Court Opinion

ID: 5588507
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:01:38.739105+00
Date Added: 2024-06-11T08:36:21.513225
License: Public Domain

ON MOTION FOR REHEARING.
Hill, J.
In Wilkins v. Gibson, 113 Ga. 31, 35 (supra), it was stated in the opinion by Mr. Justice Cobb: “Subsequently, the notes given by W. I. Steiner to A. L. Eichardson having become due, she applied to Lawson & Scales, loan brokers, and engaged said firm to negotiate a new loan in order that she might pay up and discharge her indebtedness to Eichardson, who was urging a settlement of the same. Upon being informed that no new loan could be secured if there were any existing or uncanceled liens against the property offered as security, W. I. Steiner, knowing that subsequently to the deed to Eichardson such liens had been given to Willdns, Neely & Jones, immediately applied to them to assist her in perfecting the necessary arrangement to secure the new loan. To this they readily consented, and, being anxious that Mrs. Steiner should make arrangements with Eichardson so that she could continue her farming operations, out of which they hoped to realize their debt, accompanied W. I. Steiner’s husband, who was acting for her, to the office of Lawson & Scales, and in the presence of the members of this firm stated that they thought all their liens on the property had been canceled, but, if they were not, they would promise and agree to cancel and extinguish all their liens on the property in question, if Lawson & Scales would negotiate the loan for Mrs. Steiner. Upon the faith of this agreement, and upon the assurance of Wilkins, Neely & Jones that they held no liens or other papers against the property, application was made for a loan of $6,000, the same being sufficient to pay the debt due Eichardson, which amount was advanced by petitioner to W. I. Steiner and by her paid to Eichardson in extinguishment of his debt, and his deed was then and there marked canceled and satisfied upon the record.” Thus it appears that Wilkins, Neely & Jones, the intervening creditors, did agree with' the lender that their lien, *249if any, would be canceled, and would not stand in the way of the lending creditor. The court said, in the Gibson ease: “As the jury found in favor of the defendants on the issues as to novation and estoppel, it will be unnecessary to advert to these branches of the case. On these the evidence was directly conflicting, and we shall assume, for the purposes of this opinion, that the jury have arrived at the truth of the case with respect to them.” Even if the case of Merchants & Mechanics Bank v. Tillman, 106 Ga. 55 (supra), is in point, it was decided by only four Justices, two being absent, and is not controlling, as a precedent.
Learned counsel for plaintiff, in their brief on the motion for rehearing, make this statement; “In the case at bar the Federal Land Bank’s loan was for $5,000, and by its terms was to run for 33 years. But H. B. Barron could have relieved the land from the lien of the loan deed executed to the Federal Land Bank at any time by paying to the bank the amount of the Prudential Insurance Company loan, $-4,000 and interest.” The record shows that the interest was only $234.06. This statement of counsel furnishes a strong illustration, and reason against subrogation, under the facts of this case. In the first place, it shows that the debt due the land bank is not the same debt due the Prudential Insurance Company, which was $4,000, and interest, $234.06; whereas the new debt contracted with the Federal Land Bank was $5,000, and interest. In the second place, the debt due the Federal Land Banlc was to run for 33 years, whereas the debt due the Prudential Life Insurance Company was to run only five years. This 33-year debt would practically debar the intermediate creditor (H. B. Barron) from foreclosing his second mortgage; for no one would buy a piece of property under a second mortgage when there was a prior 33-year mortgage on the same. And to wait 33 years to foreclose would be a practical denial of justice and due process of law. And this, in the face of the fact that the second mortgagee had never agreed to such' an arrangement. Such a rule would in many cases destroy the liens of the holders of second mortgages. There is nothing in the record, or in the law, so far as we are advised, to authorize the statement that “H. B. Barron could have relieved the land from the lien of the loan deed executed to the Federal Land Bank at any time by paying to the bank the amount of the Prudential loan, $4,000 and interest.” If the Federal Land *250Bank had' what they considered a good security deed for the loan of $5,000 to run for 33 years, with interest, it is hardly probable that they would accept $4,000 and interest, $234, for such debt “at any time.”
In Harris’ Law of Subrogation, 508, it is stated: “In the absence of some agreement or stipulation which will amount to conventional subrogation, a person who pays off an encumbrance in which he has no interest will not thereby entitle himself to be subrogated to the rights of the prior encumbrancer, especially against intervening liens. So if the money is loaned to the debtor to pay off purchase-money, for land, discharging the vendor’s equitable lien, and is so applied, the lender will not ordinarily be subrogated to the vendor’s lien. And the same rule applies where the money is loaned to the debtor to pay off a judgment, which is a lien on his land; it does not subrogate the lender to the place of the judgment creditor, unless so agreed and understood. If the debt is paid at the instance of the debtor, and under circumstances that would induce the belief that the parties contemplated that the party paying should take the securities held by the creditor, it may perhaps have that effect, as against the debtor; but not against one interested in the property held by the creditor, when paid by a stranger, unless, however, the money was advanced as a purchase, and not as an extinguishment of the debt. But the stranger may, by conventional subrogation, which must be an agreement with the creditor or the debtor, avail himself, of such securities.”

Rehearing denied.