Court Opinion

ID: 7855813
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:43:59.195579+00
Date Added: 2024-06-11T16:29:47.126010
License: Public Domain

Lavery, J.,
dissenting. I respectfully dissent from part I of the majority’s opinion because the record is adequate for our review and the facts require equitable subrogation.
I
The majority reviews the trial court’s memorandum of decision and, not finding the words “equitable subrogation,” concludes (1) that the trial court failed to comply with Practice Book § 4059, (2) that Chemical Bank (defendant) failed to comply with Practice Book § 4061, and (3) that we cannot review the defendant’s claim for equitable subrogation for lack of an adequate record. The majority correctly points out that § 4059 requires that the trial court give its conclusions on each issue raised by the parties. That section does not, however, require the trial court to recite, in talismanic fashion, particular words and phrases.
The trial court did state its conclusions on the equitable subrogation claim. In its memorandum of deci*692sion, the court reviewed the stipulated facts and then addressed the defendant’s claims. First, the court resolved the dispute over the validity of the Cottieros’ mortgage. The defendant had claimed that the mortgage was invalid as not supported by sufficient consideration. The trial court found that valuable consideration had been exchanged and that the two month period between execution of the note and the mortgage was reasonable. The trial court concluded that the Cottieros’ mortgage was valid.
After reaching that conclusion, and before considering the unjust enrichment claim and the attack on the amount of the debt, the trial court reviewed the posture and conduct of the parties. In a paragraph separate from its treatment of all of the other claims, the trial court noted that Sund had deliberately concealed his sale to Ifkovic, and the Cottieros had no notice of Sund’s sale and had acted reasonably. The court further observed that the defendant had without explanation unreasonably delayed recording their mortgage. In light of the equities among the parties, the court concluded that “[i]t would be unfair and unjust to rearrange the priorities in this case to give the bank, a later recorded mortgage, a superior right of enforcement
I believe that a reasonable and rational reading of this paragraph reveals that the trial court did address the equitable subrogation claim. Equitable subrogation rearranges the priorities of the parties in a case. See Home Owners’ Loan Corp. v. Sears, Roebuck & Co., 123 Conn. 232, 238-39, 193 A. 769 (1937); 2 J. Story, Equity Jurisprudence (14th Ed. 1918) § 707. That rearrangement is based on fairness and justice. See Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 238-39. Because the trial court believed that the Cottieros had acted reasonably and the defendants had acted *693unreasonably, the court concluded that rearranging the priorities would not be fair and just.
I respectfully submit that the context of the decision makes clear that the trial court did address the claim and that the record is adequate for our review.1
II
The facts of this case are, I believe, quintessentially suited to equitable subrogation. I agree with the facts set out in the majority opinion with the following additions. When Sund executed a note in favor of the plaintiffs, the property securing the note was subject to (1) a mortgage in the amount of $111,352.15 from Sund to the Branford Savings Bank, and (2) a judgment lien in the amount of $40,930 based on a debt that the Cottieros and Sund, in their capacities as partners, owed to Branford Savings Bank. When Sund sold the property to Ifkovic, Chemical Bank paid $152,282.15 to satisfy and release these two encumbrances. Notwithstanding Chemical Bank’s release of those encumbrances, the plaintiffs testified that they believed they were taking a mortgage subject to the prior encumbrances. Leonard Cottiero testified that he knew of the *694law suit and resulting judgment lien2 and Jacqueline Cottiero testified that she knew there was a mortgage on the property.3 When Sund defaulted on his note,4 *695the Cottieros discovered that their lien had been advanced to first priority by Chemical Bank’s payment, and foreclosed on the property.
This brief recitation of the facts reveals that the Cottieros benefited from a threefold windfall: They received the value of $152,282.15 when their mortgage was advanced from third to first place by Chemical Bank’s satisfaction of the Branford Savings Bank’s mortgage and judgment lien. When they foreclosed, the Cottieros also received $135,000 worth of property5 for which they paid only $95,000. Finally, the Cottieros were released from personal liability for the $40,930 partnership debt owed to Branford Savings Bank.6
“ ‘Subrogation is a doctrine which equity borrowed from the civil law and administers so as to secure justice without regard to form or mere technicality. . . .’ ” Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 123 Conn. 238. “Subrogation is the substitution of one person in place of another . . . so that he who is substituted succeeds to the rights of the other . . . .” 2 J. Story, supra, § 707; see also Restatement, Restitution § 162 (1937). “Equitable subrogation ... is a legal fiction entitling a person to reimbursement for discharging the debt or obligation for one who should have paid it.” Thornton v. Syracuse Savings Bank, 961 F.2d 1042, 1046-47 (2d Cir. 1992).
The aim of equitable subrogation is to prevent the unjust enrichment of another person; 1G. Palmer, The Law of Restitution (1978) § 3.6; while not causing that person to suffer inequity. Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 123 Conn. 243. Thus, *696a subrogee takes only those rights held by the subrogor. Continental Casualty Co. v. Pullman, Comley, Bradley & Reeves, 709 F. Sup. 44, 49 (D. Conn. 1989). “This doctrine is not static, but so elastic as to take within its remedy cases of first instance which fairly fall within it and secure its primary object by compelling payment of a debt by him who ought in equity and good conscience to pay it.” (Internal quotation marks omitted.) Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 238-39.
“In numerous cases it has been held that one who advances money to discharge a prior lien on real or personal property and takes a new mortgage as security is entitled to be subrogated to the rights under the prior lien against the holder of an intervening lien of which he was ignorant.” Id., 237. Faced with those facts, our Supreme Court did employ equitable subrogation in Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 248. Equitable subrogation has often been used to disgorge unjust enrichment in cases similar to this one, where equity and good conscience so demanded.7 See 1 G. Palmer, supra, § 3.6 (a); J. Pomeroy, Equity Jurisprudence (5th Ed. 1941) § 1212, pp. 642-43.
*697I believe that, in this case, equity and good conscience demand that Chemical Bank be subrogated to the priority of the debts it discharged. Equity must be employed to best serve justice and to carry out the actual intention of the parties. Lomas & Nettleton Co. v. Isacs, 101 Conn. 614, 622, 127 A. 6 (1924). Thus, the parties’ intent is a controlling consideration. Id. In this case, the plaintiffs intended their mortgage to be subject to the existing encumbrances; the defendant intended, and paid for the right to be, superior to all encumbrances. Subrogating Chemical Bank to the debts it discharged will best achieve the parties’ intent.
Subrogation will also best serve justice. The plaintiffs’ unwarranted threefold windfall justifies subrogation. See Connecticut National Bank v. Chapman, 153 Conn. 393, 399, 216 A.2d 814 (1966) (“[t]o deny relief . . . would result in . . . unjust enrichment . . . through an unexpected and undeserved windfall”). By paying off the attachments, Chemical Bank paid off a partnership debt for which the plaintiffs were liable, gave the plaintiffs $152,282 in value by advancing their lien which the plaintiffs neither expected nor bargained for, and enabled the plaintiffs to obtain $135,000 in property.8 Since the Cottieros benefited from the satisfaction of the prior liens, they should pay for the benefit. Equity and good conscience demand that Chemical Bank receive the value of what it paid by being equitably subrogated to the priority of the liens it discharged.
Equitable relief is not barred by Chemical Bank’s tardy filing of its mortgage. Ignorance of an intervening lien when discharging a superior lien is “regarded in equity as equivalent to a mistake . . . .” Id., 398; Lomas & Nettleton Co. v. Isacs, supra, 101 Conn. *698620-21. “We have upheld the power of a court of equity to grant relief from the consequences of an innocent mistake although the mistake was not unmixed with negligence (Fountain Co. v. Stein, 97 Conn. 619, 626, 118 Atl. 47) . . . where the failure to do so would allow one to enrich himself unjustly at the expense of another.” Lomas & Nettleton Co. v. Isacs, supra, 620-21; see also Wesson, Inc. v. Hychko, 205 Conn. 51, 59, 529 A.2d 714 (1987); Home Owners’ Loan Corp. v. Sears, Roebuck & Co., supra, 123 Conn. 242; Connecticut National Bank v. Chapman, supra, 153 Conn. 398; 1 G. Palmer, supra, § 3.6, pp. 249, 256 (“[o]ne cannot justify the retention of a windfall, conferred upon him by another through mistake, because that other was careless”). Therefore, Chemical Bank’s negligent failure to record its mortgage in a timely fashion does not bar the relief of equitable subrogation.
Nor is equitable relief barred by prejudice to the plaintiffs. Chemical Bank would not be entitled to subrogation if it would prejudice or work inequity to the plaintiffs. It will not. Subrogees can only be subrogated to the rights held by the subrogor. Continental Casualty Co. v. Pullman, Comley, Bradley & Reeves, supra, 709 F. Sup. 49. Thus, Chemical Bank would be subrogated only to the amount of the prior liens that it discharged, $152,282.15. Because that will put the plaintiffs in the exact financial position that they intended to occupy, and believed they occupied, they will neither be prejudiced nor suffer inequity. Moreover, the plaintiffs would still reap the reward of the release of the partnership debt for which they were liable. Thus, they will benefit regardless of Chemical Bank’s priority.
Finally, I note that the purpose of the recording act would not be advanced if equitable subrogation was denied because Chemical Bank failed to record timely. One of the central purposes of the recording system is to preserve the priority of liens. 1 G. Palmer, supra, *699§ 3.6, p. 256. Here, the plaintiffs are not seeking to preserve the priority gained by their recording. They seek, instead, to retain the advantage of a higher priority obtained at the defendant’s expense. “Subrogation merely returns [the plaintiffs] to the position of priority which [they] protected through recording.” Id.
Because the trial court addressed the claim and because the facts before us strongly support the application of equitable subrogation, I would follow the precedent of Home Owners’ Loan Corp. and Lomas & Nettleton Co., and reverse the trial court’s judgment.
Accordingly, I respectfully dissent.

 To the extent that the trial court did not use the term “equitable subrogation,” the discussion is not as obvious as it might be. Even if the record was inadequate, however, I believe the proper resolution would be to remand for articulation. “[U]nder normal circumstances, this court will not remand a case to correct a deficiency that the appellant should have remedied.” Economy Sales & Service Co. v. Family Center Pharmacy, Inc., 33 Conn. App. 822, 825, 639 A.2d 1042 (1994). “On a case-by-case basis, however, both [appellate] courts have on occasion ordered articulation even after the case has been argued.” Id.; see also id., 825 n.5 (citing cases remanded for articulation after argument); Dime Savings Bank of Wallingford v. Cornaglia, 33 Conn. App. 549, 561, 636 A.2d 1370 (Lavery, J., dissenting), cert. granted, 229 Conn. 907, 640 A.2d 120 (1994). Failure to remand in cases such as this one, where the trial court did in fact conclude the issue of law would recast Practice Book § 4059 as the supreme shredder of viable appealable issues.

 Leonard Cottiero testified as follows:
“Q. Did you know whether or not there were any liens or encumbrances against the property at 3 Waverly Road?
“A. Yes. I assumed there was. I did not know for sure.
“Q. You knew for sure about one, didn’t you? Weren’t you and Mrs. Cottiero and Sund attached by Branford Savings Bank?
“A. Yes.
* * *
“Q. Do you recall how much the attachment was for?
“A. It says here sixty thousand.
* * *
“Q. Did you discuss the status of the title with Mr. Sund?
“A. No.
“Q. But you knew that because he told you he didn’t have enough equity to get his own mortgage, you know there was some lien against the property?
“A. Yes.
“Q. One of which you knew about because you were part of the lawsuit?
“A. Right.
“Q. Do you know what it means to have a first mortgage on the property?
“A. Yes.
“Q. Did you think you were getting a first mortgage on the property?
“A. I was not sure.
“Q. When you say you were not sure, you knew there was an attachment against the property?
“A. Yes..
“Q. So you knew that would be ahead of your lien?
“A. I did not know that for sure.”

 Jacqueline Cottiero testified as follows:
“Q. Do you know or did you know at that time whether there were any liens against that property?
“A. Which property are you talking?
“Q. Waverly Road?
“A. I thought there was one mortgage on it and that was it.”

 I note that the Cottieros’ partner, Sund, is the source of all of the parties’ present woes. By mortgaging property that he no longer owned, Sund obtained relief from a $95,000 debt he owed to his partners, relief from a $40,930 debt he owed Branford Savings Bank, relief from a $111,352 mortgage to Branford Savings, and obtained an additional $81,481.45 in cash. He filed bankruptcy and is now protected from liability by his discharge.

 At the time of the hearing, a private sale of the property for $135,000 was pending. The parties agreed to place the proceeds of the sale in escrow pending resolution of this action.

 The Cottieros were jointly liable with Sund for this debt. General Statutes § 34-53 (partners are liable jointly for all partnership debt).

 See, e.g., Wesson, Inc. v. Hychko, 205 Conn. 51, 59, 529 A.2d 714 (1987) (where vendor pays taxes on sale mistakenly believed nontaxable, equitable subrogation entitles vendor to obtain reimbursement from buyer); Connecticut National Bank v. Chapman, 153 Conn. 393, 399-400, 216 A.2d 814 (1966) (first mortgagee, who released mortgage to refinance, subrogated to priority over unknown second mortgagee); Lomas & Nettleton Co. v. Isacs, 101 Conn. 614, 625-26,127 A. 6 (1924) (first and second mortgagee, who released mortgages to refinance, subrogated to priority over unknown third mortgage); First Taxing District v. National Surety Co., 97 Conn. 639, 649, 118 A. 96 (1922) (where embezzled district funds used by estate administrator to pay creditors, district subrogated to creditor’s rights against administrator’s surety); Paton v. Robinson, 81 Conn. 547, 555, 71 A. 730 (1909) (buyer who satisfies first mortgage subrogated to that mortgage’s priority against all others when title proves defective).

 Chemical Bank’s payment was the only way the Cottieros could obtain the property: before their lien was advanced, the superior liens were far greater than the value of the property, and Sund’s bankruptcy discharge left the plaintiffs without recourse.