Downer v. Miller , 15 Wis. 612 ( 1862 )

By the Court,

Paine, J;

It is not necessary to sustain the judgment in this case upon the principle of subrogation. If Miller had simply loaned his credit to Steever to enable him to raise the money with which to pay the Lyness judgment, Miller being in no way bound to pay it, either as security or otherwise, this alone would not have entitled him to be sub-rogated to the rights of Lyness. We know of no case that has ever carried the doctrine of subrogation so far as to hold that a mere loan of money, for the purpose of enabling the borrower to pay a debt, entitles the lender to be subrogated to the rights of the creditor whose debt was thus paid.

Miller’s rights, therefore, must depend entirely on the effect of the agreement between him and Steever, and that we deem sufficient to justify the judgment of the circuit court. That agreement was, that Miller-was, to indorse for Steever so as to enable the latter to raise the money at the bank, but that the money was to be used not to pay and extinguish the Lyness judgment, but to procure an assignment of it to Miller, to indemnify him as indorser.

To use the money thus obtained to pay the judgment and have it discharged, would operate as a fraud upon Miller, and it is upon this ground that he was entitled to the relief given, by tbe court below. It may be conceded that such relief could not have been given against any party who, relying upon the discharge of the Lyness judgment, has acquired an interest in the property for a Valuable consideration, without notice of Miller's equitable rights. But the appellant here does not stand in such a position. His rights were subsequent and subject to the Lyness mortgage. They existed before the transaction between Miller and Steever, and were not acquired upon the faith of the discharge of the Lyness judgment upon the record. He is therefore in no position to insist that he is injured by allowing that discharge to be set aside and the judgment kept in force for Miller’s security, according to the agreement between him and Steever. Where a prior mortgage or judgment has, by wrong or fraud, been discharged of record, a subsequent mortgagee, whose rights existed at the time of such discharge, cannot claim to be injured by allowing it to be set aside, and the prior mortgagee to Jae restored to his rights. If Lyness had been induced by fraud to enter a discharge of his judgment, would Downer have been in any position to object to its being set aside? Clearly not. And the principle is the same as the case now stands. Miller raised the money with which Lyness was paid, upon an agreement that he was to have the judgment as security. To deprive him of that security is a fraud upon him. To restore him to his rights is no injury to the appellant, for it leaves him just where he was.

It is true, he claims to have been injured by delaying the enforcement of his own claim, in consequence of Steever's representations that the Lyness judgment was extinguished. He says he might have redeemed the first mortgage, and then have enforced the personal judgment against Olason & Steever. But the case shows that this personal judgment was to have been vacated when the foreclosure judgment was entered as a substitute for it. And although it may not have been so entered on the record, the court would undoubtedly have caused it to be done at anytime on a proper application.

The appellant therefore lost nothing there. Nor do we think his delay to enforce his own claim can be regarded as such a change of position, on the faith of the record, as should enable him to object to the enforcement of the agreement between Miller and Steever. His own evidence shows that he never agreed to any extension of the time to Steever so as to release Clason the guarantor. Had he done so upon the faith of the Lyness judgment, and did it appear that he would now suffer loss by allowing that judgment to be enforced against the property, it might constitute a good objection upon his part. But the proof fails to show this. Nor is the fact that Lyness was no party to the agreement that his decree should be assigned for Miller's security, any reason why that agreement should not be enforced. It was a matter of indifference to him whether the decree was assigned or discharged, and where justice between others requires it to be assigned, he should not be allowed to prevent it upon the supposed technical right to control his own decree. The enforcement of this agreement between Miller and Steever without reference to the question whether Lyness assented to it, is entirely analogous to the principle of sub-rogation, where the assent or agreement of the creditor who gets his money is not essential to the right. If a surety pays a debt, he has a right to be subrogated to the securities of the creditor, and the latter would not be allowed to object, for it is a matter of indifference to him. It is equally true here, though Miller’s right is not that of subrogation, but grows out of the agreement between him and Steever. That agreement is one which should have been enforced, even though Lyness had adhered to his refusal to assign the decree. But here he voluntarily consented in the end to make the assignment.

The judgment is affirmed, with costs.