Court Opinion

ID: 3225438
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:02:19.802879+00
Date Added: 2024-06-11T12:43:34.521438
License: Public Domain

The doctrine of conventional subrogation is of universal recognition, and its principles have often been stated and applied by this court. Bell v. Bell, 174 Ala. 446, 56 So. 926, 37 L.R.A. (N.S.) 1203 (reviewing earlier cases); First Ave. C.  L. Co. v. King, 193 Ala. 438, 69 So. 549; Cook v. Kelly,200 Ala. 133, 75 So. 953.
In Bell v. Bell, supra, we approved a statement of the law by the Supreme Court of Minnesota in Emmert v. Thompson, 49 Minn. 386,392, 52 N.W. 31, 32, 32 Am. St. Rep. 566, as follows:
"The better opinion now is that one who loans his money upon real estate security, for the express purpose of taking up and discharging liens or incumbrances on the same property, has thus paid the debt at the instance, request, and solicitation of the debtor, expecting and believing, in good faith, that his security will, of record, be substituted, in fact, in place of that which he discharges, is neither a volunteer, stranger, nor intermeddler, nor is the debt, lien, or incumbrance regarded as extinguished, if justice requires that it should be kept alive for the benefit of the person advancing the money, who thereby becomes the creditor."
This statement is quoted by Judge Freeman in his note to Am. Bonding Co. v. Bank, 97 Md. 598, 55 A. 395, 99 Am. St. Rep. 466, 517.
The benefit of the doctrine will be extended to such a person, as this court has said, "where that course will best serve the substantial purposes of justice and the true intention of the parties." First Ave. C.  L. Co. v. King, supra; Scott v. Land, Mortg. Co., 127 Ala. 161, 28 So. 709; Bigelow v. Scott, 135 Ala. 236, 33 So. 546.
There is some difference of opinion as to the necessity, or not, of an express agreement to keep alive the original security for the benefit of him whose money has paid the debt, or at least of an express agreement to substitute therefor a new security which shall be a first lien on the property. "The generally accepted view at the present time, however, is that it is not necessary that there should be an express agreement that the prior lien shall be kept alive for the benefit of one advancing money to pay it, or that it be assigned, but if, from all the facts and circumstances surrounding the transaction it is clearly to be implied that it was the intention of the parties that the person making the advance was to have security of equal dignity with that discharged then equity will so decree. In such cases equity, speaking from the standpoint of good conscience, substitutes the person so paying the debt to the place of the original creditor, so far as to enable him to enforce the security for the purpose of reimbursement." 25 R. C. L. 1340, § 24.
The general rule is that the right of subrogation may be enforced as against liens and claims which are subordinate to the lien or mortgage discharged. N.E. M. Sec. Co. v. Fry,143 Ala. 637, 42 So. 57, 111 Am. St. Rep. 62; Fidelity, etc., Co. v. Richeson, 213 Ala. 461, 105 So. 193; note, 99 Am. St. Rep. 480, 481. But as observed by Judge Freeman (99 Am. St. Rep. 518):
"A prime consideration in such cases, however, is that the restoration of the discharged lien may be made without putting the holder of the second incumbrance in any worse position than if the prior lien had not been discharged." Straman v. Rechtine, 58 Ohio St. 443, 51 N.E. 44; London, etc., Mtg. Co. v. Tracy, 58 Minn. 201, 59 N.W. 1001; Wilkins v. Gibson,113 Ga. 31, 38 S.E. 374, 84 Am. St. Rep. 204, 222.
On the facts alleged in their cross-bill, the respondents Alison are unquestionably entitled to subrogation to the title and lien of the vendor, Brintle, as against his vendee, the West Real Estate  Insurance Company, whose purchase-money debt he paid; and also as against the West Company's vendee, the complainant Patrick, provided that the substitution of the Alisons for Brintle as unpaid vendor does not increase Patrick's burden, or place him in a more unfavorable position than he would have occupied, had Brintle continued to be the vendor creditor of the West Company, under his contract of sale to that company.
The argument against subrogation, quoting *Page 523 
from the brief of Patrick's counsel, is as follows:
"The debt owing to Brintle by the said West Company must necessarily have been paid by it, under the terms of contract, or in a lump sum; and had the appellant Alison not volunteered to pay it, the said company must needs have done so, from the funds paid to it by Patrick, or otherwise acquired; for had payments to Brintle ceased, his lien would have been enforced, with notice, necessarily, to Patrick in possession of the property. Patrick would thus have had an opportunity to divert the payments he was making to the West Company to the clearing up of this lien upon his property, thus conserving his interest and equities. The intermeddling of appellants, in lending said corporation money, enabled it to extend the matter, and, by deferring repayment of the amount, obviated the necessity of applying the money it collected from Patrick to its original debt owing to Brintle. If appellants had kept out of the affair and had not intermeddled, the money paid by appellee to the said West Company would have been paid by it to Brintle, and the said lien would have thereby been discharged; otherwise, had the West Company failed to pay under the contract with Brintle, an enforcement of his vendor's lien by Brintle would have been attempted, or made, and the appellee in possession of the premises must needs have had notice thereof, and would have been permitted in equity and good conscience to divert his payments of money from the said corporation, to its proper channel, the extinguishment of this lien. This right the appellants precluded by their failure to give any notice whatsoever to appellee. They do not come into equity with clean hands, and cannot look to the appellee in this cause for the payment of their indebtedness against the said West Real Estate Insurance Company."
This reasoning is not without a degree of plausibility, but its assumptions of fact are wholly speculative, and its conclusions therefore untenable. Had the West Company failed to pay installments to Brintle as they fell due, Brintle might or might not have pressed for their payment; and, had he pressed, he might himself have been induced to extend the debt in whole, or to have assigned his title and contract to any third person who might be willing to carry it on. In either case, Patrick could not have complained of an extension of credit to the West Company by Brintle or by his assignee, without notice thereof to himself, as being in violation of his own rights as subpurchaser, or as being prejudicial thereto. Brintle was under no obligation to notify Patrick of his title reserved as security for the unpaid purchase money, even had he known of Patrick's purchase; and had the Alisons inquired as to Patrick's possession, and become actually informed of his outstanding contract of purchase, it would have been no impediment to their acquisition of Brintle's paramount title, with its accompanying rights and obligations. The only question seems to be whether, in such a case, the Alisons would have been in duty bound to advise Patrick of their relation to the property and warn him of their claim, so that he might protect himself in some way. Our view of that situation does not sustain the theory of such a duty. And when in moral and equitable effect the Alisons are substituted to the position of Brintle, we are unable to see any material change in the rights and obligations of the parties.
Our conclusion is that there is no equitable barrier to the respondents' equitable right to subrogation and that the trial court erroneously sustained the demurrer to the cross-bill.
It is true, the cross-bill omits any specific prayer for subrogation, but, under its allegations of fact and its general prayer, the cross-complainant was entitled to that relief. Bell v. Bell, 174 Ala. 446, 456, 56 So. 926, 37 L.R.A. (N.S.) 1203. The only relief that can be properly decreed on the cross-bill is subrogation to the title of Brintle and to his rights as an unpaid vendor in the sum of $1,393, with decree for enforcement according to the terms of the contract.
The decree appealed from will be reversed, and a decree will be here rendered overruling the demurrer to the cross-bill and remanding the cause for further proceedings.
Reversed, rendered, and remanded.
ANDERSON, C. J., and THOMAS and BROWN, JJ., concur.
                              On Rehearing.