Conner v. Howe

Berrv, J.

This is the statutory action to determine an adverse claim. The plaintiff rests upon his admitted possession alone. The defendants Howe, Rust, and Gale claim a lien upon the premises in controversy under the state of facts following: Carson, then owner of the property, on March 23, 1874, mortgaged it to Eliza T. Shoemaker to secure $6,000. Default having been made in its condition, the mortgage was duly foreclosed by advertisement on May 15, 1877, and a duly executed and acknowledged certificate of sale delivered to the purchaser, R. H. Shoemaker, and duly recorded June 2d following. On May 14 and December 10, 1874, Carson conveyed the property, subject to the Shoemaker mortgage, to certain parties, and as the result of this and subsequent conveyances the property became vested, subject to such mortgage, in Eaton, who thereupon, on August 18, 1875, mortgaged it to Howe to secure a $2,000 note, the collection of which was, by writing thereon indorsed, guaranteed by Gale & Co., a firm composed of defendants Gale and Rust. On January 20, 1877, Eaton, by warranty deed, conveyed the property to Wilson, subject to the Shoemaker and Howe mortgages', payment of which was assumed by Wilson in the deed as part of the consideration thereof. On January 30, 1877, Wilson, by warranty deed, conveyed the property to Mayo, subject to both of said mortgages, which Mayo, in such deed, also assumed to pay as part of the consideration thereof. On May 16,1878, the next day after the expiration of the period of redemption from the foreclosure sale before mentioned, R. H. Shoemaker, the purchaser at such sale, executed to Mayo a quitclaim deed of the property. Upon the maturing of the Howe note and mortgage, Eaton, the maker thereof, having failed to pay the same, Gale & Co., the guarantors, immediately after such default, paid Howe the amount due thereon for principal and interest, *520 but took no assignment of the mortgage until June 29, 1885. After the payment of the note and mortgage by Gale & Co. to Howe, and at different times prior to December, 1878, Wilson and Mayo paid portions of the amount thereof to Gale & Co., so that on November 1, 1885, which was about the time of the trial of this action below, there was a balance thereof, which had not been paid, of $685.07.

Upon this state of facts the title of the property in controversy is in Mayo; the plaintiff, so far as appears, being a mere squatter. By the terms of the deed from Wilson, Mayo was bound,, and in legal implication covenanted, (Dunning v. Leavitt, 85 N. Y. 30 ,) to pay both mortgages. Heim v. Vogel, 69 Mo. 529 . He took his title subject to both, and to his agreement to pay both. Hence it was not competent for him to deal with the first so as to cut out and destroy the lien of the second; for this would be in derogation of his agreement, and of the duty which he had solemnly assumed. And the mortgaged premises having been sold upon foreclosure of the first mortgage, and Mayo having taken a conveyance of the title which had become perfected in the purchaser, he was estopped to set it up against the second or Howe mortgage, for this would violate the obligation and duty which he had assumed in reference to that mortgage, and permit him to build up a title upon his own default. Allison v. Armstrong, 28 Minn. 276 , ( 9 N. W. Rep. 806 .) Mayo was thus estopped, as respects Howe, because his agreement to assume and pay the Howe mortgage inured to Howe’s benefit. Lahmers v. Schmidt, ante, p. 434.

He is likewise thus estopped, as respects Gale and Bust, if they are entitled to stand in Howe’s shoes, as they are if they are subro-gated, or entitled to be subrogated, to Howe’s securities, among which is Mayo’s obligation to pay the Howe mortgage. They were entitled to be so subrogated because they were sureties for the payment of the Howe note. They were none the less sureties because guarantors of collection, rather than of payment. As such guarantors, their liability was contingent upon the inability of Howe to collect the note of Baton, the maker; but, notwithstanding it was thus contingent, they were sureties, and not mere strangers. Being sureties, they had the right to pay the note, after it fell due, for their own safety and pro *521 tection, (Craig v. Craig, 5 Bawle, 91; Tillotson v. Rose, 11 Met. 299 ,) and upon such payment they were, by operation of law, immediately entitled to be subrogated to the securities held by Howe, and, among other things, to the Howe mortgage, and to Mayo’s obligation to pay it. Sheld. Subr. §§ 86, 87; Baylies, Sur. 359; Brandt, Sur. §§ 260, 262, 274, 275; Shinn v. Budd, 14 N. J. Eq. 234; McArthur v. Martin, 23 Minn. 74 ; Felton v. Bissel, 25 Minn. 15 ; City of Keokuk v. Love, 31 Iowa, 119 ; 1 Lead. Cas. Eq. 136.

Eaton having failed to pay his note at maturity, it does not lie in his mouth, nor that of any other person, to object that the note could have been collected of him, and thus seek to take advantage of his own default. Neither, if it be the fact that the right of action of Gale and Bust against Eaton is barred by the statute of limitations, does that extinguish the lien of the Howe mortgage, against which the statute has not taken effect, or take away the right of subrogation to it. They stand in Howe’s place, and the mortgage is no more extinguished as to them than it would have been as to Howe if the Eaton note had not been paid. Smith v. Swain, 7 Rich. Eq. 112 ; Wood, Lim. § 21; Ozmun v. Reynolds, 11 Minn. 341 , (459;) Lumpkin v. Mills, 4 Ga. 343 ; Felton v. Bissel, 25 Minn. 15 . The result is that, under the assignment thereof, Gale and Bust are completely subrogated to the Howe mortgage, and that by virtue thereof there is a subsisting lien upon the property in controversy in their favor, and the finding of the court below to that effect is therefore correct. At the commencement of the action Howe held the mortgage in trust for Gale and Bust; but since the assignment she has no longer any lien upon the property in trust or otherwise, so that, strictly and technically, the plaintiff was entitled to a formal judgment against her, and the judgment may be modified accordingly if plaintiff deems it worth while to ask for the modification, which will not, however, be permitted to affect the question of costs or disbursements.

The judgment will be modified accordingly, if plaintiff signifies his desire for the modification within five days from notice of this decision ; otherwise it is affirmed.