Atherton v. Tesch

The general rule in regard to subrogation is well stated by the Supreme Court of Indiana in the case of Carithers v. Stuart, 87 Ind. 424, as follows:

'It is a well-settled general rule that before subrogation can be enforced the whole debt must be paid. Substitution cannot be made as long as the debt of the party whose rights are claimed to be used for the purpose of protecting the interest of the applicant for substitution remains unsatisfied, though it be in part only; 'for until he shall be wholly satisfied, there ought and can be no interference with his rights or his securities, which might, even by bare possibility, prejudice or embarrass him in any way in the collection of the residue of his claim.' "

This statement of the law seems to be very generally supported by the authorities. Harris' Law of Subrogation, § 29; Sheldon on Subrogation, §§ 70, 71, 25, and 14; Gaskill v. Huffaker (Ky.) 49 S.W. 770; Wilkins v. Gibson, 113 Ga. 31,38 S.E. 374, 84 Am. St. Rep. 204; Rec'rs of N.J., etc., Ry. v. Wortendyke, 27 N.J. Eq. 658; London, etc., Mortgage Co. v. Fitzgerald, 55 Minn. 71, 56 N.W. 464; Wyckoff v. Noyes, 36 N.J. Eq. 227; Hubbard v. Le Baron, 110 Iowa, 443, 81 N.W. 681; Appeal of Allegheny Nat. Bk. (Pa.) 7 A. 788; Browder v. Hill, 136 Fed. 821, 69 C.C.A. 499.

Indeed, the principle does not seem to be controverted by counsel for appellant, but they insist that, as the mortgage was given to secure several notes falling due at various times, the mortgage as to the several notes is equivalent to so many successive mortgages. It appears without dispute that the mortgage was given to secure a single debt — that is, the purchase price of real estate, remaining unpaid — and the notes were executed for the convenience of the parties, for the proper distribution of said debts among those interested therein, and payable in installment periods, evidently for the convenience of the mortgagor. We have but a single security for all the notes, which represented in fact but one debt, and we think the following quotation found in Carithers v. Stuart, supra, is fully applicable to this contention:

"The several notes secured by the mortgage in this case must, we think, be regarded as but one debt with reference to the rule in question."

At the time of the execution of the mortgage, the entire indebtedness belonged to the complainants in this case, and a large portion thereof yet remains unpaid. Not only so, but it appears that they had no notice whatever that the debt was not being satisfied by the payment of the notes as they fell due, and their security thereby increased, until after default was made in the note due in 1916; and thus the period for foreclosure was postponed for more than two years beyond the time at which foreclosure could have been had. It would therefore appear that by the enforcement of the right of subrogation, so as to share ratably with the complainants, the rights of the latter would be seriously interfered with. All of the authorities agree that subrogation will not be enforced if the rights of creditors, as to the remainder of the debt, are to be in the least prejudiced thereby. Authorities supra.

In the decree rendered, the appellant, Ella C. Atherton, was granted the right of subrogation, but such right was postponed as secondary to the rights of the complainants; and it is only this latter feature of the decree which we are called upon to review.

The decree of the court below is here affirmed.

Affirmed.

ANDERSON, C. J., and McCLELLAN and SAYRE, JJ., concur.