Court Opinion

ID: 6602503
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:09:00.594691+00
Date Added: 2024-06-11T15:58:04.012032
License: Public Domain

Cole, J.
I. The first question to be considered is as to the legal effect of the purchase by the Whortons of one-half of the Scott mortgage, and at the same time the purchase of the equity of redemption of the mortgaged property, it being conceded that these purchases were made out of the funds of the partnership, and for the benefit of the firm. It is claimed by the learned counsel for Webster, that the purchase of one-half of the Scott mortgage in the name of W. G. Whorton, and of the equity of redemption in the name of John K. Whorton, under the circumstances, operated, by way of merger, to satisfy and extinguish one-half of the Scott mortgage debt transferred to W. G. Whorton, so as to leave the mortgaged prem*193ises subject only to that half of tbe first mortgage debt wbicb still belongs to Scott, and to the Webster mortgage. We fail to see bow any such consequence can possibly follow on the facts in the case. Eor, without going into any discussion of the doctrine of merger, it seems to us plain that there was no merger here: first, because the interest in the Scott mortgage was assigned and transferred to W. G. Whorton, while the equity of redemption was conveyed to J. R. Whor-ton/ and secondly, because of the intervening Webster mortgage. The general rule, as stated by the authorities, is, that a merger takes place whenever a legal and equitable estate in the same land come to one person, in the same right, without an intervening interest outstanding in a third person. Then, it is said, the equitable merges in the legal estate, the latter alone subsisting. See authorities cited on the briefs of counsel on both sides. But here there was in fact no conveyance by the mortgagors to the mortgagee, and there was a junior incumbrance on the estate outstanding in favor of Webster. But it is insisted that in equity the Whortons should be treated as joint owners of the half interest in the Scott mortgage, and joint owners of the equity of redemption, and should not be permitted by any device to avoid rules of law or evade the ends of justice. A court of equity, it is said, will keep an incumbrance alive, or consider it extinguished, as will best serve the purposes of justice and the actual and just intent of the party. If we apply these 'principles to the facts, we see no ground for holding that there was such a merger as to extinguish one-half of the Scott mortgage, or that the rights of Webster were injuriously affected by what was done. His mortgage was expressly declared to be subject to the Scott mortgage, and he has the same security for the payment of his debt he originally had. "Why should he now stand in any better position than he would if Scott had retained the entire mortgage debt? Or why ask that the Whor-tons should pay one-half of that mortgage to make good his *194security, if it is inadequate? Certainly no promise on the part of the Whortons, or either of them, to pay the mortgages, can be presumed, unless it is implied from the circumstance that John H. purchased the equity of redemption with the means of the partnership, and for the benefit of the firm. But will the law imply a personal liability to pay from these facts alone? It appears to us not. Of course the land conveyed is charged with the incumbrances, and will be applied to satisfy them. But, in the absence of a special agreement to assume -the mortgage, we do not understand that the purchaser of the equity of redemption becomes personally liable to pay it. lie may give up the property in satisfaction of the liens upon it. It is said, however, that the consideration paid for the equity of redemption was merely nominal. Concede this to be so, and how does that fact enlarge the rights of Webster? The property may not be worth the amount of the incumbrances upon it. Moreover, that it was the intention of the Whortons to keep the entire .Scott mortgage alive, is plainly inferable from the way the purchases were made. The equity of redemption was conveyed to one, while the interest in the mortgage was assigned to the other. This method of making the transfers renders the presumption almost irresistible, that the Whortons did not intend there should be any merger. The legal and equitable estate were designedly kept distinct, and did not unite in the same person. This was doubtless done for the purpose of keeping the entire Scott mortgage alive as a subsisting security.
But it was further insisted, that the plain object which the Whortons had in view by the purchase of an -interest in the mortgage and the purchase of the equity of redemption, was to injure Webster/ or, in the language of the learned counsel, it was “ intended to wipe out his mortgage, or render his security as valueless as possible.” But, as already observed, we fail to see how his rights were or could have been prejudiced by .what was done. The property was charged with the pay*195ment of the Soott mortgage when he took his. It remains so still. He originally had the right to redeem from that mortgage. That right still remains unimpaired. True, it might be greatly to his advantage to have one-half of the Soott mortgage discharged, but, under the circumstances, we see no ground for holding that the Whortons assumed the payment of -it, or that it became extinguished joro tanto by the purchases. By the transfer from Soott, one-half of the mortgage debt was assigned, and the mortgaged property, as between these parties, is chargeable with the payment of that entire incumbrance. Webb v. Meloy, 32 Wis., 319.
II. It appears that there were lands covered by the Soott mortgage which were not included in the Webster mortgage. The court ordered that these should be first sold to satisfy the amount due on the first mortgage. It also appeared from the testimony of the plaintiff Soott, that he held a quantity of lands in Chippewa county, with some drafts and lumber, as collateral security for the payment of the mortgage and an account against the mortgagors. Under the rule of marshaling securities, it is claimed that the court should have further decreed that the Chippewa lands and other property be first appropriated to pay the mortgage debt. It is the aim of a court of equity, as regards marshaling assets, to do equity; and equality is generally equity. Says Chief Justice Marshall: “ The principle on which the court proceeds is, that a creditor having his choice of two funds ought to exercise his right of election in such a manner as not to injure other creditors who can resort to only one of these funds.” Alston v. Munford, 1 Brock., 279. This principle has often been applied in this court, as between creditors. Goss v. Lester, 1 Wis., 43; Worth v. Hill, 14 id., 559, and cases cited in head note in Y. & B.’s ed. The difficulty, however, in enforcing that principle here is, that there is no foundation laid for any such relief in the answer of Webster. Had he amended his answer, on the trial even, asking, by way of counterclaim or cross bill, that an ac*196count be taken to ascertain the amount of collaterals held by Soott, wbicb was applicable to the payment of the first mortgage, and that this amount be applied before the lands included in bis mortgage were sold, we think that relief might possibly have been granted. Rut, without expressing any positive opinion on the point, we are clear that, as the pleadings now stand, the court would not have been justified in marshaling the securities as is claimed should have been done. For Soott testified that the title of the Chippewa lands was in him to sell and apply on the notes; but the nature or conditions of that trust nowhere appear. Resides, it appears there were dealings between Soott, and Girard and Drake, which would necessarily have to be investigated and settled before any mashaling of assets could take place. It seems that Scott had taken lumber and drafts, which he still held as collaterals. And, as all these transactions between these parties would have to be adj usted before it could be known how much, if anything, remained to be applied on the Soott mortgage, some foundation for the intervention of the court to investigate them should have been laid in the answer. It is a sufficient answer, that Webster demanded no such relief or aid of the court in marshaling the securities, and was, therefore, not entitled to a judgment that the lumber and Chippewa lands should be sold and first applied in payment of the Soott mortgage.
III. It is further said that the Whortons were in possession, and should have accounted for the use and occupation of the premises. It will be seen that they became the owners of one-half of the Soott mortgage, and of the equity of redemption, only seven days before this suit was commenced. As owners of the equity of redemption, they were entitled to the possession. We do not think any accounting was necessary or should have been had.
IY. A vai’iety of objections are taken to the form of the judgment. Whether any of these objections would work a *197reversal of tbe judgment on tbe appeal of tbe mortgagors, we will not decide. It is sufficient to say that there is none for which the judgment should be reversed on the appeal of the second mortgagee.
By the Court. — Judgment affirmed.
RyaN, C. J., and LyoN, J., took no part.
A motion for a rehearing was denied.