Opinion
No. 32940.
January 3, 1938. Suggestion of Error Overruled February 14, 1938.
SUBROGATION.
Where vendee paid purchase price to holder of trust deed to secure release of property from trust deed, vendee was entitled to right of subrogation to lien of trust deed to extent of purchase money paid, plus taxes and improvements, less rent as against judgment creditor whose lien was junior to lien of trust deed, since vendee was not mere "volunteer," especially where he had an interest to protect under enforceable contract of purchase entered into prior to time vendee paid holder of trust deed.
APPEAL from the chancery court of Lauderdale county. HON. A.B. AMIS, SR., Chancellor.
Lyle V. Corey, of Meridian, for appellant.
At the time the appellee Rhodes purchased the land involved, he was a volunteer, being under no duty of any nature to purchase the land and no privity of any nature existing between him and any of the other parties to the transaction.
A mere volunteer or intermeddler, who, having no interest to protect, without any legal or moral obligation to pay, and without an agreement for subrogation, or an assignment of the debt, pays the debt of another, is not entitled to subrogation, the payment in his case absolutely extinguishing the debt.
60 C.J., page 716, sec. 27; Berry v. Bullock, 33 So. 410, 81 Miss. 463; Demourelle v. Piazza, 27 So. 623, 77 Miss. 433; Good v. Golden, 19 So. 100, 73 Miss. 91; Union Mtge. Bk. Co. v. Peters, 18 So. 497, 72 Miss. 1058; Slaton v. Alcorn, 51 Miss. 72.
Rhodes was under absolutely no duty to purchase the property or to satisfy the lien of the Federal Land Bank. In coming into this transaction, he was prompted solely by his own personal reasons. He had the right to elect whether to purchase the property or not. He had absolutely no interest in the property prior to the actual purchase from Strange.
We respectfully submit on the authority of the cases above cited, that Rhodes was a pure volunteer, and that court below erred in granting him subrogation to the rights of the Federal Land Bank.
At the time the appellee Rhodes purchased the land involved, it was the intention of all of the parties to the transaction that the lien of the deed of trust be then completely extinguished.
Since a purchaser of land on which there is a mortgage, assuming payment of the mortgage as part of the purchase price, becomes the principal debtor, and his payment thereof operates in law as an extinguishment of the lien, and, being under no duty to buy the land, he is a volunteer, on paying the mortgage he is not entitled to be subrogated to the rights of the mortgagee to the prejudice of a junior lien claimant of whose lien he had actual, or constructive, notice at the time of payment, in the absence of an agreement between the parties that he will be subrogated, or an assignment of the mortgage. Nor will the purchaser of land subject to a mortgage which he assumed and paid, and which formed part of the purchase price, or his grantee, be entitled to subrogation to the rights of the mortgagee as against a judgment creditor of the mortgagor whose judgment had been rendered and recorded at the time the land was bought.
60 C.J., page 793, sec. 104; Fidelity Deposit Co. of Maryland v. Vance, 245 P. 578, 135 Okla. 24; Stastny v. Pease, 100 N.W. 482, 124 Iowa 287; Kiniry v. Davis, 200 P. 439, 82 Okla. 211; Owen v. Interstate Mortgage Trust Co., 211 P. 87, 88 Okla. 10, 30 A.L.R. 816.
Any loss which the appellee Rhodes might suffer by a denial of the right of subrogation would be occasioned solely by the negligence of the said Rhodes.
60 C.J. 696, sec. 2.
Mr. Rhodes admitted on the witness stand that he made no attempt to determine whether or not there were any judgment liens upon the property.
Section 610, Code of 1930; Josselyn v. Stone, 28 Miss. 753.
We respectfully ask the question, "Can a person willfully neglect to take advantage of a law which was enacted for his particular benefit and then come into a court of equity and obtain relief from the injury caused by such negligence?" We submit that he cannot.
Union Mortgage Banking Trust Co. v. Peters, 18 So. 497, 72 Miss. 1058; Prestridge v. Lazar, 95 So. 837, 132 Miss. 168.
We respectfully submit that the warranty in the deed gives to Rhodes a full adequate and complete remedy at law for any injury sustained and is sufficient to preclude his right to equitable relief by way of subrogation.
If the right of subrogation should be granted to the appellee Rhodes, then such subrogation should be limited to bear the same ratio to the entire amount of the indebtedness due to the Federal Land Bank, as the value of the land involved bears to the value of all of the land covered by the deed of trust.
There is considerable difference between the rights of one who lends money to discharge a lien and those of one who purchases the property and lets the purchase money discharge the lien. In the former case, that person is moved by the request of the owner of the property, while in the latter he is moved by the anticipation of personal gain, or the enjoyment of ownership.
Deposit Co. of Maryland v. Vance, 131 P. 682, 37 Okla. 219.
J.V. Gipson, of Meridian, for appellee.
The appellee, L.N. Rhodes, contends that this case is controlled by the following Mississippi cases decided by this court, and other cases, to-wit:
American Trust Savings Bank v. Turner, 80 So. 176; Federal Land Bank v. Miles, 152 So. 472; Strickland v. Carroll, 154 So. 109; Russell v. Grisham, 170 So. 900; Shaddix v. National Surety Co., 128 So. 220; Jackson v. Overton, 96 So. 742; Shields v. Hightower, 108 So. 525; Prestridge v. Lazar, 95 So. 837.
The purchaser of an equity of redemption upon paying off prior mortgages is subrogated to the rights of the mortgagees paid off, the mortgages paid being considered part of the purchaser's title to the premises.
Fidelity Deposit Co. v. Richeson, 105 So. 193.
In the case of American Trust Savings Bank v. Turner, 80 So. 176, the court in discussing the question of subrogation among other things held and stated in the opinion as follows, to-wit: "The doctrine of conventional subrogation is not new to the jurisprudence of this state, and one who pays off the obligation of another secured by a mortgage, or advances money for its payment at the instance of the debtor and for his benefit — such a person is in no true sense a mere stranger and volunteer, but in a proper proceeding is entitled to be subrogated to the rights of the original creditor."
Henderson Iron Works Supply Co. v. Jeffries, 105 So. 792.
Equity looks to the justice of the situation and does what is right; therefore appellee, L.N. Rhodes, respectfully submits to this court that in equity and good conscience he should not be forced to stand the loss to the profit of the appellant herein under the facts and circumstances and the law of this case.
The appellant, Tom Lyle Grocery Company, filed its bill of complaint in the chancery court of Lauderdale county seeking to impress the lien of a judgment which it held against E.G. Strange, one of the defendants in the court below, on certain land sold by the judgment debtor to the appellee L.N. Rhodes.
It appears that on October 1, 1930, E.G. Strange, being the owner of approximately 700 acres of land situated in Lauderdale and Newton counties, executed a deed of trust on said land to secure an indebtedness of $5,500 borrowed from the Federal Land Bank of New Orleans, and which deed of trust was thereupon duly recorded; and that in February, 1932, the appellant obtained its judgment in the county court of Lauderdale county for the sum of $405.10, together with interest and costs, and thereupon the judgment was duly enrolled upon the judgment rolls of Lauderdale county, and became a lien on the land owned by Strange in said county, and which judgment still remains unpaid.
In December, 1935, E.G. Strange and his family vacated such part of the land in Lauderdale county, consisting of 76 acres, as they had occupied as their homestead since prior to the rendition of the judgment, and thereupon acquired a homestead elsewhere. This tract was sold and conveyed by Strange and his wife on February 14, 1936, to the appellee L.N. Rhodes, but the deed of conveyance was executed pursuant to a written contract of sale entered into between the Stranges and appellee in September, 1935, prior to their vacating this land as a homestead. Appellee paid the full amount of the purchase price of this land in the sum of $2,000 to the Federal Land Bank of New Orleans in consideration of a release of the same from the lien of its deed of trust, and which payment was required by said bank as a condition precedent to the execution of such release.
The decree of the court below granted appellant the relief prayed for, to the extent of impressing the lien of the judgment against the land sold to appellee, upon the theory that it was no longer exempt as a homestead from execution after becoming vacated by the judgment debtor in December, 1935. But it was further decreed that the land should be sold subject to the right of subrogation of the appellee in and to the lien of the deed of trust in favor of the Federal Land Bank to the extent of the purchase money paid by appellee, plus certain taxes and improvements and less the rent received for the year 1936. It is from that portion of the decree granting subrogation to appellee that this appeal is taken.
We are not called on to review of action of the court below in holding that this land became subject to the judgment lien when vacated as a homestead by the judgment debtor, who had previously bound himself in writing to convey the same to appellee, since there is no cross-bill from this adverse portion of the decree.
But the rule is well settled to the effect that the appellee is entitled to an affirmance of the decree granting him the right of subrogation, as provided for therein, under the authority of the following cases: Staples v. Fox, Administrator, 45 Miss. 667; Cansler v. Sallis, 54 Miss. 446; Union Mortgage, Banking Trust Co. v. Peters Trezevant, Trustee, et al., 72 Miss. 1058, 18 So. 497, 30 L.R.A. 829; Prestridge v. Lazar, 132 Miss. 168, 95 So. 837; Spence et al. v. Clarke, 152 Miss. 542, 120 So. 195; Federal Land Bank of New Orleans v. Miles et al., 169 Miss. 43, 152 So. 472, and Russell v. Grisham et al., 177 Miss. 435, 170 So. 900.
The rule announced in the case of Prestridge v. Lazar, supra, is especially applicable to the facts in the case at bar. It was there held that where a vendee of land, in order to clear the title of encumbrances, with the consent of the vendor, discharged out of the purchase money two mortgages, given on the land by the vendor, which were prior mortgages, and where the vendee afterwards learned that there was an unsatisfied subsequent mortgage on the land given by the vendor, of which the vendee had no actual knowledge or information at the time he paid the purchase money, as appellee here had none, but which mortgage was duly recorded, the vendee was entitled to be subrogated to the rights of the two mortgagees in the mortgages so discharged by him to the extent of the amount paid by him in their discharge; and that in equity said mortgages would be revived for the benefit of the vendee, and have priority over the said third mortgage.
While the appellant in the present case earnestly insists that the case of Prestridge v. Lazar is not applicable, we fail to see any distinction between that case and the case at bar, except that in the former case the lienor against whom subrogation was allowed held a mortgage lien duly recorded, whereas the appellant in the present case holds a judgment lien duly enrolled. The principle to be applied is identically the same.
Under the authorities above cited, the vendee is not a mere "volunteer," and this is peculiarly true where, as here, the vendee had such an interest to protect in the land as became vested in him under his enforceable contract of purchase entered into sometime prior to the payment of the purchase price to the holder of the prior lien.
Affirmed.