Featherstone v. Emerson ( 1896 )

MINER, J.:

It appears from the record that on December 17, 1890, the defendants Emily S. Page and E. J. Page borrowed from the plaintiff, Featherstone, the sum of $2,000, and gave him their note secured by a mortgage on the property in question. On August 26, 1891, the defendants Page and wife conveyed by warranty deed the said mortgaged property to defendants Brown and Emerson for the sum of $5,000, subject to the $2,000 mortgage of December 17, 1890, which the grantees jointly agreed to assume and pay. Brown and Emerson also paid to Page $1,000 in cash, and executed a purchase-money mortgage back to Page upon the property purchased for the sum of $2,000, as consideration for the premises conveyed to them. At the maturity of the $2,-000 mortgage, dated August 26,1891, defendant Emerson paid $1,200 thereon, and Brown gave to Page a new purchase-money mortgage, dated October .6, 1891,» upon his undivided half of the premises, for $800, to secure a part of the said purchase price, and Mrs. Page released t'he said $2,000 mortgage of August 26, 1891, of all of which Emerson had notice at the time. On March 1, 1892, Page assigned the said $800 mortgage to plaintiff Feather-stone, so that Featherstone then held both mortgages upon the property, to wit, the $2,000 mortgage which, both Brown and Emerson were obligated to pay, and the $800 purchase-money mortgage which Brown gave to Page upon his undivided half of the premises in order to release the former $2,000 mortgage upon which. Emerson was jointly liable. “On the 17th day of January, 1898/ there was due upon the note and mortgage of $2,000, given by said Emily S. Page to John Featherstone, December 17, 1890, the sum of $2,200, including interest, and thereafter, upon said day, said S. P. Emerson paid to the plaintiff $1,100 thereon, and tendered to plaintiff the balance due thereon if plaintiff would assign to Emerson the mortgage of $2,000. Plaintiff refused to accept said tender or make said assignment, but offered to assign said mortgages of $2,000 and $800 to said Emerson, upon payment to him of the full amount due upon both of said mortgages, which said Emerson refused to do.” In answer to Emerson’s cross complaint, plaintiff alleges that the $800 note and mortgage, given by Brown to Mrs. Page as part of the purchase-money mortgage, and which was assigned to plaintiff, had been foreclosed, and plaintiff had purchased Brown’s interest in the land under such foreclosure; and it appears that the plaintiff was in the possession thereof, and no adverse claim had been set up in the foreclosure proceedings by Emerson.

The errors assigned by the defendant Emerson raise the question of his right to subrogation to the former rights of the plaintiff in the $2,000 mortgage of December 17, 1890, as against Brown and Mrs. Page, and her assignee, the plaintiff, and the superiority of that right over the rights of Featherstone acquired under the $800 note and mortgage, although no tender or payment of the $800 mortgage had been made. Emerson claims that he is subrogated to the prior incumbrance to which the $800 incumbrance is inferior. The plaintiff contends, and the trial court held, that while Emerson was a surety for Brown as to one-half of the $2,000 mortgage of December 17, 1890, the equities of Featherstone, the plaintiff, as assignee of the $800 mortgage of October 26, 1891, given by Brown to Page for unpaid purchase money, was superior to Emerson’s right, and that Emerson was not entitled to subrogation without having paid or offered to pay the $800 mortgage. The court decreed a dismisal of 'Emerson’s cross complaint, and gave judgment for the plaintiff. As between Brown and Emerson, who were purchasers of a common estate, and bound by a joint obligation created thereon by themselves, each was bound to contribute Ms proportion towards tbe discharge of the common burden, and either could be compelled to discharge the debt. It was a joint obligation. If Emerson was compelled to pay the whole to protect his rights, he could be subrogated to the rights of the owner of the security, as against Brown’s interest, upon tender or payment of the debt secured, if no other or greater equities intervened. The plaintiff, who was the owner of the $2,000 mortgage of December 17, 1890, is first in time and equity as to that mortgage, because he loaned his money on the property before any other rights attached. The obligation which Emerson and Brown took upon themselves was to pay $5,000 for the property. They purchased as tenants in common, each to take an undivided one-half interest; but they voluntarily obligated themselves jointly to pay the full amount. As to the holder of the obligation, they are the principal debtors; as to themselves they were sureties for each other for one-half of the debt. Their promise to pay the purchase money is evidenced by the $2,000 mortgage of December 17, 1890, which they assumed and agreed to pay, and by the $2,000 note and mortgage of August 26, 1891, which they gave, and which both agreed to pay. These form the remaining obligation, and as to each other they were of equal equity, amounting, in fact, to one debt of equal importance. As between Brown and Emerson, the first mortgage has no equity in advance of the second.

A purchase-money mortgage is a mortgage upon real estate, given upon a conveyance thereof, to secure the balance of the purchase money remaining unpaid. It is the debt created by the purchase Such purchase-money mortgage usually has the priority over other claims or liens of any kind arising through the mortgage’ to the extent of the land purchased, except as it may be affected by the recording laws; and when the purchase money is the consideration of the instrument, it will continue to be the consideration of any other instrument executed by agreement, in substitution of the old one, even though a part of the purchase money on the original mortgage has been paid before the execution of the second, unless other superior equities have intervened, which we do not find to exist in this case. 19 Am. & Eng. Enc. Law, 583, 575-578; Austin v. Underwood, 37 Ill. 438; Jones v. Parker, 51 Wis. 218; Pratt v. Bank, 12 Kan. 437; Flanagan v. Cushman, 48 Tex. 241; 2 Warv. Vend, pp. 736, 737.

The payment by Emerson of $1,200 on the $2,000 mortgage of August 26, 1891, paid so much of the joint debt. The fact that Mrs. Page released the $2,000 mortgage of August 26, 1891, on payment of the $1,200 by Emersion, and the giving back of the purchase-money mortgage of $800 by Brown on his'undivided part of the land, with the tacit agreement that such mortgage should be a part of the obligation of August 26, 1891, and the express agreement that it should be a purchase-money mortgage, of all of which Emerson had notice at the time, was to Emerson’s benefit to the amount of $800 remaining unpaid, and should not be used as a subrogation weapon by Emerson to defeat Mrs. Page, nor the plaintiff, who succeeds to her rights in the mortgage, from recovering the purchase money actually due for the purchase price of the land sold, without first paying or offering to pay the same. Jones Mortg. § 229, and cases cited; 2 Warv. Vend. 736; 2 Jones, Liens, § 1116; Hurlbert v. Weaver, 24 Minn. 30; 19 Am. & Eng. Enc. Law, 583. As a general rule the right of subrogation cannot be enforced until the whole debt is paid or tendered to the creditor. Emerson ¡should have extinguished the debt before invoking the remedy sought. Until the creditor is paid, there cannot ordinarily be any interference with his security which might prejudice or embarrass him in collecting the balance of his claim. The property was the primary fund to meet the obligation, and Mrs. Page held the purchase-money mortgage as such, and transferred her right to the plaintiff. 3 Pom. Eq. Jur. § 1619; Sheld. Subr. §§ 127, 176, 177; Investment Co. v. Bayless (Va.) 21 S. E. 279; 2 Brandt, Sur. §§ 306, 308, 321, 446; 2 Warv. Vend. §§ 736, 737; Grubbs v. Wysors, 32 Grat. 127; Clark v. Warren, 55 Ga. 575.

The equity of Mrs. Page for the unpaid purchase-money mortgage of $800 is therefore superior to the equities of both Emerson and Brown, and, until she was paid in full, neither has any just equitable right against her. or her assignee, the plaintiff. Emerson, as surety for Brown, has an equity superior to that of Brown in the property, and, as against Brown, this equity could have been invoked after payment of the whole debt. Until payment, the plaintiff’s equity is superior to the defendant’s, Mrs. Page’s equity is superior to that of Emerson, and Emerson’s to that of Brown. We are of the opinion that the judgment of the court below should be affirmed. It is affirmed accordingly.

Bartch, J., concurs.