Faulk v. Calloway , 123 Ala. 325 ( 1898 )

TYSON, J.

The case made by the bill may he stated to be: Complainants purchased the lands for which their tenant is sued by the respondent in an action of ejectment, from one Bayne, aav1io executed them a deed. CalloAvay, the respondent, sold the lands to Payne Avliile in the actual possession of them as his homestead and executed a deed, AA'hicli was also signed by his wife, but there Avas no separate and apart aeknoAAdedgment by her as required by the statute in cases of sales of the homestead.

Prior to the sale to Payne, Galloway and wife had executed a valid mortgage upon these lands*to one Koonce, and the consideration of the sale to Payne was the assumption by him of the payment of this mortgage debt. The consideration of the sale by Payne to the complainants, Avas $50 in cash and the assumption by tliein of this mortgage debt.

The respective sales of Oalloivay to Payne and Payne to the complainants were within a short period of time of each other; only thirty days apart. Galloway left the lands, moving to the State of Florida, and the com1 plainants went into the possession of the lands immediately upon their purchase in January, 1893, after paying to Koonce the mortgage debt AAdiich they assumed to pay.

The bill, besides praying for general relief, contains tAvo alternative special prayers. The first is, for a decree divesting the legal title to the land out of Calloway and investing it in the complainants, and the other is to Imre, a lien declared' in their favor upon the lands for the two hundred dollars they paid Koonce, in discharging the mortgage debt owing him by Calloway, the fifty dollars paid by them to Payne, the value of the improvements made by them upon the lands, the sum of fifty dollars as a reásonáblé' attorney’s feé incurred-by them for prosecuting this suit; the land be sold to satisfy the lien sought to be declared, and enjoining the action of ejectment.

The. chancellor sustained a demurrer to the bill, and this appeal is prosecuted by the complainants to review his decree.

Before, however, entering into a discussion of the legal principles governing this case and applicable to the facts as set out above, it will-be well to advert to an allegation of the bill upon which great stress is laid by counsel in their briefs. It is in these words: “That on the day of the sale by Calloway, E. L. Faulk, the father of orators and acting 'for them, went to said Calloway, while the latter was still on the lands involved and prior to his actual removal of his family therefrom, and told him that he had come to buy the land, that Calloway then informed him that he was too late, that he had sold the land to Payne and had made the latter a deed to the «same, that a few days later the said E. L. Faulk relying upon the statement made by Calloway bought the said hereinbefore described lands for your orators from the said Payne.”

The theory of appellee’s counsel seems to be that the only purpose which this allegation can possibly serve is to assert an estoppel against their client so as to preclude him from prosecuting his ejectment suit. In this, we conceive they are mistaken, which will appear from what we will say later on in this opinion.

The deed made by Calloway to Payne, attempting to convey his homestead, not being acknowledged by his wife separate and apart from him, was a nullity and conveyed no title; and its recitals, or his declarations that he had sold the lands, cannot operate as an estoppel against him to reclaim them, or institute an. action for their recovery. — Code, § 2034, and authorities cited thereunder.

While the facts alleged in the bill will not afford the relief asked for in the first special prayer relating to divesting the1 title to the lands out of Calloway, yet because the other special prayer seeks to have a lien declared upon the land, inconsistent' with the first this does not render the bill multifarious. It is the alternative statement of fact in a bill Avlien repugnant and inconsistent and not tlie alternative relief prayed, that renders a bill subject to demurrer for multifariousness. Lyons & Co. v. McCurdy, 90 Ala. 497.

Tlie material and important question involved in this case is, have complainants the right under the facts to be subrogated to the rights of ICoonce as the oAvners of the mortgage? It may he stated that it is practically the universal rule governing equitable assignment by subrogation as to the persons or class of persons in whose favor such equitable assignment exists, that equity does not admit the doctrine in favor of every person avIio pays off a mortgage debt. “Such relations must exist toAvards the mortgaged premises or with the other parties, that the payment is not a purely voluntary act, bnt is an equitably necessary or proper means of securing the interest of the one making it from possible loss or injury. The payment must be made by or on behalf of a person avIxo had some interest in the premises, or some claim against other parties which he is entitled, in equity, to have protected and secured. * The doctrine is also justly extended by analogy to one aa'Ivo, having no previous interest and being under no obligation, pays off the mortgage or advances money for its payment, at'’the instance of a debtor party and for his benefit; such a person is in no true sense a mere stranger and A’olunteer.” — 3 Pom. Eq. § 1212. To state the proposition more broadly: “This equitable doctrine which is a particular application of tlie broad principle of subrogation is enforced Avlienever the person making the payment stands in such relation to the premises or to the other parties that his interests, recognized either by law or by equity, can only be fully protected and maintained, by regarding the transaction as an assignment to him and tlie lien of the mortgage as being kept alive, either wholly or in part, for his security and benefit.” — 3 Pom. Eq., § 1200.

One of the most, familiar instances of the application of the doctrine of subrogation is where the purchaser of incumbered property, without having assumed the incumbrance pays it off, in order to protect his own interest or to protect his own title. This right of subrogation will not be affected by the circumstance that the purchaser’s' title subsequently fails, when the payment was made in the belief that he was the owner of the property purchased.

It may be said that the facts alleged ip the bill do not bring the case made by it within these principles for the reason that the complainants assumed or promised to pay the mortgage debt owned by Kooiiee. That the payment by them was simply a discharge by them of their own obligation which must of necessity result in the extinguishment of the mortgage lien. Unquestionably this contention would be true, if the respondent has seen fit to stand by his contract of sale and not to have repudiated it. They did agree to pay this mortgage debt and actually paid it under an agreement, believed by them at the time, to be supported by a consideration and binding. The respondent could have by standiug by his contract of sale, which however, was optional with him under the circumstances, put an end to all liability upon the mortgage debt. He could have, had he chosen, treated their promise to pay as a binding one and forever precluded them as against him from asserting any claim or demand arising out of the payment by them of the mortgage debt. This assumption by them being for his benefit, relieving him of a personal valid obligation, his- lands of a subsisting valid lien upon them, he will not be permitted to abrogate the contract as to himself and insist that they are bound by their assumption to pay his debt. The consideration for their promise having failed, they are no longer bound by it. Having contracted on the faith of getting a good title to the lands and this being the consideration which induced the purchase, it would certainly be iniquitous to hold them bound by a promise resulting to the benefit of the respondent who now claims the lands of them upon the ground that they got nothing, no title, by their purchase. Nor is it of consequence that the contract of assumption by them was between these complainants and Payne, the purchaser from Calloway. Their promise enures exclusively to Calloway’s benefit, and was made upon the faith of his contract Avith Payne. They are privies by contract'under Payne with him.'

The principle we have announced is recognized in the doctrine so tersely stated in 24 Am. & Eng. Encyc. of Law, 257, which is in this language: “It is held that if the purchaser expressly assumes to pay the incumbrance, he thereby becomes the principal debtor, primarily and absolutely liable for the debt, and may not be subrogated to the benefit of the incumbrance upon making payment according to his contract. And generally speaking, to entitle a purchaser to subrogation the claim which he satisfies must be such as would be enforceable against the land in his hands. If the purchaser’s title fails, and the purchase money has been applied to the payment of liens and incumbrances on the property, he will be subrogated to the rights of the holders of such claims.”

So too the position we take is fully sustained by the' folloAving authorities: Sidener v. Hawes, 37 Ohio St. 532; Cockrum v. West, 122 Ind. 372; Muir v. Berkshire, 52 Ind. 149; Dillow v. Warfel, 71 Ia. 106; The St. L. & S. Coal and Mining Co. v. The S. Coal & Mining Co., 116 Ill. 170; Temperance House v. Fowle, 22 Ore. 303; Wade v. Beldmeir, 40 Mo. 486; Mallory v. Dauber, 83 Ky. 239; Hobgood v. Schuler, 44 La. Ann. 537; Browne v. Davis, 109 N. C. 23, Caldwell v. Palmer, 6 Lea (Tenn.) 652; 2 Jones on Mortgages, § 1902.

In the case of Valie's Heirs v. Fleming's Heirs, the held, a bona fide purchaser at a mortgagee’s sale which proves defective, is, after paying the purchase money, subrogated to the rights of the mortgagee. The mortgage is in equity regarded as assigned to such purchaser, even if the mortgagee’s deed to him does not contain language amounting to a legal assignment. Such purchaser is not a stranger to. the estate, but is equitably subrogated to the mortgagee’s rights.

In Kelly v. Duff, 61 N. H. 435, where a person, erroneously supposing he had an interest in an estate, paid off a mortgage thereon, it was held that he was entitled to he treated as an equitable assignee of the mortgage.

In the case of Valie's Heirs v. Fleming’s Heirs, the Supreme Court of Missouri (29 Mo. 152, 77 Am. Dec. 557), after reviewing at great length many decisions of other courts, held that a bona fide purchaser, without notice, of land at an administrator’s sale which is void because not in compliance with the statute, who pays the purchase money which is applied to the payment of a mortgage on the land, will be subrogated to the rights of the mortgagee to the extent of the money so applied; and the owner of the legal title will not be entitled to recover possession until he repays the purchase money. Upon such sale of land void for irregularity, the owner will not be allowed to recover the land and retain the purchase money, and whether this equity be administered in the name of compensation or by substituting the purchaser in the place of the' creditor Avhose debt he has paid or by giving him the benefit of the mortgage Avliich his money has paid off, is not material. Says the court: “Nothing could be more unjust, we may repeat, than to permit a person to sell a tract of land and take the purchase money, and then, because the sale happens to be informal and void, to allow him to recover back the land and keep the money. Any code of law which Avould tolerate this would seem to be liable to the reproach of being a very imperfect or a very inequitable one. We think that, upon well established principles of equity law, the owner of the land should, if he wishes to get it back, repay the purchase money, which he has received or which lie will receive if he gets the land. This may be done upon the compensation doctrine of courts of equity, Avith Avliich, as it is settled on all hands, it is not inconsistent, if Ave regard the' claim of the OAvner under such circumstances, as the Roman law treated it, as a case of fraud or ill-faith.”

The case of James v. Burbridge, 33 W. Va. 272, is practically on all fours with this, in Avliich it was held, Avhere a purchaser of land, pursuant to Ms contract, pays a lien on the land, binding his vendor’s estate in it and such contract is abandoned by the parties, and the vendor becomes unable to execute it, though the purchaser took no assignment when he so paid the lien, yet he is entitled to be substituted to such lien and equity keeps it alive for his indemnity. While in such suit the purchaser shall have such relief, there must be charged against his debt rents and profits Avhile he Avas in possession, abating therefrom permanent improvements made by him.

Tlie special prayer of the bill seeking to have complainants subrogated to the rights of Koonce as equitable assignees of the mortgage paid by them, goes too far in asking to have a lien declared for the fifty dollars paid to Payne in addition to the $200 paid Koonce and the attorney’s fee in prosecuting this suit. An attorney’s fee cannot be recovered in this class of cases unless there is some stipulation in the mortgage by which the mortgagor binds himself to pay. There is no averment in the bill to this effect. The equitable assignment of the mortgage would invest in the complainants all the rights they would have acquired under it had it been in fact transferred to them. And their possession under this state of the case, would be treated as that of a mortgagee. There was, however, no demurrer raising the question suggested by us as to the claim for attorney’s fees and the fifty dollars paid Payne.

It is apparent from what we have said.that complainant’s equity is not dependent upon the dqctrine of conventional substitution, a doctrine distinctly different in character from, the one invoked by the bill. — 24 Am. & Eng. Encyc. Law, 290; Allen v. Caylor, 120 Ala. 251; 24 So. Rep. 512.

. It is also apparent, that it is unnecessary to discuss at length the materiality of the allegations of the third paragraph of the bill quoted above in luiee verba. It is sufficient to say, the facts therein alleged serve to establish the bona fieles of the purchase by the complainants.

The bill was not subject to the demurrer interposed, and the decree sustaining the several assignments thereof must be reversed and the cause remanded.

Reversed and remanded.