135 S.E. 19 | W. Va. | 1926
This proceeding was brought in the circuit court of Marshall County primarily to enforce a mechanic's lien against the property of defendant Fitzpatrick. There were several liens on that property, and this appeal involves the right of priority between the claim of defendants Conner and Kemple and that of defendant Buckeye Savings and Loan Company.
Fitzpatrick and wife executed four deeds of trust on his property in Marshall county. The first encumbrance was given to secure to the Real Estate and Improvement Company the payment of $1,875.00. It was dated July 29, 1919 and was recorded Aug. 22, 1919. The second was executed to secure the Scott Lumber Company in the payment of $771.35. It was dated April 26, 1920, and was recorded May 17, 1920. The third was executed to secure to Conner and Kemple the payment of $646.46. It was dated July 30, 1920 and was recorded Aug. 7, 1920. The fourth was given to secure to the *226 Loan Company the payment of $2800.00. It was dated Oct. 8, 1920 and was recorded Oct. 20, 1920.
The evidence regarding this last trust deed establishes that Fitzpatrick represented to the Loan Company that the liens of the Improvement Co. and the Lumber Co., respectively, were the only encumbrances on his property, and that the $2800.00 was advanced for the purpose of extinguishing the first two liens, and upon the representation by Fitzpatrick and the understanding of the Loan Co. that a trust deed to be given it by Fitzpatrick would become the first lien against his property. The Loan Co. made no investigation of Fitzpatrick's title, but relied on his statements, as well as like statements made by a representative of the Lumber Co. The Loan Co. paid to the Improvement Co. $1771.52, in full of its claim, and to the Lumber Co. $856.50, in satisfaction of its claim, and turned over the balance of the loan of $2800.00, to-wit, $171.98, to Fitzpatrick. The Improvement Co. executed a release of its deed of trust. The Lumber Co. executed no release, but turned over to the Loan Co. the note held against Fitzpatrick. No assignment of the claim of either the Improvement Co. or the Lumber Co. was taken by the Loan Co.
The Loan Co. claims the right in this suit to be subrogated to the priorities of the liens of the Improvement Co. and the Lumber Co., respectively, which it paid. The lower court denied this demand, and gave priority to the claims of Conner and Kemple.
Counsel for Conner and Kemple assume the position that the payments made by the Loan Co. for Fitzpatrick were voluntary and that subrogation is not applied in favor of a mere volunteer, but only where one has been compelled to pay money to protect his own rights. McNeel v. Miller,
"A person paying a debt or advancing money for the purpose, at the instance, solicitation or request of the debtor cannot be regarded as a volunteer, stranger or intermeddler, within the meaning of the foregoing rules". Note b of Freeman's Annotation on The Right To Subrogation, 99 Am. St. 495. "The doctrine (i. e., subrogation), is also justly extended, by analogy, to one who, having no previous interest, and being under no obligation pays off the mortgage, or advances money for its payment, at the instance of a debtor party and for his benefit; such a person is in no true sense a mere stranger and volunteer". Pomeroy's Eq. Juris. (4th Ed.) par. 1212, p. 2904. (See host of decisions cited under note d.)
Counsel also relies strongly on the principles announced inHoffman v. Ryan,
In the present case the Loan Co. was ignorant of the intervening claim, it had no information thereof which would have put it on guard, and it acted with eyes closed to the rights of Conner and Kemple. Its ignorance was not due to negligence, but solely to the misleading statements of Fitzpatrick and the agent of the Lumber Co. No reason appears why the *228 Loan Co. should not have relied on these representations. Therefore no blame can be charged to it.
Counsel also quotes from Sheldon On Subrogation certain rules purporting to limit and restrict the equities of a third party who has paid a lien debt. The deductions of Mr. Sheldon were doubtless warranted from the decisions before him at the time he wrote. But the law of subrogation has been steadily expanding since the preparation of his book. A review of the present authorities impels more liberality than that expressed by Mr. Sheldon. "Equitable remedies * * * are distinguished by their flexibility, their unlimited variety, their adaptability to circumstances and the natural rules which govern their use. * * * The court of equity has the power of devising its remedy and shaping it so as to fit the changing circumstances of every case and the complex relations of all the parties." Pom. Eq. Juris. par. 109. In no branch of equity jurisprudence does this statement of Pomeroy find more complete confirmation than in Subrogation. "Since the doctrine of subrogation was ingrafted on English jurisprudence, it has been steadily expanding and growing in importance and extent in its application to various subjects and classes of persons. The original limitation of the rights to transactions between principles and sureties no longer exists, and the doctrine as now applied is broad enough to include every instance in which one person, not acting voluntarily, pays a debt for which another is primarily liable, and which in equity and good conscience should have been discharged by the latter". 25 Rawle C. L. p. 1322-3. The authority last cited, in effect, challenges Mr. Sheldon's attempt to circumscribe the right of subrogation. It states that no general rule can be formulated which will afford a test of all cases, but that the right of subrogation must depend "upon the facts and circumstances of each particular case".
The facts and circumstances in this case are without complication. Appellant paid Fitzpatrick's debts, believing that its lien immediately succeeded that of the payees. Now, Conner and Kemple would step to a more secure position upon the footing prepared by the Loan Co. They would profit not *229 by their merit, but by the Loan Co.'s mistake. Their advances had been made to Fitzpatrick before the Loan Co. became his creditor. Fitzpatrick did not increase the security of Conner and Kemple by involving the Loan Co. in this affair. He simply transferred to the Loan Co. the several debts he owed the Improvement Co. and the Lumber Co. The risk of Conner and Kemple was in no wise heightened because his obligations were thus transferred. Therefore no injustice to them would follow the restoration of the original liens. They would merely occupy the same position they primarily acquired.
In discussing the right of subrogation in Atkinson v. Plum,supra, Judge BRANNON said: "Intention is the pole star in the matter. It is a matter of contract". In this case the intention of the Loan Co., and the contract with Fitzpatrick, were that it should have first lien on the property.
Upon the payment of the prior claimants the Loan Co. had the right to demand of the lienors assignments of their securities. The liens, in fact, no longer belonged to the payees. They but held them for the protection of the Loan Co. The release by the Improvement Co. — not shown to be at the request of the Loan Co., was unwarranted and invalid. Bank v. Coal Co.,
The judgment of the lower court will therefore be reversed in so far as it gives priority to Conner and Kemple over so much of the claim of the appellant as is represented by its several payments to the Improvement Co. and the Lumber Co. The cause is remanded.
Reversed and remanded.