Baugh & Sons Co. v. Black , 120 Va. 12 ( 1916 )

Sims, J..,

dissenting:

I concur in the above opinion in so far as it holds that as between themselves J. T. Black and J. Lacy Black were each bound as principal debtor for one-half of the Bowling $20,000 deed of trust debt and as surety for each other respectively for one-half of such debt; but I cannot concur in the view that, as against the appellants, lien creditors of J. Lacy Black and wife, J. T. Black is entitled to any preferred lien on the property of J. Lacy Black and wife, with any right to have such property subjected to such lien, and the proceeds of sale thereof applied to the payment of the unpaid half of said debt in preference to the rights of appellants to have such property subjected to their lien and the proceeds of sale applied in accordance with such lien to their debts and to said unpaid half of the said Bowling debt pro rata, as per the last deed of trust of date December 17, 1914, executed by J. Lacy Black and wife.

This conclusion I feel necessarily results from a consideration of the rights of the respective parties as fixed by the deeds of trust executed by J. T. Black and J. Lacy Black and wife, which fixed the lien rights of the appellants.

When J. T. Black paid the half of said Bowling debt for which he was bound as principal debtor, the remaining half of such debt was the debt of J. Lacy Black as principal and of J. T. Black as his surety. By the last deed of trust above mentioned J. Lacy Black and wife gave a lien on the real and personal property conveyed thereby to secure, along with the general debts therein mentioned, among which were the debts of appellants, “any and all other debts which may be asserted against the parties of the first part” (J. Lacy Black and wife) “although they may not be herein specifically set out.” The said indebtedness of J. Lacy Black as principal for said unpaid half of said Bowling debt was therefore thereby secured as a- lien upon the property thereby conveyed in the same class and of the same dignity as to priority as the debts of appellants. Under this deed of trust J. T. Black was given, indeed, directly no lien, but the said unpaid half of the said Bowling debt was given a lien of the same dignity as the lien of the debts of appellants, which in equity J. T. Black has the right to have enforced to his exoneration as surety and to his relief upon his liability as surety to the extent that the said unpaid half of said Bowling debt may be paid off and discharged as the result of enforcing such lien.

Has J. T. Black, as against appellants, lien creditors of J. Lacy Black and wife, the right to the benefit of any other lien?

No other lien was, at any time, expressly given to him by J. Lacy Black and wife; and after the last deed of trust from them was executed and recorded, it was beyond their power to do anything to give J. T. Black any lien in preference to the lien given by such deed of trust to appellants.

The claim of J. T. Black, however, is that he is entitled in equity, by subrogation, to have the lien of the first deed of trust, mentioned in the above opinion, to the extent that it secures the payment of the unpaid half of said Bowling debt, enforced against the property of J. Lacy Black and wife conveyed thereby, to his exoneration as surety on such part of such debt. Let us see how this will work out upon well settled principles.

If we disregard the objection that J. T. Black would not have any right of subrogation until he in fact paid out money as surety and treat him as if he were in the position of having paid the whole of said Bowling debt, what right would he have to ask that the property of the latter conveyed by said first deed of trust be subjected to satisfy the half of such'1 Bowling debt for which J. Lacy Black was the principal debtor? His rights must stand or fall under the provisions of such deed of trust as they existed at the time of the execution of the last deed of trust, as against appellants who were given rights as lien creditors by the last deed of trust.

If, then, we treat J. T. Black as having paid the whole of said Bowling debt, what would be his rights under said first deed of trust? Why, plainly he could be subrogated only to the rights of said Bowling debt to the extent of the •unpaid half of it for which he was surety.

By the express terms of the first deed of trust, “In enforcing said deed, said trustee will sell first the lands conveyed, by J. T. Black and if a sufficient amount is derived to pay the debt and costs, will not make further sale under this deed.”

A court of equity could give to J. T. Black only the right of subrogation to such rights as the first deed of trust would have given said unpaid half of the Bowling debt had it remained in the hands of Bowling. These rights were subject to and could not escape the effect of the provision next above quoted.

The provision above quoted should not be ignored by the court. It was embodied in the deed of trust by the parties thereto, and there could be no sale except in accordance therewith. 3 Jones on Mort., sec. 1778.

That is to say, by such subrogation J. T. Black could have acquired no right to enforce such first deed of trust against the lands of J. Lacy Black and wife, save only in the event that the lands of himself conveyed by such trust deed were insufficient to pay the whole Bowling debt and costs. As it is conceded in the case that J. T. Black’s lands were amply sufficient to do this, J. T. Black by such subrogation could acquire no right whatever to subject, or have subjected, the property of J. Lacy Black and wife conveyed by such first deed of trust; hence, the subrogation he asks would be barren of any beneficial result to J. T. Black— could give him no lien, nor the benefit of any lien, on the lands of J. Lacy Black and wife.

With respect to the position that the debtors, J. T. Black and J. Lacy Black and wife, might have changed “the order of sale by direction to the trustee at any time after the deed was made,” I do not feel that this could be done so as to abrogate such a provision as that embodied in the deed of trust under consideration, after the lien rights of appellants had attached. I think that such provision, in effect, withheld any power of sale being given by the trust deed of the property of J. Lacy Black and wife conveyed thereby, except upon condition that all of the lands of J. T. Black thereby conveyed should prove insufficient to pay the debt and costs — that is to say, it was in effect a case where the property of J. Lacy Black and wife was not conveyed by such deed of trust subject to any lien of the Bowling debt, except only in the event that the J. T. Black lands conveyed thereby were all insufficient to pay such debt and costs. Therefore, for J. T. Black and J. Lacy Black to be allowed to change such order of sale would be, in effect, to allow them to execute and record a new deed of trust, with materially and vitally different terms from the first deed of trust, giving unconditional power of sale for the benefit of the Bowling debt. This of course could not be done after the third deed of trust under which appellants’ liens attached, so as to take away from appellants their lien as fixed by such third deed of trust.

This is a different case from that of a deed of trust with the usual provisions unlimited by such a provision as we find here. In the case of a trust deed with only the usual provisions, there is nothing which prevents any of the property conveyed thereby from being liable to be subjected by sale, subject to the discretion of the trustee as to the order of sale. The trustee is left by the deed of trust in such a case free to exercise such discretion. In the case before us the trust deed did not leave the trustee free to exercise such discretion, but in express terms withheld from him such discretion, by providing, in effect, that the property of J. Lacy Black and wife should not be sold by him at all save only upon a certain single specified condition, which condition could not be ignored or changed by the trustee, or indeed by the parties themselves to the deed of trust, to the injury of appellants after the rights of the latter as subsequent lien creditors attached to such property.