#### Latton, Respondent, vs. McCarty and others, Appellants.

*February 23*

March *15, 1910.*

*Mortgages: Satisfaction by deed: Payment: Vendor's Hen: Enforcement in action to foreclose mortgage: Judgment.*

1. A deed by which a mortgagee conveys to the mortgagor or owner of the equity of redemption all the estate, right, title, interest, claim, or demand in law or in equity of the mortgagee in and to the mortgaged land, operates to satisfy and discharge the mortgage and cannot be contradicted by evidence of a contemporaneous parol agreement that the mortgage shall not be affected thereby.

*1912. Discharge of a mortgage securing an unpaid balance of purchase money of the land does not *per se*establish payment of such balance, and it may be shown that it was not paid.

3. In an action to foreclose a mortgage securing purchase money, if it appears that the mortgage has been discharged but that the purchase money has not been paid, the court may enforce plaintiffs right to a vendor’s lien, treating the complaint as amended to conform to the facts proved.

4. A judgment in such ease decreeing foreclosure of the mortgage and sale of the land is permitted to stand after striking therefrom the award of attorney’s fees and the direction for a deficiency judgment, since as thus modified it accomplishes the same result as a, judgment enforcing the vendor’s lien, on terms more favorable to the defendant than are usually imposed.

Appeal from a judgment of the circuit court for Taylor ■county: John K Pajeush, Circuit Judge.

*Modified, and affirmed.*

On October 10, 1898, Mite Wagoner and his wife executed a mortgage upon a certain parcel of real estate owned by him in the city of Medford, to secure a note for $250 signed by them in favor of *Arthur J. Latton.*On October 24, 1898, Mite Wagoner entered into a land contract with *John*McCarty, whereby, in consideration of $600, Wagoner agreed to give a warranty deed of these premises to *McCarty*when the purchase price was fully paid. *McCarty*paid $100 at the time of the execution of the contract and agreed to assume payment of the $250 mortgage from Wagoner and his wife in favor of *Latton.*The balance of the purchase price, amounting to the sum of $25 0j was to he paid in quarter-yearly instalments of $30 each. On June 13, 1899, in consideration of $185, the sum still to he paid on the land contract exclusive of the mortgage, Wagoner assigned his interest in the. land contract to Latton, and Wagoner and his wife ■executed a quitclaim deed of the premises in favor of *Latton.*By mutual agreement of *Latton,*Wagoner, and *McCarty,*Wagoner was released from liability on the note and mortgage and *McCarty*assumed it. It was under the conditions *192of the deed from Wagoner and his wife to *LaMon*that Wagoner was to be released from liability on the mortgage debt and that *Latton*agreed to deliver a good deed to *McCarty*upon fulfilment of the conditions of the land contract. On March 19, 1902, upon payment by *McCarty*to *Latton*of a certain amount upon the land contract, *Latton*executed a warranty deed in favor of *McCarty. Latton*alleges in the complaint in this action that at the time he gave *McCarty*this warranty deed *McCarty*paid him $98.88 on the note and mortgage which he held against the premises; that it was agreed and understood that there was an unpaid balance on the note and mortgage amounting to $200; that the mortgage was not satisfied or discharged; that it was understood that it was unnecessary to make a new mortgage to secure this-amount and that the old mortgage could be continued under the parol agreement; and that *McCarty*agreed and promised to pay the balance it secured. The plaintiff brings this action to foreclose this mortgage. The defendant *Catherine-McCarty*is the wife of *John McCarty, Maggie Perry*is a daughter and a purchaser of part of 'these premises, and *Sherman Perry*is *Maggie Perry’s*husband. The defendant alleges full payment of the purchase money and that the' mortgage debt is fully paid and the mortgage discharged.

The court found that all the allegations of the complaint were true and that *Maggie Perry*had notice of the mortgage-lien when she purchased from *McCarty.*The facts found are that Wagoner and his wife made and executed and delivered the mortgage to the plaintiff to secure the note for' $250; that Wagoner thereafter executed to *John McCarty*a land contract covering these premises, in consideration off $600 to be paid by *McCarty;*that *McCarty*agreed to pay, as part of the purchase money, the $250 note, which was secured by 1he mortgage and specified in the land contract; that Wagoner thereafter assigned his rights under the land contract to the plaintiff, *Latton,*and that Wagoner and his wife-*193conveyed tbe premises to bim by quitclaim deed under an agreement of tbe parties and *John McCarty*tbat *McCarty*would pay tbe balance due on tbe contract and tbe $250 note to *Latton;*tbat thereafter, on March 19; 1902, *Latton*made, executed, and delivered to *John McCarty*a warranty deed of the premises, granting all bis “estate, right, title, interest, claim or demand whatsoever,” either in law or equity, and covenanting tbat tbe same were clear and free from all in-cumbrances; and tbat it was verbally agreed tbat there was still due on tbe mortgage and note of $250 tbe sum of $200, and tbat tbe mortgage securing it should be deemed to continue and remain in force to secure tbe payment of such $200 and interest.

Tbe court awarded judgment declaring tbat tbe mortgage was a subsisting one, and was in force as security for tbe payment of tbe $200; decreed foreclosure thereof and a sale of tbe premises upon tbe usual conditions; awarded a recovery of $25 as solicitor’s fees; and ordered a judgment for a deficiency in case tbe proceeds on sale were not sufficient to defray tbe expense of sale and tbe amount due on the judgment. This is an appeal from tbe judgment.

Eor tbe appellants there was a brief by *Schweppe & Urquhart,*and oral argument by *E. H. Schweppe.*

*M. A. Buckley,*for tbe respondent.

SiebecKER, J.

Tbe evidence as to many of the facts stated above is undisputed. Tbe findings of the court do not cover many of these undisputed facts. Tbe main controverted and material issues of fact were whether or not tbe mortgage on tbe premises, securing payment of tbe $250 note, was discharged; whether or not a portion of tbe purchase money remained unpaid; and whether or not tbe defendant *Maggie Perry*bad notice tbat a part of tbe purchase money which was due from *McCarty*remained unpaid at tbe time she purchased a part of tbe premises. These issues were *194embraced in tbe court’s findings. It found tbat $200 of tbe purchase money remained unpaid at tbe time tbe plaintiff made, executed, and delivered a deed of tbe premises to tbe defendant *John McCarty,*tbat *Maggie Perry*bad notice thereof before tbe conveyance of a part of the property to her on June 18, 1903, and tbat by parol agreement of plaintiff and *McCarty*tbe mortgage was to be continued as a security for tbe payment of this balance of tbe purchase money. Though tbe finding states this amount to be due upon the note and mortgage which were given by Wagoner and bis wife before plaintiff became tbe owner of tbe premises, it also appears tbat tbe defendant *John McCarty*bad purchased tbe premises under a land contract, and agreed at tbe time of the conveyance to him to pay, as part of tbe consideration for the purchase of tbe premises, tbe amount due on tbe note and mortgage. Tbe court found tbat at tbe time plaintiff by warranty deed conveyed title to the premises to *McCarty*(March 19, 1902), it was orally agreed tbat tbe mortgage should remain in force and unsatisfied. Tbe court held tbat such an agreement was effectual to continue this mortgage as a subsisting obligation and awarded judgment of foreclosure and for a sale of tbe premises. Tbe appellant assails this judgment upon tbe ground tbat this parol agreement of tbe parties to continue tbe mortgage given plaintiff prior to tbe delivery of bis warranty deed of tbe premises to *McCarty*on March 19, 1902, is wholly void and ineffectual. Tbe contention is that the warranty deed from plaintiff to *McCarty*operated as a satisfaction and discharge of tbe mortgage, and tbat tbe oral agreement to keep tbe mortgage alive contradicts tbe effective parts of the deed, whereby plaintiff conveyed all his right, title, and interest in tbe premises and warranted tbat they were free and clear from all incumbrances whatsoever. Tbe deed contains nothing excepting this mortgage from its terms. Tbe court finds, and tbe evidence supports the conclusion, that the parties attempted to except the mort*195gage from tbe operation of tbe deed by tbe parol agreement. This shows that tbe parties assumed that tbe mortgage was not excepted by tbe terms of tbe deed. Tbe deed grants, sells, remises, releases, and conveys tbe premises, together with tbe hereditaments and appurtenances thereunto belonging, and “all tbe estate, right, title, interest, claim, or demand whatsoever” of tbe plaintiff, either in law or equity, in possession or expectancy. Surely these words in their natural import and meaning embrace plaintiff’s rights under tbe mortgage, and hence those rights were thereby conveyed to the grantee, *McCarty.*It is a general rule that such a conveyance by a mortgagee to a mortgagor or the owner of the equity of redemption operates to satisfy and discharge the mortgage. *Mason v. Beach,*55 Wis. 607, 13 N. W. 884; *Waters v. Waters,*20 Iowa, 363; *Woodbury v. Aikin,*13 Ill. 639; *Barr v. Foster,*25 Colo. 28, 52 Pac. 1101; *Mutual B. & L. Asso. v. Wyeth,*105 Ala. 639, 17 South. 45.

In *Mason v. Beach, supra,*this court, after discussing the nature of a mortgage claim or interest in the premises mortgaged, declares:

> “Whatéver interest in the land the mortgagee obtains, less than the fee, under these decisions, and whatever it may properly be denominated, it is certainly an. *interest,*and a substantial interest, which may pass by a conveyance. By our statute (sec. 2203, R. S.) 'conveyances of land, *and of any estate or interest*therein, may be made by deed,’ etc. It follows, therefore, that, according to the old or the modern theory of mortgages, a quitclaim deed by the mortgagee will operate as a discharge of the mortgage.”

We thus have a situation wherein plaintiff’s conveyance of the premises by warranty deed operated to satisfy • and discharge the mortgage theretofore given him thereon, but which the court, in effect, held was excepted from the deed by the parol agreement of the parties. This was, in effect, a holding that the parties could by parol evidence contradict their written agreements embraced in the deed, whereby the plaint*196iff conveyed all bis estate, right, title, interest, claim, or demand, in law or in equity, in these premises to *McCarty.*It is well established that in the absence of fraud or mistake the written agreements of parties cannot be so contradicted or modified by parol. Upon this consideration it must be held that the court erred in ruling that this mortgage was a subsisting valid conveyance and in awarding judgment for its foreclosure and a sale of the premises.

The discharge of this mortgage, securing payment of an unpaid balance of the purchase money, does not *per se*establish payment thereof, and it was competent to show that it remained unpaid. We .consider the evidence on this subject as ample to sustain the finding that $200 of the purchase money remained unpaid at the time plaintiff conveyed the premises by warranty deed to *McCarty*and when the *action*went to judgment. Under these facts plaintiff clearly had a right to a vendor’s lien on the premises for this balance, with interest thereon. While the complaint, in form, is one for foreclosure of the mortgage and a sale of the premises, and was no doubt intended to embrace no other cause of action, nevertheless it alleges all the facts necessary to the right to a vendor’s lien and a foreclosure thereof. It is manifest that the question of whether or not a part of the purchase money was still due plaintiff from the vendee, McCarty, was as fully litigated by the parties by the issues tried as it could have been in an action to enforce a right to a vendor’s lien. All the other facts pertinent to the right to such a lien by the plaintiff are well-nigh undisputed and hence the record is complete for enforcing plaintiff’s right to such a lien. “Belief by way of declaring and enforcing a vendor’s lien is of the same general character as relief upon a bill to foreclose a mortgage to secure purchase money” *(Mutual B. & L. Asso. v.*Wyeth, *supra),*and should therefore be awarded, under the facts shown, if the complaint and the relief demanded will permit it As indicated, the facts alleged sustain this *197right, and tbe demand for general relief, in addition to tbe specific relief for a foreclosure and sale, are sufficient in equity to embrace tbe right to relief by an enforcement of tbe purchase-money lien.

But plaintiff is not confined to tbe general equitable jurisdiction for authority to obtain such relief. Sec. 2886, Stats. (1898), contemplates that, where issue has been joined and tbe action tried, “the court may grant . . . any relief consistent with tbe case made by tbe complaint and embraced within tbe issue.” This statute has been applied, after issue joined, in many cases in this court, and under a liberal construction judgment has been rendered on tbe merits, in tbe furtherance of justice. Under such circumstances tbe court has deemed tbe pleading amended so as to conform to tbe facts proven, and has granted relief thereon, if consistent with tbe case made by tbe complaint and embraced in tbe issues. This accords with other Code provisions prescribing that tbe court shall at every stage of tbe action disregard any error or defect in tbe pleading or proceeding which does not affect an adverse party’s substantial rights, and that this court shall not reverse a judgment for such errors. We cite tbe following cases as analogous to tbe instant case, wherein this policy of tbe statutes has been liberally applied and fully vindicated: *Leonard v. Rogan,*20 Wis. 540; *Hopkins v. Gilman,*22 Wis. 476; *Strœbe v. Fehl,*22 Wis. 337; *Kimball v. Darling,*32 Wis. 675; *Brook v. Chappell,*34 Wis. 405; *Sage v. McLaughlin,*34 Wis. 550; *Lemke v. Daegling,*52 Wis. 498, 9 N. W. 399.

We are of opinion that tbe court should have awarded judgment declaring $200 of unpaid purchase money, with interest thereon, was owing by tbe defendant *McOarty*to tbe plaintiff; that plaintiff had a right to a vendor’s lien on tbe premises for the amount due, with costs of tbe action; and also should have ordered a sale of the premises upon terms .and conditions conformable to equity, if *McCarty*should fail *198to pay the judgment as required. The judgment entered accomplished this result on terms more favorable to *McCarty*than a court of equity usually imposes under the circumstances shown. In the light of this state of the case, we hold that the complaint must be considered amended to conform to the proof; that the judgment should be modified by striking therefrom the parts awarding plaintiff recovery of $25 as solicitor’s fees and ordering that a judgment for a deficiency after sale may be rendered against *John McCarty;*and that the judgment should be, and it hereby is, affirmed in all other respects.

*By the Court.*— The judgment is ordered modified by striking therefrom the parts specified in the opinion. As so modified it stands affirmed; appellant to recover costs on this appeal