Court Opinion

ID: 6546579
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:20:02.782017+00
Date Added: 2024-06-11T15:55:59.053162
License: Public Domain

McCulloch, J., (after stating the facts). 1. The chancellor was right in refusing to allow the bill of review to be filed or to decree a cancellation of the sale to appellees, Elder, Ford and Simons. No grounds were shown for such relief. The only irregularity shown in the sale was a mistake in the commissioner’s advertisement of sale wherein the date was given as June i, 1093, instead of 1903. This was a trivial irregularity in the notice, and no one could have been misled by the mistake. It was cured by the confirmation of the court. No proof was adduced tending to show collusion between the purchasers at the sale to stifle competition. The suit was commenced by Lane and wife before the alienation of the property by Curtis (except his mortgage to Pixley, which will be hereafter discussed in this opinion), and subsequent purchasers from him were charged with the notice of the pendency of the suit. 2. Is the appellant Neff entitled to subrogation to the lien of the Curtis mortgage ? This mortgag'e was executed prior to the commencement of the Lane suit against Curtis, and neither the mortgagee, Pixley, nor the assignee thereof, was chargeable with notice of the pendency of that suit. The mortgage being good as to Pixley, his assignees are protected, even though the suit was pending at the time of the several transfers of the ■debt and mortgage. The alleged vendor’s lien of Lane and wife which was not expressed in the face of their deed, if it can be held that they had lien at all, even against the grantor Curtis, was not available against subsequent purchasers without actual notice. Scott v. Orbison, 21 Ark. 202; Holman v. Patterson, 29 Ark. 357. The evidence shows that appellant purchased this property from Robinson, and paid the price of $2,000 for it without any notice of the pendency of the Lane suit, or of the assertion by the Lanes of any lien on the land. It was agreed between appellant and Robinson that the Curtis mortgage should be satisfied out of the purchase price paid by appellant. This was done, and the mortgage and note were delivered to appellant. The mortgage was then a valid and subsisting lien in the bank, which held it as collateral security by assignment either from Simons or Robinson, and appellant’s money was used in discharging the lien. He is, we think, entitled to be subrogated to the mortgage lien. 2 Story, Eq. Jur. § 1237; Sheldon on Subrogation, § 30; Chaffe v. Oliver, 39 Ark. 531; Goldsmith v. Stewart, 45 Ark. 149; Neel v. Carson, 47 Ark. 421; Meher v. Cole, 50 Ark. 361; Wyman v. Johnson, 68 Ark. 369; Union Mort. B. & T. Co. v. Peters, 72 Miss. 1058, 30 L. R. A. 829. One of ■ the earliest applications of the principle in this country was made by Judge Story in the case of Bright v. Boyd, i Story, 478, and the language of that learned judge is peculiarly applicable here. "There is,” he said, “still another broad principle of the Roman law which is applicable to the present case. It is that where a bona fide possessor or purchaser of real estate pays money to discharge any existing incumbrance or charge upon the estate, having no notice of any infirmity in his title, he is entitled to be repaid the amount of such payment by the true owner seeking to recover the estate from him.” Applications of this doctrine bearing close analogy to the facts of the present case are found in Chaffe v. Oliver, 39 Ark. 531, and Wyman v. Johnson, 68 Ark. 369, where lenders of money on defective mortgages for the purpose of discharging prior valid mortgages upon the property, for which purpose the money was used, were held to be entitled to subrogation to the right of the prior mortgagees. In one of those cases the last mortgage was defective by reason of an informal certificate to the wife’s acknowledgment, and in the other case the mortgagors had no title to the premises nor authority to execute the mortgage. The doctrine of merger of the mortgage Hen with the legal title when they are united in the same person has no application in a case of this kind when the principles of equity demand that they be treated as. separate. Cohn v. Hoffman, 45 Ark. 376; Bemis v. First National Bank, 63 Ark. 625; Smith v. Roberts, 91 N. Y. 475. “It is a general rule that the mortgagee’s acquisition of the equity of redemption does not merge his legal estate as mortgagee, so as to prevent his setting up his mortgage to defeat an intermediate title, unless such appears to have been the intention of the parties and justice requires it; and such intention will not be presumed where the mortgagee’s interest requires that the mortgage should remain in force.” 1 Jones on Mort. § 870. Learned counsel for the appellees contend that there is no evidence in the record of the existence of the mortgage or the terms thereof, but in this they are mistakenj A copy of the mortgage was exhibited with the complaint and referred to therein. The decree does not recite that it was read in evidence, but as it was exhibited with the complaint the chancellor is presumed to have considered it with the complaint. While written instruments exhibited with the complaint in cases at law are not presumed to have been introduced in evidence, a different rule prevails in equity cases where the whole record is before the chancellor. The plaintiff testified concerning the existence of the mortgage, and in his deposition referred to the copy exhibited with his complaint. Witness Robinson, whose deposition was introduced by the defendants, also testified concerning the mortgage, and stated that he indorsed satisfaction thereon and delivered it to the plaintiff. This method of proving the existence of the mortgage was not proper, but no objection was raised to it at the time, and it is too late now to question the competency of the evidence. Counsel also contend that-plaintiff is not entitled to subrogation because satisfaction of the mortgage was indorsed on the record before the purchase by the defendant at the commissioner’s sale. The defendants had notice of the facts concerning the purchase by plaintiff, and cannot claim innocence of knowledge concerning the plaintiff’s rights. The plaintiff testified that at the time of his purchase he talked to Simons, one of the defendants, concerning it, and that the latter knew of the existence of the morgage, and claimed to be the holder of it. He must have known that plaintiff’s money, paid to Robinson, was used in discharging the mortgage debt. The knowledge of Simon is chargeable to his co-purchasers. It is unnecessary to say whether, ordinarily, the notice to one tenant in common is notice to all; but when persons are jointly pursuing the common purpose of acquiring title to land by purchase as tenants in common, notice to one concerning the condition of the title is notice to all. Steele v. Robertson, 75 Ark. 228. 3. The only question remaining to be determined is whether or not appellant’s rights are barred by the statute of limitation, which is pleaded by the defendants. .The note secured by the mortgage fell due on October 13, 1899, and the amended complaint praying for subrogation under the mortgage was filed on April 5, 1905, more than five years thereafter. The statute provides that “in suits to foreclose or enforce mortgages or deeds of trust it shall be sufficient defense that they have not been brought within the period of limitation prescribed by law for a suit on the debt or liability for the security, of which they were given.” Kirby’s Digest, § 5399. This statute does not apply to a suit of this kind brought to, enforce the right of subrogation under the mortgage, when the mortgage debt was not barred at the time the payment which is the basis of the claim of subrogation was made. Under such circumstances the person entitled to subrogation may bring his action within a reasonable time after notice of the defect in his title. The situation of one entitled, under those circumstances, to subrogation may be likened to that of one who has suffered a wrong by fraud, the enforcement of whose rights would, but for the fraud, have been barred by limitation. Under such circumstances the enforcement of the right must be brought within a reasonable time after the discovery of the fraud. The decree is reversed, and the cause remanded with directions to enter a decree in favor of the plaintiff declaring a lien on the lots in controversy for the' amount paid in discharge of the mortgage executed by Curtis and wife to Pixley.