after stating the case: Eliminating immaterial matter, the record presents the following case: White sold to *562 Piland a tract of land for some $3,500. Eor the purpose of securing the payment of the purchase money, Piland exеcuted to Blount a deed in trust for the land. Thereafter, Piland executed to defendant W. S. Privott a deed in trust on the same land, also a tract belonging to his wife, to secure a note of $650 due defendant II. C. Privott. Both deeds were duly reсorded. Subsequent to their execution, Piland sold to plaintiffs a portion of the land for $1,500, which was a full and fair price therefor. Pursuant to an arrangement between White, Piland and the plaintiffs, the purchase money was paid to White on account of his note, and he executed to plaintiffs the release set out in the record. Thereafter, the defendant W. S. Privott, pursuant to the power of sale in the deed in trust executed to him, sold the portiоn of the land which had not been sold to plaintiffs for the sum of $2,100, which he applied to the payment of the balance due on White’s note. He thereupon advertised and sold the portion of said tract conveyed by Piland to plaintiffs for the sum of $650. Plaintiffs, supposing that he had the right to sell, purchased and paid the amount. The question is, To whom does the $650 belong? If, upon these facts, the court be of the opinion that the defendant W. S. Privott was empowеred to sell the land, plaintiffs cannot recover; otherwise, they are to have judgment. Defendant W. S. Privott was not a party to the arrangement between White, Piland and plaintiffs, and did not assent thereto. It is conceded that his rights сould not be prejudiced by the arrangement between Piland, White and plaintiffs. The real question is whether he could take any benefit therefrom. It is manifest that, as matters stood before Piland sold to plaintiffs, the defendant W. S. Privott’s deed in trust was of no value. The proceeds of the land sold to plaintiffs for $1,500, and the remainder, sold for $2,100, were absorbed in paying White’s note. It is equally manifest that Privott’s power of sale was not affected by the arrangement, unless the admission that the amount paid by plaintiffs *563 for tbe portion of tbe land purchased by tbem was a full and fair price therefor has the effect of preventing him from selling it under the power contained in his deed. White was entitled to hаve the proceeds of the sale to plaintiffs applied to his note. It is clear, upon the admissions in the case agreed, that defendants have suffered no* prejudice by the sale of the land to plaintiffs. They arе in the same position as if Blount, trustee, had sold the land under the power in his deed and applied the proceeds to White’s note. If defendant W. S. Privott be permitted to sell the plaintiffs’ land and apply the proceeds to TI. O. Privott’s note, a tract of land conceded to be worth $3,600 is made to pay $4,250 of Piland’s debt, and plaintiffs are required to pay $2,150 for land conceded to be worth but $1,500. If, instead of selling under the power in his deed in trust, defendant W. S. Privott had brоught suit for foreclosure, having all of the parties before the court, and the facts as set out in the record had, by appropriate pleadings, been brought to the attention of the court, what decree would have been rendered % Plaintiffs insist that, upon payment to White of the $1,500, they became subrogated to the rights of White, and that, pro tanto, they were, by substitution, the owners of the White note and entitled to the same security which he held therefor; that, as defendants admit they paid full value for the portion of the land conveyed to them, equity will not permit defendants to sell the land.
It is not very material to the determination of this appeal whether the plaintiffs’ equity be to enjoin a sale or, sale having been made, to demand the application of the proceeds to the discharge of the amount paid by them in reduction of White’s note. The equity upon which their claim is founded is defined to bе “the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt,” * * * or “that change by which another pеrson is put into the place of a creditor, so that the rights and
*564
securities of the creditor pass to the person who, by being sub-rogated to Mm, enters into bis right. It is a legal fiction, by force of which an obligation extinguished by a payment by a third person is treated as still subsisting for the benefit of this third person who is thus substituted to the rights, remedies and securities of another. The party who is subrogated is regarded as entitled to the same rights, and, indeed, as constituting one and the same рerson with the creditor whom he succeeds.” Sheldon Sub., 2; 27 Am. and Eng. Enc., 206;
Davidson v. Gregory,
Are the plaintiffs, upon the facts set out in the record, entitled to invoke this equity ? It is manifest that all parties have acted in good faith, plaintiffs paying full value for' the land and applying the purchase money to the first lien. If they had taken an assignment of AVhite’s debt pro tanto they would have “stood in his shoes” in respect to the security which he held. The rights of thе defendants would not have been disturbed. Nothing was taken from them, nor was their security reduced in value.
It would be a manifest hardship to compel the plaintiffs to pay a second time for the land.
Smith, G. J.,
thus disposes of a somewhat аnalogous case: “The plaintiff occupies the place of the trustee, so far as the mortgagor is concerned, and he has paid the money into the trust fund in the hands of the mortgagees, which, if the purchase werе upheld, would go in diminution of the indebtedness, and, if not, must be restored to the plaintiff, and this would be a self-adjustment
pro tanto,
should the plaintiff again become the purchaser.”
Gibson v. Barbour,
The learned counsel for plaintiffs further insists that, independent of the equity for subrogation, when defendant W. S. Privott first sold under his power, the proceeds should have been aрplied to the debt secured by his deed; that the sale was subject to the deed to Blount, or, in other words, he sold what he had — the equity of redemption. , We concur in this view, as a general rule.
Bobbitt v. Stanton,
We have considered tbe case upon tbe facts agreed and tbe form in which they are submitted to us. We think that, independent of this agreement, tbe admission that tbe plaintiffs were ignorant colored men, not knowing their rights, and being advised by tbe defendant W. S. Privott, who was honestly mistaken, entitles them to relief. Equity disregards mere forms and looks at tbe substance of things.
Tbe judgment must be
Affirmed.