292 Mass. 568 | Mass. | 1935
In this bill in equity, as amended, the plaintiff seeks to have a mortgage, held by it on certain real estate, given priority over a mortgage held by the defendant Joseph Scarano on the same property which is now a first mortgage as a matter of record, but which, the plaintiff alleges, it was the intention of the parties should be subject to the mortgage held by the plaintiff.
The case is before this court upon an appeal with a report of material facts made by a judge of the Superior Court, in substance, as follows: On June 20, 1924, the defendant Holland A. Harwell bought out the interest of his brother, the defendant Leon C. Harwell, in certain real estate on Highland Avenue in Hitchburg in this Commonwealth theretofore owned by them in common, and mortgaged the whole estate to the Hitchburg Cooperative Bank to secure his note of that date for $3,600, and on the same day gave to Leon a second mortgage for $700 to secure the unpaid balance of the purchase price. The proceeds of the cooperative bank loan were used in part to pay a first mortgage for $2,000 on the property held by the Worcester North Savings Institution. The property, owned by Holland A. Harwell alone, remained subject to the Hitchburg Cooperative Bank mortgage and to the second mortgage to Leon C. Harwell until November 8, 1926. On that day Holland ' A. Harwell gave to the defendant Scarano a note for $900
About August, 1927, the mortgagor, Holland A. Farwell, finding it difficult to meet the monthly payments to be made
The defendant Leon C. Farwell filed a motion that he be allowed to amend his answer by adding the following: “And further answering the respondent prays that he be restored as the second mortgagee upon the premises described in the bill of complaint, and that all the parties hereto be instructed to execute all necessary papers to restore the defendant, Leon C. Farwell, to the original position of second mortgagee, which was held by him before the execution of the new mortgage to the Worcester North Savings Institution.” The motion was allowed. A final decree was entered dismissing the bill as against all the defendants, and ordering that the plaintiff pay to the defendant Joseph Scarano costs in the sum of $17.50. It was further decreed that the relief prayed for in the amended answer of the defendant Leon C. Farwell be denied.
It is the contention of the plaintiff that it is entitled to the relief sought by reason of a mistake, due to negligence of its counsel, although none of the defendants was a party to the mistake.
It is apparent that the plaintiff’s attorney who examined the title to the premises and submitted a certificate to the plaintiff respecting the state of the title as of November 9, 1927, failed to discover the Scarano mortgage, which had been duly recorded for about a year. Although it is found that Scarano was not a party to the mistake, that finding does not exclude the inference that Scarano was also mistaken. Dzuris v. Pierce, 216 Mass. 132. “One of the common grounds of relief in equity is that the party who seeks the aid of the court has acted under and suffered loss through mistake, that is through ignorance of a fact material to the transaction, or in an erroneous belief in the
The findings show that the plaintiff bank and the defendant Leon C. Farwell believed that as a result of the transaction they were to receive first and second mortgages respectively. It may be inferred that this was the understanding of the mortgagor Holland A. Farwell. In these circumstances the plaintiff is entitled to be subrogated to the lien of the mortgage discharged with money advanced by it for that purpose. Federal Land Bank of Springfield v. Smith, 129 Maine, 233. Hill v. Ritchie, 90 Vt. 318, 322. Fifield v. Mayer, 79 N. H. 82, and cases cited. Industrial Trust Co. v. Hanley, 53 R. I. 180. Emmert v. Thompson, 49 Minn. 386. Kent v. Bailey, 181 Iowa, 489. Home Savings Bank v. Bierstadt, 168 Ill. 618. Compare Whitely v. Delaney [1914] A. C. 132. The cases of Childs v. Stoddard, 130 Mass. 110, and Houle v. Vallieres, 281 Mass. 123, are distinguishable from the present case. In those cases the plaintiffs had elected to rely on a new mortgage. In the present case any negligence which may be attributed to the plaintiff in failing to discover Scarano’s mortgage on the record does not bar it as against the latter, since it does not appear that Scarano changed his position because of the transaction in question. Hill v. Ritchie, 90 Vt. 318, 322. Fifield v. Mayer, 79 N. H. 82, 85, 86. Federal Land Bank of Springfield v. Smith, 129 Maine, 233, 236. Compare Reggio v. Warren, 207 Mass. 525, 532, 533. Negligence of one which does not induce a change of position of another is not a bar to recovery in cases of subrogation. Wall v. Mason, 102 Mass. 313, 316. Sheldon, Subrogation, § 42. It is held that money paid under a mistake of fact can be recovered back. Appleton Bank v. McGilvray, 4 Gray, 518, 522, 523. Quimby v. Carr, 7 Allen, 417.
It results that the original mortgage given to Leon C. Far-well should be restored, in accordance with the prayer in his amended answer to the bill. Institute Building & Loan Association v. Edwards, 11 Buch. 359. Campbell v. Trotter, 100 Ill. 281. It is well settled that when a mortgage has been discharged by mistake and no intervening rights are
The finding that Scarano was misled by Holland A. Far-well, the mortgagor, when he originally took his mortgage in 1926, does not prevent relief being granted the plaintiff, as Scarano has shown no change of position. He will be the holder of a third mortgage, which will be subject to a first mortgage held by a savings bank in the same amount as the previous mortgage and also to a second mortgage held by the defendant Leon C. Farwell. The secoud mortgage originally was for $700 and as rewritten was for $750. It was first given June 20, 1924, nothing was paid on it when it was rewritten on November 7, 1927. The interest then due was in excess of $100 but it was rewritten for $750 so that $50 was deducted from the amount then due, which was in the interest of Scarano, who was benefited by the substitution.
We are of opinion that the plaintiff is entitled to the relief which it seeks. The final decree entered is reversed. The mortgage held by the defendant Scarano is declared to be a third mortgage, and is to be treated as such, and he is perpetually enjoined from seeking any prior or other standing for it. A final decree is to be entered to this effect, with costs to the plaintiff against the defendant Scarano.
Ordered accordingly.