Wunderle v. Ellis ( 1905 )

Opinion by

Mr. Chief Justice Mitchell,

This is a perfectly clear case for the maintenance of the status quo until final hearing and unless the facts shall then be shown to be essentially different from what they now appear, it will be an equally clear case for payment and subrogation.

The whole right of the defendant as holder of the mortgage is to have his money paid him, and his whole claim on the land is to hold it as security for such payment. When he is offered his money his refusal to take it is persuasive evidence that he is not enforcing his legal rights in good faith but is seeking to use them for some ul terior and inequitable purpose. Even if this were not so the general doctrine of subrogation is that where a party can attain all his legal rights in either of two different ways, a court of equity will compel him to take that which will do the least injury to another having a junior interest in the subject-matter, and if necessary will subrogate the latter to the prior rights.

It is conceded “that a junior mortgagee, judgment creditor, or other encumbrancer who pays off a prior encumbrance in order to protect his own interest in the encumbered estate, will as a general rule be subrogated to all the rights of the senior encumbrancer and if necessary for his protection may compel an assignment of the security.” 27 Am. & Eng. Ency. of Law (2d ed.), Subrogation IV, 3, page 243. There is no good reason why the same relief should not be afforded under similar circumstances to a lessee for years, and there is authority for so holding. “ A tenant for years may redeem, although his lease being made after the mortgage, and good against the mortgagor, is not good against the mortgagee. ” 2 Jones on Mortgages: (6 ed.), sec. 1066. And in Hamilton v. Dobbs, 19 N. J. Eq. 227, a case on all fours with the present but not so strong, it was held by Chancellor Zabrislde that a tenant for years who offers to pay off a mortgage debt, has the right to redeem. He has not perhaps strictly the right to demand a written assignment of the mortgage, but stands by redemption in place of the mortgagee, and will be subrogated to his rights against the mortgagor and reversioner. He has the right to have the bond and mortgage delivered to him uncanceled, which in such case, is in equity and may be at law, a complete assignment.

The appellant presents a much stronger prima facie case than these principles require. He not only has a term with several years yet to run, but he shows a use of the land in connection with other land, to which a severance would do great injury, and further under the terms of his lease he had the right to apply the rent to the payment of taxes, interest on the mortgage, etc., and that he had so paid that when suit was brought on the mortgage there was no interest due, and the property was in debt to him for money advanced.

At common law a mortgagee could not be compelled to assign the mortgage on payment, but only to surrender it. In fact, in the absence of a system of record, the surrender of the instrument was the only secure evidence the mortgagor had of payment. Our Act of May 28, 1715, 1 Sm. L. 94, in aid of the mortgagor, provided for compulsory entry of satisfaction by the mortgagee on the record. And so the Act of J une 24,1885, P. L. 157, provides in certain cases for the compulsory assignment of mortgages on tender of the amount due. It is argued that these acts do not cover the case of a lessee or tenant, and therefore that he is without remedy. But these are common-law remedies, and even if it be conceded, which is by no means clear, that ordinary cases must be brought within their terms, it does not follow that equitable remedy should not be afforded when a case is shown to which equitable principles apply. The common law was opposed to assignments of cboses in action, which it regarded as tending to litigiousness and maintenance : 2 Black. Comm. 442. The general recognition and enforcement of' assignments are the growth of modern methods of business, and the development of equity founded on and following such methods : Bispham on Equity, sec. 164 (7th ed. 1905). There is no solid reason why the principle of subrogation that where a party asserting a legal right can be fully secured in it and at the same time the interests of another in the subject-matter can be protected from impending injury, should not be applied in regard to the assignment of a mortgage, and in favor of a lessee, as well as to any other ease to which the principle is applicable.

Decree reversed injunction reinstated and directed to be continued until otherwise ordered after final hearing.