Behrendt v. Burns , 1908 Wisc. LEXIS 78 ( 1908 )

KeewiN, J.

The history of this case is quite fully detailed in the findings of fact, which are supported by the evidence. The agreement between Anton Behrendt, original owner of the premises covered by the Palmer and Munich mortgages, and Shumway and Smith was made in pursuance of a scheme by which Shumway and Smith, in consideration of $500, should handle the mortgaged property and pay off the mortgages with a view of saving something out of the property for Behrendt. It appears from the established facts that this scheme was quite successfully carried out in accordance with the agreement and intention of the parties. The judgments on the Palmer mortgages were assigned to Smith and Shumway and the mortgages paid, the assignments being taken to secure the amounts paid, and, in order to enable Smith and Shumway to more advantageously handle the property, a sheriff’s deed was executed to Smith on a sale under the junior Palmer mortgage. Before this sale and subsequent to the assignments to Smith and Shumway, Anton Behrendt, mortgagor under the Palmer and Munich mortgages, in pursuance of the agreement made with Smith and Shumway 'and with a view of more successfully handling the property, replatted and subdivided it into lots numbered from 1 to 7, inclusive. It appears from the evidence that this was thought necessary in order to dispose of the property to advantage, lots 2 .and 5 being platted about twelve feet wide and in such way as to abut upon other lots with a view of using lots 2 and 5 for right of way purposes in connection with lots on either side thereof. It also appears from the evidence that the plaintiff had knowledge of the facts respecting the replatting and the purpose thereof and was present during the conversations between her husband and Shumway and Smith, and agreed that the replatting was the proper and only thing to do because the property could not be sold to advantage without it. Also the matter of sale to Ludden and Godden was talked over with plaintiff. The sales by Behrendt and plaintiff to Ludden and Godden, referred to in the statement of facts, with knowledge and consent of Smith and Shumway, the application of the proceeds of such sales upon the indebtedness to Smith and Shumway, together with other moneys raised on the property through Smith and Shumway and Behrendt, the execution of the new mortgage to take the place of the Munich mortgage, which on the face of the record appeared to be barred, as well as the release by Smith and Shumway to Ludden of their right-of-way interests in lots 2 and 5 which appeared cut off by the foreclosure, show very clearly the execution and carrying out of the agreement between Anton Behrendt and Smith and Shumway, which amounted to a payment of the two Palmer mortgages, leaving the Munich mortgage unpaid and perfected of record by the execution of the new mortgage for $2,500 assigned to and held by Shumway. The evidence also shows clearly and without dispute that before the sale under the Rich mortgage an agreement was made between Shumway and Rich by the terms of which Rich was to bid in the property at the foreclosure sale for Shumway, and Shumway agreed to take care of the amount due within a certain time, he stating to Rich that he wanted to protect his second mortgage, and that if he would bid in the property for him he (Shumway) would pay his claim, which Rich agreed to do. This agreement was carried out, and at the direction of Shumway Rich deeded the property to the defendants Thomas P. Burns and James H. Burns, Shumway at the same time conveying to Thomas P. Burns the mortgage. It also appears from the evidence that at least the greater part of the Munich mortgage had been unpaid, and that when Shumway sold it to1 Burns he did not get all of his money out of it. So it seems very clear from the established facts that the two Palmer mortgages were paid or redeemed from by transactions between the Behrendts and Smith and Shumway, and that the property was cleared of the liens thereon at the time of the execution of the last Munich mortgage and the Rich mortgage. And it is equally clear that the agreement between Shumway and Rich to the effect that Rich should bid in the property under the foreclosure sale on his mortgage for the benefit of Shumway, which agreement was carried out and the property conveyed to Burns by direction of Shumway, as between Rich and Shumway continued the relations between Rich and Shum-way, so that Shumway’s mortgage continued an existing lien not only upon lots 2 and 5, but also upon lot 3. All of the testimony shows that this was the object and intention of the parties and was strictly in accordance with the agreement between them, and so entered into and carried out for the express purpose, as appears from the testimony, of preventing the Munich mortgage, owned by Shumway, from being cut off by the Rich foreclosure. In this way the interests under the Rich foreclosure and the Shumway mortgage were kept separate and no merger took place. This is strictly in accordance with the agreement and understanding of the parties, and 'no reason is perceived why such agreement is not valid and binding between the parties. It is certainly in the interest of justice and fair dealing. Shumway made the agreement with Rich and carried it out, as the evidence shows, for the purpose of protecting his mortgage; and Bums purchased the mortgage from Shumway for the purpose of preserving the lien of said mortgage.- The intention of the parties, from the evidence of both Shumway and Bums, was that the mortgage interest assigned to Burns by Shumway should be kept alive, and, where such is the intention of the parties and justice requires that the interests should be kept separate, equity will prevent a' merger. Goulding v. Bunster, 9 Wis. 513; Webb v. Meloy, 32 Wis. 319; Jones v. Jones, 64 Wis. 301, 25 N. W. 218.

Counsel for respondent argues that the only way the lien of the Munich mortgage could be kept alive was through a redemption of the Rich mortgage, and that there could not have been a redemption because there was a sale under the mortgage. But, as before observed,, this sale was made through an agreement between Rich and Shumway, which in effect continued the relations between the parties under their mortgages. 1 Jones, Mortg. (6th ed.) § 1047a.; Heald v. Jardine (N. J.) 21 Atl. 586; Phelan v. Fitzpatrick, 84 Wis. 240, 54 N. W. 614; Beebe v. Wis. M. L. Co. 117 Wis. 328, 93 N. W. 1103. The fact that Rich’s judgment was paid by procuring the money through a transfer of the property to Bums by order of Shumway was a payment by Shumway as the holder of a subsequent mortgage for the purpose of keeping his second mortgage alive and transferring it to Burns. It is further contended by counsel for respondent that if there was a redemption merely of the Rich mortgage by Shumway, in such event Bums, as the assignee of the Shumway mortgage, must foreclose not only upon lots 2 and 5, but also upon lot 3, since the mortgage covers lot 3 and right of way over lots 2 and 5. It may well be, as contended by respondent’s counsel, that the counterclaim for foreclosure should cover lot 3 as well as lots 2 and 5, the entire lien under tbe Sbumway mortgage passing to Burns. It appears under tbe amended answer that tbe allegations are sufficiently broad to cover a foreclosure under tbe counterclaim upon lot 3 as well as right of way over loto 2 and 5. However, if there be any doubt as to tbe sufficiency of the allegations in this regard, an amendment would doubtless be allowed. Erom what has been said it follows that tbe defendant Thomas P. Burns has a valid and subsisting lien under tbe Sbumway mortgage on lots 2, 3, and 5; therefore the plaintiff cannot maintain this action.

By the Court. — The judgment of tbe court below is reversed, and the cause remanded for further proceedings according to law.

Bashi'ORD, J., took no part.