No. 3609 | Colo. | Jan 15, 1898
delivered the opinion of the court.
November 16,1892, John M. Berkey & Company executed and delivered their note, payable in sixty days, with John C. Montgomery and Donald Fletcher as guarantors thereon, to appellant Poole. By deed of even date, the makers of this note conveyed to the guarantors a three-fourths interest in certain real estate which, it is claimed by appellant, was to secure the payment of the above note, while, on behalf of appellee Perkins, it is contended this conveyance was only to indemnify the guarantors. This conveyance was subject to an incumbrance on the entire property, in the sum of §4,000, and the deed so recited, except that it specified the amount thereof in the sum of §8,000, which was the prorate snare on the interest conveyed. The deed did not show upon its face that it was given as security for any purpose. March 4, 1893, Berkey & Company and one E. C. Gilman entered into an agreement, by the terms of which it was, in effect, provided that the latter should purchase the note secured by the incumbrance mentioned in the above deed; cause the deed of trust securing such note to be foreclosed, and if the property at the foreclosure sale did not sell for a sum in excess of a specified amount, one Holland should become the purchaser, as trustee for the parties to this agreement, and out of the proceeds of a sale thereof, Gilman was to be paid a sum sufficient to discharge the note by him so purchased, and the remainder paid to the heirs of Brown, deceased, who were the owners of the other one-fourth interest in the property, or, in case such sale was not made, a loan upon the property was to be effected by Berkey & Company, Gilman paid, from the proceeds thereof, a part of the amount represented by such note; the property conveyed by Holland to Berkey & Company and by them a one-fourth interest conveyed to Gilman, subject to this new incumbrance. At the foreclosure sale, Holland was not to be required to pay any money to either of the parties to the agreement or the heirs of Brown, deceased, but that they and
September 4, 1894, appellant commenced his action to foreclose the deed given by Berkey & Company to Montgomery and Fletcher, averring in his complaint that it was given as security for the payment of the Berkey & Company note. To this action Lowe, Ferguson and Perkins, and, also, Montgomery and Fletcher, were made parties defendant, it being alleged that the interest of the three first named was acquired with notice that the deed sought to be foreclosed as a mortgage was, in fact, given to secure the' payment of this note. For answer the defendants Ferguson and Perkins, first, put in issue these allegations of the complaint; second, alleged that on the date the loan was made by Perkins the title to the property, as shown by the records, was vested in Lowe, free of incumbrance, and having no knowledge regarding the status of the title except as it appeared of record, he loaned the sum of $6,000, taking as security therefor a deed of trust from Lowe; third, averred the giving of the deed of trust named in the deed from
By replication the affirmative averments of the several defenses were put in issue. On the trial of these issues, the court found that the Berkey & Company deed was executed and delivered to Montgomery and Fletcher as security for their guaranty of the former’s nóte; rendered judgment against the parties thereto for the amount due thereon; subrogated appellant to the rights of the grantees in the deed; decreed a foreclosure thereof, and adjudged the lien of appellant junior to that of the deed of trust executed by Lowe. The correctness of this finding is challenged by counsel for appellant, and the decree of the court, adjudging the lien of appellant junior to that of appellee Perkins, is assigned as error.
The only question to determine is, what is the relative rank of these liens ? The court made, so far as disclosed by the record, but the one special finding above noted. This finding was clearly warranted by the evidence, and if it could be successfully urged that it was not sufficient upon which to base the judgment, in so far as it fixed the relative rank of the respective liens, the evidence in the record warrants the presumption that the trial court, in reaching its conclusion, respecting these liens, further found that Per
Counsel for appellant urges in argument that the foreclosure sale under the deed of trust mentioned in the deed, through which appellant claims his rights, was not in good faith; that this sale, by reason of the agreement between Berkey & Company and Gilman, resulted .in a cancellation of the lien of this deed of trust, and vested the title to the property in Holland as the trustee of Berkey & Company, free and clear of this lien ; and that the sale was void, because there was no consideration therefor. There is nothing in the record from which it can be inferred that any of the parties to this agreement were acting in bad faith, or thereby intended to perpetrate a fraud. Except for this agreement, the purchaser at the foreclosure sale would have taken title
The one special finding of the trial court above noticed, in connection with the facts as shown by the record, that this action was not commenced until after the deed of trust securing the Perkins loan was executed, delivered and recorded, and after the conveyance by Montgomery and Fletcher to the party executing this instrument, was sufficient for the trial court to base its judgment upon respecting these liens.
When a debtor has given security to his surety for the indemnity of the latter only, the creditor is entitled to the benefit of the same, and may, by proceedings commenced in equity, before the surety has, in good faith, surrendered or discharged such security, subject it to the payment of his debt, Rankin et al. v. Wilsey et al., 17 Iowa, 463" court="Iowa" date_filed="1864-12-08" href="https://app.midpage.ai/document/rankin-v-wilsey-7093127?utm_source=webapp" opinion_id="7093127">17 Iowa, 463; Jones v. Quinnipiac Bank, 29 Conn. 25" court="Conn." date_filed="1860-02-15" href="https://app.midpage.ai/document/jones-v-quinnipiack-bank-6577735?utm_source=webapp" opinion_id="6577735">29 Conn. 25. In such case the right of the creditor is derived through and not independent of, the surety, and the creditor seeking to enforce his claim against the surety, is in equity entitled to subject to the payment of his debt security then subsisting for the personal indemnity of the surety to the same extent the latter would had he discharged the debt. There is no element of trust in a security of this character in favor of the creditor until he takes steps, by an appropriate action, to subject it to the payment of his claim; such a security is not, by its own vigor, devoted or appropriated to the payment of the debt, but only to the indemnity of the surety in the event he should sustain loss by reason of his guaranty of the principal debt; and as courts enforce contracts, or give redress for violation of them, as made by the parties, and cannot by construction, enlarge them beyond their fair intent and meaning, it follows that in subrogating the creditor to the surety’s place as to any security given him, the rights of the former, in such security, will be limited to that existing in favor of the surety at
The decree of the district court, adjudging the lien of appellant junior to that of appellee Perkins, was right, and the judgment is, therefore, affirmed.
Affirmed.