Court Opinion

ID: 9834368
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:31:35.121647+00
Date Added: 2024-06-11T07:44:14.237421
License: Public Domain

On Motion for Rehearing.
All the parties have filed motions for rehearing. There is one matter urged by the defendants in error which we did not discuss in our original opinion, however, the effect of our holding was to decide the question adversely to the contention of the defendants in error. Upon more mature consideration of the question we have reached the conclusion we were partially in error in this respect. The matter to which we refer is the right of subrogation urged in behalf of Lizzie B. Ashbrook in regard to certain payments made by her upon the indebtedness against the land herein involved. This indebtedness was originally represented by the two $2,400 notes above mentioned which bore interest at the rate of 6% per annum. These notes, as above stated, were renewed by Mrs. Ashbrook on November 1, 1932, by her executing the two $1,800 notes and the liens herein sued upon.
*734The pleadings of Lizzie B. Ash-brook allege that she paid $600 on each of the $2,400 notes reducing the principal of such notes to $1,800 each; that after the remaining indebtedness was renewed and extended she made additional payments of principal and interest upon the renewed indebtedness; and that she was entitled to subrogation by reason of the payments, so made. The testimony reveals that she paid $500 principal on each of the $2,400 notes on March 24, 1931, and $100 principal on each note on November 1, 1932, aggregating a total of $1,200 paid on the indebtedness upon these two occasions. These payments, according to the testimony of Mrs. Lizzie B. Ashbrook, were made to the Peoria Life Insurance Company, then owner of the notes, and her evidence further shows that such payments were made in order to avoid a threatened foreclosure upon the land. The evidence further shows that on December 30, 1933, Mrs. Ashbrook paid $200 principal on each of the $1,800 renewal notes, reducing the principal of these notes to $1,600 each, and making a total of $1,600 paid by her upon the principal of the indebtedness. Mrs. Ashbrook testified that she paid some interest oh the indebtedness and paid some taxes upon the property, but the amounts so paid are not shown by her testimony or by any other testimony, nor were the amounts paid alleged in the pleadings, and, since the burden is upon Mrs. Ashbrook to both plead and prove her right of subrogation, the purported amounts paid for interest and taxes must fall for lack of sufficient pleadings and support in the evidence. 39 Tex. Jur. 803, 804, paras. 43, 44.
The record shows that Lizzie B. Ashbrook did not assume any indebtedness against the property she purchased from the Methodist Episcopal Church of Spic-kardsville, Missouri. The deed from the church to her, in which the property in issue was included, does not mention indebtedness of any sort but merely recites that for a consideration of $3,000 paid by the grantee the grantor granted, sold and conveyed to “Lizzie Ashbrook, all of the interest of said Church in and to the estate of D. F. Ashbrook, deceased, and in and to the estate of Mary E. Ashbrook, deceased, and specially do we hereby convey all interest of said Church in and to the M. H. Cahill Pre-emption, Abstract No. 535; the W. A. Hunt Pre-emption, Abstract No. 537; * * * .” After this recitation there followed the description of numerous other tracts of land not the subject of this controversy. Under such a deed Mrs. Ash-brook did not become primarily liable on the indebtedness then outstanding against the property. After she purchased this property and before she became primarily liable for the indebtedness in question she paid $1,200 principal to the Peoria Life Insurance Company, and, according to the uncontroverted testimony; such payment was made in order to prevent a foreclosure. After the execution of the renewal notes she further paid the sum of $400 on the indebtedness which was then her own and for which she was primarily liable.
We think the rule is well settled in this State that one is not entitled to subrogation who pays an obligation for which he is primarily liable. Therefore, as far as the $400 payment is concerned Mrs. Ashbrook is not entitled to claim the benefits of an equitable subrogation. Kerens Nat. Bank et al. v. Stockton et al., 127 Tex. 326, 94 S.W.2d 161; Lusk v. Parmer et al., Tex.Civ.App,, 114 S.W.2d 677, writ dismissed; McDowell v. M. T. Jones Lumber Co. et al., 42 Tex.Civ.App. 260, 93 S.W. 476. However, in regard to the $1,200 paid by Mrs. Ashbrook upon the indebtedness before she became primarily liable thereon, a different question is presented. Mrs. Ashbrook, having paid the $1,200 to prevent a threatened foreclosure, could not be classed as a mere volunteer who paid the debt without legal or moral obligation to do so. In 25 R.C.L. 1353, para. 37, we find the following general rule expressed: “And there are numerous decisions to the effect that where a purchaser buys land and takes a deed thereto, and subsequently pays a prior lien on the property which he is not primarily bound to pay, but which if not paid might cause him to lose his interest therein, he is subrogat-ed to the rights and remedies of such prior lien, as against a lien which is superior to his title. * * * The purchaser is not technically a surety for the vendor, but in virtue of his ownership of lands encumbered by the judgment or mortgage against the grantor under whom he claims title, who conveyed the same for full value with covenants of warranty, he occupies a position very similar to that of sureties, and is entitled to the same equities, so far as they can be administered consistently with the rights of others.”
It will thus be seen that upon Mrs. Ash-brook’s payment of the $1,200, under the *735circumstances which existed, equity will place her in the position of a surety for the vendor and afford her the same rights to which a surety would • have been entitled under similar conditions. We think the rule in regard to the rights of a surety paying the debt of the principal has been definitely settled in Texas by the pronouncement of the Supreme Court in the case of Fox v. Kroeger, 119 Tex. 511, 35 S.W.2d 679, 681, 77 A.L.R. 663. In a very learned opinion in that case written by Judge Critz, the Supreme Court reviews the decisions upon the subject, and, apparently in order to clarify the conflict theretofore existing in the authorities, announced this rule: “From what we have said it follows that we now announce the rule in Texas to be that, where the surety pays the debt of the principal, he has his election to either pursue his legal remedies and bring an action on an assumpsit, or the obligation implied by law in his favor for reimbursement by the principal; or he can prosecute an action on the very debt itself, and in either event he stands in the shoes of the original creditor as to any securities and rights of priority. What we have already said applies with equal force to all debts whether represented by a negotiable instrument or not.”
In view of the above rule, under the facts of this case, it is our opinion that for the payment of the $1,200 on the above indebtedness Mrs. Lizzie B. Ash-brook should be subrogated to the rights and remedies held by the mortgagee as against Neal’s claim, however, her rights in this matter are inferior to the rights of the Alliance Life Insurance Company, and we do not wish to be misunderstood in this regard. We are not holding that her rights as to subrogation are paramount to, or even on a par with, the rights of the' Alliance Life Insurance Company. Such a holding would be prohibited under the rule that a person is not entitled to be subrogated to a creditor’s securities until the claim of the creditor against the debtor has been paid in full. 25 R.C.L. 1318, para. 6. However, in our original opinion and judgment in this case we held that the claim of the Alliance Life Insurance Company, as against all the parties, should be first satisfied, and to such holding we still adhere. Under such holding the Alliance Life Insurance Company will have been fully satisfied before the effect of the subrogation accrues to Mrs. Ashbrook, and therefore such creditor’s rights will not be prejudiced in any manner by our holding in this respect. Cason et al. v. Westfall et al., 83 Tex. 26, 18 S.W. 668; Foos Gas Engine Co. v. Fairview Land & Cattle Co. et al., Tex.Civ.App., 185 S.W. 382, writ refused. After such company’s claim is thus satisfied we hold that next in order for satisfaction, and prior to the claim of Neal, is the equitable claim of Lizzie B. Ashbrook for the $1,200 paid by her upon the indebtedness and for interest at 6% per annum on $1,000 of such amount from March 24, 1931, until paid, and interest at 6% per annum on $200 of such amount from November 1, 1932 until paid, the dates mentioned being that of the respective payments made on the indebtedness. Williams et al. v. Daniel et al., Tex.Civ.App., 30 S.W.2d 711, writ refused; Phipps v. Fuqua, Tex.Civ.App., 32 S.W.2d 660, yvrit refused. Under the facts of this case we think equity demands that Mrs. Ashbrook be reimbursed for these sums with interest as stated, and in support of our opinion in this respect we call attention to the fact that had not this money been paid by Mrs. Ashbrook the unpaid 'debt thereby represented would certainly have had precedence over Neal’s claim. We therefore think that she should be placed in the position of the mortgagee for reimbursement of such amount out of the sale of the property in the probate court before any of the proceeds of such sale may be applied to the payment of Neal’s claim. . Sullivan et ux. v. Doyle, 108 Tex. 368, 194 S.W. 136; Harrison v. First Nat. Bank of Lewisville et al., Tex.Com. App., 238 S.W. 209; Davis v. John V. Farwell Co., Tex.Civ.App., 49 S.W. 656.
The motion of the plaintiffs in error is overruled. The motions of the defendants in error are granted in part and our holding in our original opinion is hereby modified to the extent that after the satisfaction of the Alliance Life Insurance Company’s claim out of the sale of the land herein in the probate court, if the same is satisfied, that the $1,200 claim of Mrs. Lizzie B. Ashbrook, with interest as above stated, be next satisfied out of any funds remaining after the payment of the claim of the Alliance Life Insurance Company, and that after the satisfaction of the claims of both such company and Mrs. Ashbrook any amount remaining shall be subjected io the payment of Neal’s *736claim in the due course of the administration of the estate of D. F. Ashbrook, deceased. It is further ordered that our holding in this respect, in addition to our holding in the original opinion, be certified by the district court to the probate court for observance and execution.