Scott v. Land, Mortgage, Investment & Agency Co., Ltd. of America

127 Ala. 161 | Ala. | 1899

HARALSON, J.

The case here presented is, that Brown Scott, the defendant, applied to the plaintiff cómpany'to borrow $320, and proposed to execute his notes and mortgage on the lands in the bill mentioned, to secure them, which loan was perfected after the preliminary examination of the lands and their title had been made. It is shown, that at the time of this application, there existed a debt of $320 by Scott to one Simpson Goodwin, from whom he 'bought the lands, which debt was evidenced by Scott’s notes to Goodwin, which notes recited a vendor’s lien on the land as security for their payment. The bill is full in its averments of the existence of said vendor’s lien on said lands for the payment of $320, the balance of the pur-' chase money due by Scott to his said vendor on them.

It is averred, also,'that in his application for this loan Scott made known the existence of this vendor’s lien, and represented, that the money he proposed to borrow, rvas to be applied to the satisfaction of said vendor’s lien on tlie lands, to which they were subject; that after the acceptance of said loan, complainant, in pursuance of a common understanding and agreement to that end, between it and Scott, paid over to said Goodwin the amount of said principal sum of $320; less a small sum deducted and paid to the abstractor of the title to the lands, and less a small sum for the recording of said mortgage, which sums it was agreed should be paid- out of the loan, and thereupon, said Goodwin released said vendor’s lien, and cancelled the promissory notes which he had taken from said Scott..

From the foregoing it will appear that there was no transfer of the vendor’s lien notes to complainant, and no agreement that it should be subrogated to said vendor’s lien, for that was -cancelled and given up, as between the original parties. The subrogation sought, therefore, ■ cannot be classed as conventional, or one growing -out of agreement of parties. — Allen v. Caylor, 120 Ala. 251. If the right of subrogation -can be enforced at all by the complainant, it must spring, from some principle recognized in courts -o-f equity in the interest, of justice and fair dealing. In Chapman v. Abrahams, 61 Ala. 108, followed in other cases, it was held that one who advahces money to the vendee to pay the deferred payments on a purchase of lands, or pays the amount, at the vendee’s request, who conveys to the purchaser, has no vendor’s lien on the lands, — the principle on which the doctrine rests being, that the payment of the purchase money by another at the request of the vendee of the land, did not operate to transfer the original demand to him, but extinguished it, and -created a new liability, the advancer of the money becoming a new and original creditor. — Tyler v. Jewett, 82 Ala. 93, 101; Pettus v. McKinney, 74 Ala. 108.

In the case of Bolman v. Lohman, 74 Ala. 507, this doctrine and the authority of Chapman v. Abrahams, on which the others cited -are based, is recognized, the court stating: “There is clearly no scope for the operation of the principle (of equitable subrogation )in a case of ordinary borrowing, where there is no fraud or misrepresentation, and the borrower creates in favor of the lender a new and valid security, although the funds are used in order to discharge a prior incumbrance.” In such case the lender is treated as a mere volunteer in the transaction. “But, [as the opinion proceeds], the rule is settled that, where money is expressly advanced in order to extinguish, a prior encumbrance, and is used for this purpose, with the just expectation on the part of the lender, for obtaining a valid security; or where its payment is secured by a mortgage, which for any reason is adjudged to be defective, the lender or mortgagee may be subrogated to the right' of the prior incumbrancer, whose claim he has satisfied, there being no intervening equity to prevent! — Kitchell v. Mudgett, 37 Mich. 82; Sheldon on Subrogation, § § 8, 20; Dixon on Subrogation,'165.” See also 24 Am. & Eng. Encyc. Law, 292. It is of the essence of this doctrine, that equity does not allow the incumbrance to become satisfied as to the advancer of the money for such purposes, but as to him, keeps it as alive, and as though it had been assigned him as security for the money. — Fouche v. Swain, 80 Ala. 151, 153; 3 Pomeroy, § 1212.

We may add, without repeating- what was said, that our- recent case of Faulk v. Calloway, 123 Ala. 325, sustains the doctrine of the case'of Bolman v. Lohman, supra, and the views we here express.

The demurrer to the bill was properly overruled.

Affirmed.