123 P. 925 | Wyo. | 1912
This action was brought in the District Court by the plaintiff in error to quiet her title to certain real estate. She alleged that she was in possession of the property and the ovyner thereof in fee simple. The answer of each defendant alleged the execution and delivery of two mortgages by the plaintiff in error and her husband, the first on May 6, 1904, and the second on July 12, 1906, the foreclosure of the first mortgage, which was given for the purchase-money of the land; the redemption from the sale upon that foreclosure with money advanced for that purpose by the defendant, J. D. Powers, the holder of the second mortgage; the foreclosure of said second mortgage; and the purchase of the property at the foreclosure sale by the defendant, John W. Pense, and the issuance to him of a certificate showing such sale and purchase.
The case is here upon the pleadings, the findings of fact, conclusions of law, and the judgment, the evidence not being brought into the record. The facts as found by the trial court are substantially as follows: On May 6, 1904, the property was purchased by Alex Powers, the husband of the plaintiff, for the sum of $1,250. He paid at that time $200 in cash, and executed and delivered to the grantors a mortgage upon the property, in which the plaintiff joined, to secure the payment of the balance of the purchase price. That mortgage was a purchase-money mortgage, and the court so found. The property became the homestead of Alex Powers and his wife, the plaintiff, from
On July 12, 1906, Alex Powers and his wife, the plaintiff herein, borrowed from said J. D! Powers the sum of $1,650, and signed, executed and delivered to the Bank of Commerce of Sheridan, Wyoming, for the use and benefit of said J. D. Powers, a note and a mortgage upon the property aforesaid for that amount. The court found that said money was borrowed and the mortgage executed for the purpose of redeeming said premises from the foreclosure sale above mentioned, and that the money “was received by’ said Alex Powers and by him used to redeem said premises and by him paid to said Lizzie Holstein and James W.’ Kirkpatrick.” This mortgage was duly recorded, and thereafter together with the note duly assigned to J. D. Powers,' and the assignment was duly recorded. A default occurred' in the payment of the amount so borrowed and secured, and the mortgage was foreclosed by advertisement and sale in the manner prescribed by law, the sale occurring November' 1, 1909, and at said sale the defendant, John W. Pense, purchased the property for $2,460, and a certificate of sale was issued to him as required by law. There was no clause
Upon these facts, the court found as conclusions of law, First: That the mortgage of May 6, 1904, was paramount to the homestead rights of Alex Powers and Lillie Powers, the same being a purchase-money mortgage. Second: That the mortgage of July 12, 1906, was paramount to said homestead rights, and that the premises were not exempt from sale under such mortgage. Third: That said last mentioned mortgage was an obligation contracted for the purchase of said premises, and was valid notwithstanding defective execution, and that the defendant Pense is entitled to a deed for the premises therein described. Judgment was thereupon rendered in favor of the defendants, and the title was quieted in the defendant, John W. Pense. The findings of fact were not excepted to, but exception was taken to each conclusion of law, and it is here contended that such conclusions and the judgment are contrary to law and not sustained by the findings of fact. It is argued in support of this contention that the absence of a clause in the mortgage of July 12, 1906, expressly waiving or releasing the homestead right of Alex Powers rendered it invalid or insufficient as a release of the homestead, that such right was therefore retained unincumbered, and that by the provision in the divorce decree above mentioned the plaintiff has succeeded to all the right and title of her former husband, and is the owner of the property free from any lien or claim of the defendants.
The Constitution of this state declares that a homestead as provided by law shall not be alienated without the joint consent of husband and wife, when that relation exists. (Art. XIX, Sub-title “Homesteads,” section 1.) It is provided by statute that the owner of a homestead may voluntarily sell, mortgage or otherwise dispose of or incumber the same, but that every such sale, mortgage, disposal or
At the time thé mortgage in question was executed a homestead was provided for by law as follows: “Every householder in the State of Wyoming, being the head of a family, shall be entitled to a homestead, not exceeding in
It then appears that when the mortgage of July 12, 1906, was "executed and delivered, the property had been regularly sold upon a foreclosure sale under a valid mortgage given for purchase money, and that the mortgagors were allowed
We do not understand these principles to be disputed by counsel, but it is contended that they are inapplicable to the facts in the case at bar, for the reason that, the purchase-money mortgage had been discharged by the foreclosure sale, and the debt secured thereby extinguished by the payment of the proceeds to the mortgagee. ’ The argument does not hold good where the former mortgage is paid by the use of the borrowed money, as held in Carr v. Caldwell, supra, for it was argued in that case that the payment and release of the original mortgage discharged the debt and lien. In that tase a decree of foreclosure had been obtained upon a' mortgage given for the purchase price, and the premises had been advertised for sale under the decree. On the day set for the sale the mortgagor borrowed money of another to be applied in payment of the decree and mortgage, and executed to him a mortgage upon the property. The money was so applied. The court said: “It cannot be doubted that if the note and mortgage of Gordon had been renewed, the homestead would have continued bound. Can it make any difference in equity whether the first debt be renewed or another debt — if it be another — for the same sum created, to raise money to pay off the first? A clear title to the homestead could not vest until the payment of the purchase-money. In equity and in effect,' the advance of the money by Carr under the circumstances, to pay off the purchase-money due, was equivalent to so much purchase-money. The debt was, to all intents and purposes, the same, though the creditor was changed.' The authorities cited by' re-'
In the case at bar, it is true, the sale upon the foreclosure had occurred, and the money was borrowed and used to redeem from the sale. It is true also that, as a personal obligation of the mortgagors, the debt had been extinguished. It is proper, therefore, to consider the effect of the sale upon the rights of the parties, and the relation of the purchasers to the mortgage foreclosed, the lien thereof, and the land. , It cannot be denied that the purchasers at the .sale acquired all the lien of the mortgage, or that such lien was superior to the homestead right. The purchasers had at least a lien equal to that of the mortgage, the foreclosure proceedings and sale being regular; and if the sale was irregular or invalid for any reason, they would be entitled fi> be subrogated to the rights of the mortgagee, and the mortgage would be regarded as assigned to them. (1 Jones on Mort., 6th Ed., sec. 74; 2 Id. secs. 1634, 1661, 1897, 1802; Cavanaugh v. Sanderson, 152 Mich. 11, 115 N. W. 955.) But they had something more than a mere lien, for the only right of the mortgagors was the statutory right of redemption. Mr. Freeman says that the right of the purchaser at an execution sale during the period of redemption seems more like an inchoate title, though it is also a lien. (3 Freeman on Executions, sec. 323.) The question has been considered in Minnesota with relation to the right of a purchaser under the foreclosure of a junior mortgage to redeem from a sale under a prior mortgage. And it was said: “The title of the mortgagor does not pass by the foreclosure till his right of redemption expires. * * * The foreclosure attaches this condition to his title; that it will pass at the end of a year from the sale unless he, his heirs, executors, administrators or assigns redeem. * * * The lien of the mortgage is not extinguished until it merges in the legal estate, when
If it may be rightly said that the mortgage debt was extinguished by the sale and before the estate of the mortgagors could pass to the purchasers by a deed, that would be true only in the sense that it had ceased to be the personal obligation of the mortgagors. It remained for the purpose of supporting the lien of the purchasers, though a personal judgment could not have been recovered upon it, and, after the sale, to the extent of the amount paid by the purchasers upon the sale, it was a conditional obligation attached to the right of redemption, for the property could not be redeemed from the sale except by the payment of that amount. While no duty to redeem rested upon the mortgagors, they were entitled to do so, but only upon the payment of the amount requited by law in such case; and the mortgage debt determined the character and dignity of the lien acquired by the purchasers. Where one had purchased land subject to a mortgage, and afterwards took an assignment of the mortgage, and the widow of the former owner who had given the mortgage claimed dower it was said: “The debt, even if discharged so that an action could not be sustained against the original promiser, still subsists in the nature of a charge or lien upon the land, and upholds the mortgage title as against any one who ought not in justice take the land from the mortgagee without paying the money.” Speaking of the situation of the owner respecting the title, immediately preceding the remarks just quoted, the court said: “It is true, he holds all the title that Adams had, and all the title that Parrott (the mortgagee) had, and the two titles', therefore, unite in him. Now by this, prima facie, the mortgage debt is extinguished. But that is not considered as done without regarding the equities of the parties.” And so it was held that the widow was entitled to dower
Unquestionably, therefore, the purchasers under the foreclosure sale had a lien upon the property including the homestead right, — a lien which, through the failure to redeem within the period allowed therefor, would ripen into an absolute title. It was the lien of the mortgage, as much so as if the mortgage had been assigned to the purchasers; and necessarily was a lien for purchase-money created by the mortgage. For the purpose of discharging that lien the money was borrowed from the defendant Powers, and the mortgage in question was executed and delivered to him; and it is contended that by this transaction a homestead right was acquired in the property, though it had not been paid for except with money borrowed upon the security of this mortgage. It was well said by the Supreme Court of Wisconsin: “Exemption and homestead laws are liberally construed to effect their beneficent purpose, but they will not be construed so as to accomplish positive frauds, if such a result can be avoided.” (Lashua v. Myhre, 117 Wis. 18, 93 N. W. 811.) We are not called upon in this case to determine what the effect of the transaction, or the rights of the parties, would have been, if the money had been loaned solely upon the personal obligation of Alex Powers and his wife, without any agreement or understanding for a lien upon the premises as security therefor; and, therefore the question to be decided does not wholly depend upon the technical meaning of the term “purchase-money,” or the words of the Constitution, “obligations contracted for the purchase of said premises.” For here security was given under circumstances clearly showing an intention to secure the payment of the money loaned by a first lien upon the property.
While the point does not appear to have been contested, a transaction like that in this case, viz.: money loaned secured by a trust deed on the property to redeem from a foreclosure sale, was regarded by the courts in Illinois as
The following statement of the rule is found in the opinion of the court delivered by Judge Thayer in the case of Cumberland B. & L. Ass’n. v. Sparks, in Eed. 647, 49 C. C. A. 510: “Where money is advanced to a debtor in pursuance of an express agreement that it is to be used to retire existing loans or incumbrances on his property, and that the creditor who loans the money is to have a first lien upon the property to secure its repayment, such creditor may be subrogated to the rights of the incumbrancer or lienor whose debt has been paid, not only as against the borrower, but as against any one else who subsequently acquires an interest in the property with knowledge of the.circumstances under which the money to pay off the incumbrances or liens was advanced. They (the authorities) further hold that, if money is advanced to a debtor to discharge an existing first mortgage, upon his property, and in pursuance of an agreement that the- lender is to have a first lien upon the property for the repayment of.the sum loaned, the lender is entitled, as against a junior incumbrancer, to be treated as the as-signee of the first mortgage which has been paid off arid discharged with the money loaned, whenever it becomes necessary to do; so to effectuate the agreement with the
While the rule is more generally stated in a form requiring an express agreement that the lender should have a first lien upon the property, many authorities sustain the proposition that in the absence of an express agreement one may be implied. (Gans v. Thieme, 93 N. Y. 225; Wilkins v. Gibson, 113 Ga. 31, 38 S. E. 374, 84 Am. St. Rep. 204; Rachal v. Smith, 101 Fed. 159, 42 C. C. A. 297.) And in the notes to the Georgia case cited in 84 Am. St. 233, it is said: “One who lends money to discharge liens on real property and who discharges them at the request of-, the debtor, expecting that his securities will of record take the place of that which is discharged is not a volunteer. Therefore, he may be subrogated to the. liens discharged.” In Rachal v. Smith, the court say: “If a person pays a debt at the instance, request, or solicitation of the debtor, he is neither a volunteer, stranger, or intermeddler; nor is the debt regarded as extinguished, if justice requires that it should be kept alive for the benefit of the one advancing the money, who thereby becomes the creditor. * * * We decide that on the facts of the case, in the absence of any agreement on the subject, the Alliance Trust Company (the new mortgagee) is subrogated to the rights of the mortgagees, whose claims it advanced the money to discharge.” The theory is that the agreement that the lender is to be secured by a first mortgage on the property, will be treated in equity as an agreement that the lien to be discharged shall become security for the loan; that such is the substance of the transaction, and equity will effectuate the real intention of the parties, where no injury is done to an-innocent party. (Home Sav. Bank v. Bierstadt, 168 111-618, 48 N. E. 161, 61 Am. St. Rep. 146.)
The findings, it is true, do not expressly 'state that the new mortgage was executed pursuant to an agreement to secure the loan by a lien on the property; but it is impossible to construe the transacation as shown by the findings otherwise than as the result of a prior agreement to secure the loan by a first mortgage lien, and thereby substitute a new mortgage for the lien of the first mortgage, then held by the purchasers under the foreclosure sale.
Holding that the defendants would be entitled to be sub-rogated to the prior lien, if the mortgage under which they claim was invalid or defective, and that such prior lien was a lien for purchase money, it is clear that not having paid or offered to pay at least the amount that would be necessary to satisfy the prior lien, the plaintiff was not entitled to the relief she asked for.
But sihce the lien to which the defendants would be sub-rogated, if necessary, was a purchase-money lien, we see no objection to considering the mortgage in question as one for purchase-money; and in that view of it, the manner of its execution and the provisions contained therein would be sufficient to bar the homestead’ right. We think, indeed, that it might properly be held to have been a purchase-money mortgage; for there appears to us to be no substantial distinction in that respect between a mortgage given for ihoney loaned to pay off a prior purchase-money mortgage, and one given to secure a loan made for the purpose of redeeming from a foreclosure sale under such mortgage. The judgment will be affirmed.