76 F. 673 | 8th Cir. | 1896
This is an appeal from a decree in favor of David W. Hart, the appellee, which was rendered on an intervening petition that was filed by said Hart in a pending foreclosure suit. The facts disclosed by the record are substantially these: On June 28, 1895, the Mercantile Trust Company, the appellant, filed a bill in the circuit court of the United States for the district of Colorado to foreclose a deed of trust, in the nature of a mortgage, on certain property situated in the city of Denver, Colo., which at the date of the execution of the deed of trust belonged to a corporation known as the “Colorado Mining-Stock Exchange.” The deed of trust had been executed by the last-mentioned company for the purpose of securing the payment of an issue of negotiable bonds to the amount of $250,000. On August 12, 1895, David W. Hart, the appellee, filed an intervening petition in said cause, wherein he alleged'that on October 17,1892, he was the treasurer of the county of Arapahoe, state of Colorado; that certain taxes had become due on the property covered by the aforesaid deed of trust, which it was his duty as treasurer to collect and pay over to the state of Colorado and to the proper municipalities and school corporations to which such taxes belonged, and for whose benefit they had been imposed; that on October 17, 1892, and on October 25, 1892, the Hicks & Bailey Investment Company, and the firm of Hicks & Bailey, respectively, drew checks in his favor, as treasurer of Arapahoe county, on certain banks in the city of Denver, for an amount sufficient to pay said taxes, which them amounted to the sum of $2,288.18, and delivered said checks to said treasurer in payment of said taxes; that at the tune of receiving said checks, he, as treasurer, executed receipts for said taxes and delivered the same to the drawers of said
As the case was disposed of in the circuit court on pleadings showing substantially the aforesaid facts, without the introduction of any testimony, the question presented by the appeal is whether the decree which sustained the intervener’s claim, and granted the relief prayed for, can be upheld. This question, we think, should be answered in the negative. On the state of facts disclosed by the record, and heretofore stated, the payment made by the intervener of
But, aside from the foregoing considerations, the right of subro-gation ought not to be conceded in the case at bar, because the rights of the mortgage bond holders, for the reasons fully disclosed in the answer of the trust company, would be injuriously affected. By the provisions of the mortgage, a failure on the part of the debtor to pay, when due, the taxes that were assessed against the mortgaged property, constituted a default, on account of which a suit for foreclosure might have been maintained, in which proceeding the income of the mortgaged property might have been appropriated to the satisfaction of the mortgage debt shortly after the default occurred. No such action was brought until the present suit was instituted on June 28, 1895, because the trust company and the bond holders were induced to believe, by the actiou of the intervener, that the taxes for the year 1892 had been fully paid and discharged. It now transpires that the property covered by the mortgage is inadequate to pay the mortgage debt, and that the mortgagor is insolvent. The loss of the taxes which were advanced by the intervener must fall on some one, and, in view of the circumstances under which they were paid, it is certainly more equitable that the loss should be borne by the intervener, than that it should be cast on the bond holders. It was because the intervener accepted checks in payment of the taxes, which was an act not authorized by law, that he incurred the loss in question. Under these circumstances, he has no equitable right, as against the bond holders, to be subrogated to the lien of the state or the municipalities to whom the taxes belonged. The decree of the circuit court is reversed, and the case is remanded to that court, with directions to dismiss the intervening petition, at. the cost of the intervener.