 55 Am. St. Rep. 486); Campbell v. Foster Home Ass'n, 163 Pa. 609 (30 A. 222, 26 L.R.A. 117, 43 Am. St. Rep. 818).

Some criticism is made of Mrs. French because she is insisting on her legal rights, although it is said she would lose nothing if she should concede to Catherman more than his rights. Mrs. French owns some bonds secured by a second mortgage on defendants' property. If the first mortgage is paid and released the second mortgage moves up into first place and thereby the value of her bonds will increase in value. She may be actuated by this motive. Mrs. French's motive for insisting on her legal rights is immaterial. She is probably selfish like most of the human race, but this furnishes no reason why she should not insist upon her legal rights, neither does it furnish any reason why she should grant to Catherman more than his legal rights.

I think the holding of the trial court should be reversed, and the mortgage sale confirmed, with costs to plaintiff. The writ should be granted if necessary in the mandamus cases.