Court Opinion

ID: 7047019
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:56:07.290735+00
Date Added: 2024-06-11T16:11:34.588932
License: Public Domain

On Petition for a Rehearing.
Elliott, J.
It is contended in the argument on the petition for a rehearing, that the opinion heretofore pronounced does not correctly lay down the law upon the subject of subrogation. Counsel affirm that a replevin bail upon a personal judgment rendered on a debt secured by mortgage can not be subrogated to the mortgage lien, in cases where the creditor acquires a junior mortgage upon the same property. This position is not tenable.
The general rule is that where a replevin bail pays a judg*205ment, he is entitled to the benefit of all securities held by the creditor. This general rule, like most general rules, is not without exceptions, and one of these exceptions is that the right to subrogation does not exist unless the surety pays the entire debt secured by one and the same lien. Zook v. Clemmer, 44 Ind. 15; Vert v. Voss, 74 Ind. 565; Rice v. Morris, 82 Ind. 204. But where the debts are entirely separate and distinct, and are secured by different and independent mortgages, the principle declared in the cases cited does not apply. These cases do not decide that a replevin bail must pay all debts, or all liens, but do decide that he must pay all of the particular debt secured by one mortgage.
Subrogation is allowed only in cases where it will work equity and do no injustice. The right to subrogation is not a fixed legal right, but is an equitable one framed by courts of equity for the purpose of promoting the just administration of equitable principles. It is everywhere conceded that it can not prevail in cases where its operation would violate “ equity and good conscience.”
There are cases holding that a replevin bail is not entitled to subrogation in cases where it will operate to the injury of those who had acquired rights prior to his undertaking, but we do not think those eases rule here, for the reason that the « right of the bail was to the mortgage as it existed in the hands of the creditor at the time the undertaking was entered into, and this carried his rights back to the date of the mortgage. The lien of the mortgage was not broken by the personal judgment taken for the debt, nor was the time of the inception of its lien changed in any particular. It was a lien in the hands of the creditor, from the time of its execution, and, as against the creditor, continued to be such a lien, or else ceased to be a lien at all. There was no interim in which the lien of the mortgage was dead, nor was there, either in legal contemplation or in reality, a second mortgage. The lien to which the appellee was substituted was that of the mortgage, precisely as it originally accrued.
*206Our decisions firmly settle the law to be that, under our statute, the rights and liability of the replevin bail are those arising out of the undertaking and the original judgment. His liability is determined, not by the law in force when he undertakes as bail, but by the law in force when the judgment was rendered, that is, he became bound by the original judgment according to its force and effect under the law in force at the date of its rendition. Hutchins v. Hanna, 8 Ind. 533; Doe v. Harter, 2 Ind. 252; Doe v. Dutton, 2 Ind. 309. It is therefore but just that his rights should be coeval with his burdens. In Golgrove v. Gox, 22 Ind. 43, it was held that the replevin bail’s right of subrogation was superior to that of general creditors and to that of junior encumbrancers, and' this principle decides the present case. The reasoning of the court was this: “ The senior judgment would be a superior lien upon the debtor’s property — would have to be first satisfied. The fact that the day of such satisfaction, from such property, should be delayed by staying the execution, can not, in view of numerous decisions relative to the laws controlling the remedy, substantially affect the rights of any creditor. Then if the judgment is not paid the property is swept off from the junior creditors to satisfy the same; if the bail pays it, and the property goes for his benefit, it is at last but in discharge of that superior lien, to which, under this construction, such bail had a right to look when he became a party.” This decision has stood for many years, rights have grown up under it, and we should sustain it unless the clearest convictions of duty require us to break it down. We are by no means satisfied that the decision is erroneous.
Our statute provides for the entry of replevin bail, and gives a general right of subrogation. All contracts made, and all acts done, are conclusively presumed to be made and done under this law. It enters as a silent but potent factor into all affairs involving the duty and liability of replevin bail. The appellants were, therefore, bound to know, when they took their judgment, that there was a right to enter bail, and were *207bound, also, to know the legal effect of the undertaking of bail, and the character of the rights of the person becoming bail. If they, by their own act, imperiled a junior lien they can not complain because the surety avails himself of a right secured by law.
The undertaking of a replevin bail is, under the statute, a matter of record, and is in this' respect different from an ordinary contract of suretyship, where no record gives notice of its existence or character. A record notice is effective, not only as to the existence of the thing recorded, but also of its legal force and character. If a record fixes the rights of parties under the statute, then all persons acquiring an interest in the property are bound to know the effect of the contract, or deed, found in due form of law upon the public records.
In still another particular the case differs from one of ordinary suretyship. The law provides that a mortgage lien is not discharged by a personal judgment for the debt secured by the mortgage. Hensicker v. Lamborn, 13 Ind. 468; O’Leary v. Snediker, 16 Ind. 404. Here, then, was a mortgage securing the debt for which the bail became responsible, and this lien was neither merged nor interrupted by the personal judgment. A judgment neither merges nor impairs the mortgage lien. Manns v. Brookville National Bank, 73 Ind. 243; Evansville, etc., Co. v. State, ex rel., 73 Ind. 219 (38 Am. R. 129); Teal v. Hinchman, 69 Ind. 379; Lapping v. Duffy, 47 Ind. 51; Helmbold v. Man, 4 Whart. (Pa.) 410; Stahl v. Roost, 34 Iowa, 475; Riley v. McCord, 21 Mo. 285; Priest v. Wheeloch, 58 Ill. 114. The lien, therefore, enured to the benefit of the replevin bail, neither interrupted nor postponed by any act for which he was responsible. These considerations plainly distinguish the case from that of an ordinary surety.
The case of Fishback v. Bodman, 14 Bush, 117, decides that a judgment for purchase-money merges the equitable vendor’s lien, and, therefore, the bail can not invoke the benefit of the lien. It is obvions that this principle can not rule here, for the plain reason that the judgment did not *208merge the mortgage lien, but left it in undiminished vigor. In Patterson v. Pope, 5 Dana, 241, the person who asserted •a right of subrogation was a surety on an injunction bond, ■and his position was not like that of a replevin bail under our statute, so that even conceding that the decision is sound, it does not applyto this case. But its soundness may well be doubted, for a carefully considered case asserts a doctrine ■directly opposite to that which it lays down. Rodgers v. McCluer, 4 Gratt. 81. The decision, in Armstrong’s Appeal, 5 W. & S. 252, is that a surety on a judgment, who hinders its enforcement by his undertaking, can not assert the judgment lien against subsequent judgment creditors, but this can not be good law where a statute, like ours, gives a right of ■subrogation and keeps the judgment alive for the benefit of the bail. The general doctrine of the case cited is opposed by Watts v. Kinney, 3 Leigh, 272, so that here, again, there is conflict. Strongly in point, in favor of our holding in the former opinion, is the case of Drew v. Lockett, 32 Beavan, 499, where it was said: “ I am of opinion that a surety who pays off the debt for which he became surety must be entitled to all the equities which the creditor, whose debts he paid off, could have enforced, not merely against the principal debtor, but as against all persons claiming under him.” In Nunemacher v. Ingle, 20 Ind. 135, it was held that a replevin bail for a debt secured by mortgage was not released by an order directing a return of execution, and the decision was placed upon the ground that the bail was secured by the mortgage lien, of which the court said: “ The mortgage was a lien having its due priority.” If it be true that the postponement did not release the bail because of the existence of the mortgage lien, then it must also be true that he succeeds to the.lien in all its force and vigor. This well comports with the well known rule that a creditor who destroys •or impairs a lien securing a debt, releases the surety to the ■extent of the value of such lien. The doctrine of some of the cases cited can not possibly be reconciled with this gen*209eral rule. In holding as we do, that the replevin bail was subrogated as against the junior mortgage acquired by the creditor, we are sustained by our own cases and by the general rule recognized by the courts and text-writers. Gerber v. Sharp, 72 Ind. 553, and authorities cited. Kane v. State, ex rel., 78 Ind. 103.
The record gave notice of the character of the undertaking of the replevin bail and of the mortgage which secured the debt evidenced by the judgment, and the purchaser at the sale on the junior mortgage was bound to take notice of the facts disclosed by the record. Having this notice he can not be permitted to assert, to the injury of the bail, that his purchase gave him a paramount title. He bought with the notice imparted by the record, and can not displace prior rights.
The mortgaged property could not have been sold on execution. Although a mortgagee may obtain a personal judgment without foreclosing his mortgage, he can not selj the mortgagor’s equity of redemption. R. S. 1881, section 1105. The bail could not, therefore, have compelled resort to the mortgaged property; he was bound to pay the judgment, and when he did this he acquired a right to the lien as it existed when he became replevin bail.
In Jones v. Tincher, 15 Ind. 308, it was held that a surety could not compel a creditor to resort to mortgaged property, but that the surety’s course was to pay the debt, and that he would, thereupon, as the court said, “ be subrogated to the plaintiff’s rights under the mortgage.” The appellants having, by their own conduct, made it legally impossible to seize the mortgaged property on the judgment, are not in a situation to insist that the replevin bail is confined solely to the judgment lien.
The right of a surety to subrogation is not dependent upon the question of the solvency or insolvency of the debtor. When he pays all of a debt secured by a lien, he is entitled to be subrogated to the rights of the creditor, irrespective of *210the financial condition of the debtor. Sureties are favored in law and in equity, and they are not bound to forego the benefit of a specific lien on real property and assume the hazard of collecting the money they have been compelled to pay by ordinary legal process. No such risk is put upon them.
Filed April 26, 1884.
The contention of counsel that the surety must show the insolvency of the principal debtor is proved to be without merit when it is brought to mind that the law requires the creditor to first exhaust the property of the principal debtor before forcing payment from the surety. Edwards v. Haverstick, 53 Ind. 348; Elson v. O’Dowd, 40 Ind. 300. If the appellants desired to prevent the lien from fastening on the mortgaged property, they should have levied their judgment upon other property of the principal debtor, instead of forcing the replevin bail to pay the judgment. It was for them, if there was other property of the principal debtor, to seize it in satisfaction of their debt, before falling on the surety, and there is, therefore, no equity in their claim that the surety, who has paid the debt, should cast about for property. They are in the position of demanding that another should do that which they themselves should have done. Petition overruled.