Durbin v. Shenners ( 1907 )

WiNsnow, J.

The facts appear to be complicated, but are in fact quite simple. Shenners, having record title in fee to the land in question, mortgaged it to' Herman to secure his note for $1,300, and the note and mortgage came into the hands of the plaintiff as an innocent purchaser in due course. After the execution of the mortgage he deeded the land to Mindeman, with a covenant of quiet enjoyment as-against all persons claiming under him, and the deed was duly recorded.- Mindeman then mortgaged the land to secure his own note of $6,500, and this note and mortgage were transferred to Thorpe and foreclosed, and the judgment purchased by Weaver. A senior mortgage on the same land was then foreclosed in an action in which the holders of both the Shenners and Mindeman mortgages were made parties, and a surplus resulted not large enough to pay both of the last-named mortgages, but large enough to pay the Shenners mortgage and leave a balance to apply on the Min-deman mortgage. At this time plaintiff had commenced his action at law on the $1,300 note, and Weaver had purchased the cause of action, so that he had become the owner of all rights under both the Shenners and Mindeman notes and the accompanying mortgages and causes of action. Of course Wemer was entitled to draw this surplus, because, even if the Shenners mortgage were discharged, he still owned the Mindeman mortgage and judgment, and this was considerably larger than the entire surplus; but the question is, and this is really the only question in the case: Should enough of this surplus be applied on the Shenners note and mortgage to pay them and thus defeat any personal judgment against Shenners on his note of $1,300 ? The answer to this question must plainly depend upon the effect to be given to Shen-ners’ limited covenant for quiet enjoyment in his deed to Mindeman as against the owner of the Mindeman mortgage and judgment, i. e. Weaver. The covenant for quiet enjoyment is prospective in its operation and is not breached by the mere existence of an incumbrance, nor in fact by anything short of eviction actual or constructive from the whole or a part of the premises. Falkner v. Woodard, 104 Wis. 608, 80 N. W. 940. Erom this principle it is claimed-that the application of the surplus here to the payment of the $1,300 mortgage will not be a breach of the covenant for quiet enjoyment given to Mindeman.

The further contention is made that the covenant runs only with the legal title to the land (Wright v. Sperry, 21 Wis. 331), and that, as a mortgagee only acquires an equitable title, neither Thorpe nor her assignee can enforce the covenant made with Mindeman or receive any benefit therefrom. It does not seem to us necessary to consider these propositions or decide whether they are correct or not. It is entirely clear to our minds that the facts show a plain case of estoppel against Shenners. He put a mortgage upon his land and then deeded it to Mindeman with a covenant to protect the possession of Mindeman and his assigns against his own (.Shenners’) acts. This meant that he would pay the mortgage or procure its discharge before foreclosure. By this public record he practically stated to all who might deal with the land in any way that he remained obligated to pay or discharge the mortgage and would do so before it ripened into a title. Josephine Thorpe advanced her money and purchased the Mindeman mortgage in reliance upon this public declaration, and Weaver has succeeded to her rights. To require this first mortgage to be paid out of the proceeds of the sale of the land before the Thorpe mortgage is paid would be allowing Shenners to radically change his position upon the faith of which Weaver’s assignor acted, and would amount to permitting a foreclosure of Shenners’ mortgage in his own favor. The well-established principles of estoppel forbid such a change of position.

We have found no authorities upon the precise proposition here presented, but the result we have reached seems to us to be supported by unanswerable logic.

By the Court. — Judgment affirmed.