Opinion ID: 1501641
Heading Depth: 1
Heading Rank: 1

Heading: Stipulation and Dismissal

Text: It is hereby stipulated and agreed by and between the attorneys for the plaintiff, Messrs. Watts & Watts, and John C. Graves, attorney for Mary Dan, intervenor, and J. B. Campbell and Leahy & Brewster, that J. B. Campbell be dismissed as a party to this cause, without prejudice to any parties herein. It is further agreed that the judgment rendered in this action shall not in any way affect the certain cause now pending on this docket, entitled Leonard Ingram, a minor, by his guardians, vs. Minerva Jones, et al., being cause No. (5259), or the rights therein litigated. Dated and signed this 13th day of October, 1923. [Signed] Watts & Watts, Attorneys for Plaintiff. John C. Graves, Attorney for Intervenor, Mary Dan. Leahy & Brewster, Attorneys for J. B. Campbell. Thereafter and on the same day, cause No. 4302 came on for trial and resulted in a decree cancelling the deed from Grace and Richard Love to Barnett and Jones. The validity of the Campbell and Ingram mortgages was not determined. Upon appeal, the Supreme Court directed the entry of a decree in No. 4302, decreeing to Richard Love a life estate and one-third of the estate in remainder in such allotments, and to Polly Barnett and Minerva Jones each one-third of the remainder, and awarding Richard Love judgment against Polly Barnett and Minerva Jones for $5,285.00 on account of rents and profits received by them and accrued interests and costs. Richard Love and Watts assigned their interest in the decree in No. 4302 to Ingram on October 16, 1926. On October 25, 1926, Ingram filed a so-called repudiation in No. 5259, in which he undertook to repudiate the acts of his alleged guardians in commencing that suit. On the same day, Ingram filed a dismissal without prejudice in No. 5259. On August 2, 1927, Ingram filed a motion to dismiss No. 5259 without prejudice. On September 15, 1927, the court denied such motion. On October 14, 1927, Ingram filed his answer to the answer and cross-petition of Richard Love in No. 5259. In their separate answer and counter-claim in the instant case, Watts and Richard Love in part alleged the concealment and fraud as set up in the answer and cross-petition of Richard Love in No. 5259; the decree in No. 4302; the pendency of No. 5259 on the answer and cross-petition of Richard Love; that on September 11, 1926, Richard Love executed and delivered to Watts a quit-claim deed for an undivided one-half interest in Richard Love's estate in such allotments, and admitted that the deed from Grace Love to Watts was a mortgage to secure an indebtedness of $4,500. Richard Love testified that, before he signed the deed to Barnett and Jones and the mortgage to Campbell, Campbell told him if Grace Love died Watts would get everything; that C. Jones told him he would not get anything if he did not take the $500; and that he did not then know Grace Love had made a will. The defendants, Minerva Jones, Robert Johnson as administrator, Polly Barnett and James Barnett offered no evidence. The trial court entered a decree dismissing Ingram's bill without prejudice. Ingram has appealed. Richard Love and Watts wholly failed to establish that the execution of the Campbell mortgage by Richard Love was induced through fraud. The representation that it was necessary to raise funds with which to pay the Watts claim was true. The representation as to what interest Richard Love would take as the surviving spouse upon the death of Grace Love was a mistake of law. It was not shown to be willfully untrue. Indeed, it was in accordance with the existing decisions of the Supreme Court of Oklahoma on the subject (see Thompson v. Cornelius, 53 Okl. 85, 155 P. 602 and Privett v. Rentie, 75 Okl. 191, 182 P. 898) which thereafter, on May 17, 1921, were overruled by In re Pigeon's Estate, 81 Okl. 180, 198 P. 309. It was stipulated that the validity of the Ingram mortgage should not be determined in No. 4302. Such cause was dismissed as to Campbell. Ingram was not a party thereto. The validity of the Campbell mortgage was not adjudicated therein. The decree in No. 4302, except in so far as it canceled the deed from Grace and Richard Love to Polly Barnett and Minerva Jones, is not binding upon Ingram. The judgment in No. 4302 determined the interests of Richard Love, Polly Barnett and Minerva Jones in the allotments which had theretofore passed to them by inheritance and under the will of Grace Love. It did not convey such interests to them but merely declared the status of the title to the allotments. Therefore, the assignment of such judgment from Love and Watts to Ingram in no wise affected the title of Richard Love to his interest in the allotments. It transferred only the money judgment for rents, interest and costs. Cucullu v. Bilgery, 48 La. Ann. 1245, 20 So. 662. Is Ingram entitled to be subrogated to the rights of the mortgage under the Campbell mortgage and to the foreclosure of such mortgage? Richard Love was not an innocent purchaser for value, but took as the heir and devisee of Grace Love. Therefore, he stands in the same position as Grace Love would if she were now living. Burns v. Berry, 42 Mich. 176, 3 N. W. 924, 925; Ripley v. Seligman, 88 Mich. 177, 50 N. W. 143, 147. The Campbell loan was necessary in order to discharge the Watts deed (which Watts claimed was in fact a mortgage), another mortgage, accrued taxes and to pay the expenses incident to the transaction. The Campbell mortgage was a valid lien, prior and superior to the interests of Richard Love. While the deed from Grace and Richard Love to Polly Barnett and Minerva Jones was voidable on account of fraud, nevertheless, at the time of the making of the Ingram mortgage, Richard Love owned a life estate in such allotments and he, Polly Barnett and Minerva Jones each owned an undivided one-third interest in the remainder. Therefore, Ingram's mortgage was valid as to the interests of Polly Barnett and Minerva Jones but voidable as to the interests of Richard Love. Pursuant to a prior agreement with Campbell as the agent of Grace Love, Ingram, through his guardians, advanced the funds with which to discharge the Campbell mortgage and was to receive a first mortgage on the allotments. The Ingram loan was made for the express purpose of discharging the Campbell mortgage. Where money is loaned to a person in pursuance of an express agreement that it shall be used to discharge an existing incumbrance on his property, and that the lender shall have a first mortgage upon such property to secure its repayment, the lender, if he fails to receive a first mortgage, may be subrogated to the rights of the incumbrancer or lienor whose debt has been thus paid, not only as against the owner of the property but as against any other person who subsequently acquires an interest in the property with knowledge of the circumstances under which the money to discharge the incumbrance or lien was advanced. Cumberland B. & L. Ass'n v. Sparks (C. C. A. 8) 111 F. 647; In re Lee (C. C. A. 8) 182 F. 579, 583. Where an invalid or defective mortgage is given to secure an advancement of money made for the express purpose of discharging a prior incumbrance and is so used, the mortgagee in the defective mortgage, who took it in the belief that it was valid, is not regarded as a volunteer and is entitled to be subrogated to the lien of the incumbrance so discharged. MacGreal v. Taylor, 167 U. S. 688, 706, 17 S. Ct. 961, 42 L. Ed. 326; Wilkins v. Gibson, 113 Ga. 31, 38 S. E. 374, 84 Am. St. Rep. 204; Emmert v. Thompson, 49 Minn. 386, 52 N. W. 31, 32 Am. St. Rep. 566; Crippen v. Chappel, 35 Kan. 495, 11 P. 453, 57 Am. Rep. 187; Home Sav. Bank of Chicago v. Bierstadt, 168 Ill. 618, 48 N. E. 161, 61 Am. St. Rep. 146; Heuser v. Sharman, 89 Iowa, 355, 56 N. W. 525, 48 Am. St. Rep. 390; Bell v. Bell, 174 Ala. 446, 56 So. 926, 37 L. R. A. (N. S.) 1203; Hall v. Marshall, 139 Mich. 123, 102 N. W. 658, 111 Am. St. Rep. 404; Sou. Cotton Oil Co. v. Napolean Hill Cotton Co., 108 Ark. 555, 158 S. W. 1082, 46 L. R. A. (N. S.) 1049; Levy v. Martin, 48 Wis. 198, 4 N. W. 35; Wilson v. Hubbard, 39 Wash. 671, 82 P. 154; Shaw v. Meyer-Kiser Bank, 199 Ind 687, 156 N. E. 552. The rule applies where the security fails because of partial or total want of title in the person giving it. Hall v. Marshall, 139 Mich. 123, 102 N. W. 658, 111 Am. St. Rep. 404; Haverford Loan & Bldg. Ass'n v. Fire Ass'n of Phila., 180 Pa. 522, 37 A. 179, 57 Am. St. Rep. 657; Hughes v. Thomas, 131 Wis. 315, 111 N. W. 474, 11 L. R. A. (N. S.) 744, 11 Ann. Cas. 673; Laffranchini v. Clark, 39 Nev. 48, 153 P. 250; Ligon v. Barton, 88 Miss. 135, 40 So. 555; Newcomer v. Sibon, 119 Kan. 358, 239 P 1110, 43 A. L. R. 1387; Northwestern Mut. Savings & Loan Ass'n v. White, 31 N. D 348, 153 N. W. 972; Detroit & N. M. B. & L. Ass'n v. Oram, 200 Mich. 485, 167 N. W. 50, 53, 54; Roark v. Matthews, 125 Ark. 378, 188 S. W. 841. Watts did not acquire his present claim until September 11, 1926, and he then knew that Ingram, upon the faith of the defective mortgage from Polly Barnett and Minerva Jones, had advanced $8,600 for the express purpose of discharging the Campbell mortgage. He therefore took with full notice of the equitable right of Ingram to be subrogated to the lien of the Campbell mortgage. We conclude that Ingram is entitled to be subrogated to the lien of the Campbell mortgage. At the time of the commencement of the instant suit, No. 5259 was pending on the answer and cross-petition of Richard Love seeking cancellation of the Ingram mortgage on the ground of fraud. In Oklahoma, a suit to cancel a mortgage is a proceeding in rem. Continental Gin Co. v. Arnold, 66 Okl. 132, 167 P. 613, 617, L. R. A. 1918B, 511; Cushing v. Cummings, 72 Okl. 176, 179 P. 762, 765. This is true because the statutes of Oklahoma provide for constructive service in such actions; and further provide that if the decree of the court is not complied with it shall operate as a release. Section 671, C. O. S. 1921. See, also, Arndt v. Griggs, 134 U. S. 316, 10 S. Ct. 557, 33 L. Ed. 918; Dennison Brick & T. Co. v. Chicago Trust Co. (C. C. A. 6) 286 F. 818. A suit to foreclose the Ingram mortgage is likewise a proceeding quasi in rem. 42 C. J. pp. 17, 18, § 1504. Since the state court acquired jurisdiction in No. 5259 before the commencement of the instant case, it is a debatable question whether the court should have proceeded with the instant case, in so far as it sought a foreclosure of the Ingram mortgage, until the determination of No. 5259. Dennison Brick & T. Co. v. Chicago Trust Co., supra; Zimmerman v. So Relle (C. C. A. 8) 80 F. 417; Boston Acme Mines Corp. v. Salina Canyon Coal Co. (C. C. A. 8) 3 F.(2d) 729. We are of the opinion, however, that the error, if any, was harmless. The state court, in No. 4302, held that the deed from Grace and Richard Love to Polly Barnett and Minerva Jones was void. While the amended complaint in No. 4302, filed after the making of the Ingram mortgage, set up new fraudulent representations as grounds for relief, it did not set up a new cause of action. Vinson v. Graham et al. (C. C. A. 10) 44 F.(2d) 772. Therefore, it related back to the original petition and there was a continuance of the original lis pendens, and Ingram, while not a party to No. 4302, is bound by the judgment therein against his mortgagors, Polly Barnett and Minerva Jones. Mound City Co. v. Castleman (C. C. Mo.) 177 F. 510, 515; Turner v. Houpt, 53 N. J. Eq. 526, 33 A. 28; 38 C. J. p. 41, § 70. It follows that, in so far as the interests of Love in the allotments are concerned, the Ingram mortgage was ineffectual. Section 260, C. O. S. 1921; Baker v. Leavitt, 54 Okl. 70, 153 P. 1099. Since Ingram has already acquired the interests of Polly Barnett and Minerva Jones through sale under execution, a foreclosure of the Ingram mortgage against them would be useless. The rule between state and national courts that the jurisdiction of the court first acquiring jurisdiction over specific property will be respected by the courts of the other sovereignty may be divided into two classes of cases. First, cases in which the property is in the actual or constructive possession of the court. Second, suits to enforce liens against specific property, to marshal assets, to administer trusts, to liquidate insolvent estates and other suits of a like nature where, in the progress of the litigation, it may be necessary for the court to assume possession and control of specific property. Palmer v. Texas, 212 U. S. 118, 129, 29 S. Ct. 230, 53 L. Ed. 435; Kline v. Burke Const. Co., 260 U. S. 226, 231, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077; Franz v. Franz (C. C. A. 8) 15 F.(2d) 797, 801, 802; Harkin v. Brundage, 276 U. S. 36, 43-45, 48 S. Ct. 268, 72 L. Ed. 457; Empire Trust Co. v. Brooks (C. C. A. 5) 232 F. 641, 643-646. In the former class of cases there is an interference with possession; and in the latter there is an interference with jurisdiction only. In the latter class of cases, where the controversies in the two suits are substantially identical, the orderly administration of justice and the necessity of avoiding a conflict of jurisdiction require that the court which last acquired jurisdiction, although it be the first to acquire possession of the property involved in the litigation, shall surrender such possession, upon application, to the court of concurrent jurisdiction which first acquired jurisdiction of the controversy. Empire Trust Co. v. Brooks, supra, page 645 of 232 F. On the other hand, where the issues in the subsequent suit are different from those involved in the first suit and the subject-matter is not identical, that is, where the two suits involve different controversies notwithstanding they relate to the same property, there can be no infringement of the jurisdiction of the court in which the first suit is pending by reason of the institution of the second suit in a court of concurrent jurisdiction. Under such circumstances, the court first acquiring possession of the property may retain it until the suit pending before it is determined. Empire Trust Co. v. Brooks, supra, pages 645, 646 of 232 F.; Havner v. Hegnes (C. C. A. 8) 269 F. 537, 540, 541; Knudsen v. First Trust & Sav. Bank (C. C. A. 9) 245 F. 81, 85. In the case last cited, the court said: There is another principle enunciated by the courts and text-writers, namely, that where the controversy is not the same, that is, where the issues in one suit are different from those involved in another, and the subject-matter is not identical, there can be no infringement of jurisdiction as between the courts maintaining cognizance of the cases. This, it is maintained, rests on the ground that in such a case there is no conflict of jurisdiction as to the question or cause. In such cases, the first acquisition of the possession of the res dominates the authority to retain the same. If the instant case be restricted to a suit for a judgment on the Ingram note, the subrogation of Ingram to the lien of the Campbell mortgage and the foreclosure of such mortgage, the issues will be different from the issues in No. 5259 and the subject-matter will be wholly different from the subject-matter of No. 5259. A decree foreclosing the Campbell mortgage will in no wise interfere with the jurisdiction of the state court in No. 5259 invoked by the answer and cross-petition of Robert Love seeking cancellation of the Ingram mortgage on the ground of fraud. It follows that the instant suit may properly proceed for the subrogation of Ingram to the lien of the Campbell mortgage and for the foreclosure thereof. The decree is reversed with instructions to enter judgment against Polly Barnett, James Barnett, Minerva Jones and Robert Johnson as administrator of the estate of C. Jones for the amount due on the Ingram note for principal and interest, and against the defendants for the reinstatement of the Campbell mortgage and the subrogation of Ingram to the lien thereof and for the foreclosure of such mortgage to satisfy such indebtedness due Ingram. The costs will be taxed against appellees.