Mulkey v. Wallrapp , 156 Okla. 233 ( 1932 )

KORNEGAY, J.

This proceeding started in the district court of Carter county by the filing of a petition by May Mulkey, the present plaintiff in error, against the present defendant in error, James J. Wallrapp, in which the plaintiff seeks a judgment holding that she is entitled to an undivided one-half interest in and to the south 50 feet of lot 2, block 414, in the city of Ardmore, and seeking an accounting for rents collected by defendant since March, 3928.

She deraigned title through a deed made by tbe defendant below, defendant in error here, on the'8th of March, 1922, conveying to James IT. Mulkey and bis wife, May Mul-key, tbe plaintiff in error tbe entire property. Tbe defendant answered, admitting tbe acquisition by plaintiff of an undivided one-balf interest in tbe property, but claiming a surrender and abandonment of tbe property to tbe defendant, and averring that tbe consideration for tbe property was furnished by James H. Mulkey, and that her sole interest was that of wife. He set up two mortgages, one to tbe defendant and the other to tbe Local Building & Loan Association of Oklahoma City. He claimed that tbe property bad been sold as being tbe property of ber husband in a bankruptcy proceeding of tbe husband and subject to the mortgage, and that be had bought tbe equity for $300. Tbe various proceedings were set out and averment made that tbe plaintiff bad full knowledge of tbe sale and tbe claims of tbe husband to own tbe property, and bad made no complaint, and there was a prayer to quiet tbe title.

There was in a cross-petition, a prayer for foreclosure of both mortgages on tbe plaintiff’s interest in tbe property, and for a personal judgment against tbe plaintiff for $5,100, with interest thereon at 10 per cent, in accordance with tbe payments that bad been made on tbe $3,500 mortgage, and $350 for attorney’s fees, and for tbe recovery of $1,075, with interest at 10 per cent, from March 24, 1923, and $100 attorney’s fees on tbe second one. Prayer was that the money derived from tbe sale be applied to tbe satisfaction of tbe claims of cross-petitioner’s interest, attorney’s fees and costs, and tbe remainder, if any, be disposed of according to tbe order of the court.

Tbe case was tried on stipulation of facts, which can be found on page 41 of tbe record. It recited the trade of tbe property to tbe plaintiff and ber husband for an exchange of land, and its being discovered that tbe land bad judgments that were liens on it, and that in order to provide for these judgments, tbe mortgage was executed for $3,500' to tbe Local Building & Loan Association, and tbe money procured and paid on tbe judgments, and that a second mortgage was executed to tbe defendant below for $1,075. Tbe entry into bankruptcy of tbe husband is recited, and his listing tbe property as being bis own, and its being ordered sold as bis property and subject to tbe incumbrances and taxes, and tbe confirmation of tbe sale, and tbe payment of the $300 in money for tbe equity. Tbe tenth paragraph is as follows:

“10. That tbe plaintiff bad both actual and constructive knowledge and notice of said bankruptcy proceedings and both actual and constructive knowledge and notice of said sale, and made no objection thereto or protest tbereagainst, and from and after confirmation of said bankruptcy sale and execution of said trustee’s deed, defendant has been in peaceable possession of said property, has held, used, occupied and possessed tbe same from that time until this date, and still bolds and possesses tbe same.”

The eleventh paragraph showed rents received, $2,170, and improvements made and insurance paid, $2,635.80; that tbe plaintiff knew nothing of these expenditures. Both mortgages were past due when Wallrapp bought tbe property at bankrupt sale, and there were delinquent taxes on it amounting to $168.80, and tbe first mortgage was paid off by Wallrapp by various payments beginning on tbe 20th of March, 1923, and ending on tbe 24tb of February, 1925, and the plaintiff was jointly and severally liable for both debts. Tbe 15th paragraph is as follows:

“15. It is further stipulated that Wall-rapp believed in good faith, at tbe time be bid for and bought tbe property at bankruptcy sale, that be was acquiring and did thereby acquire tbe whole, undivided, fee-simple title to said property.”

Tbe mortgages are set out in tbe agreed statement, and a list of taxes paid is set out, and also tbe petition in bankruptcy, verified by tbe husband, scheduling this property as his own, subject to tbe two mortgages, together with tbe bankruptcy proceedings and petition of tbe trustee to dispose of tbe property in which be claimed that tbe two pieces of property listed were worth about $9,000, but would not sell for more than enough to pay tbe incumbrances. He asked leave to sell subject to tbe liens. A trustee’s report of sale is set out, and also bis final report.

Some exception was taken by tbe plaintiff to parts of paragraphs 2 and 3 of tbe agreed statement, upon tbe ground that they did not prove any issue, and also three lines in paragraph 7, as to tbe husband testifying under oath about bis being tbe sole owner of the property. Objection was made to the allowance in tbe accounting of tbe $300 item paid for tbe equity, and also for items of repairs and improvements, etc., as not being proper items, but no objection to the taxes paid, and also objection was made to the item of $4,890.04 paid on tbe first mortgage. There was a waiver of right to enter judgment for a deficiency on the foreclosure of the $3,500 mortgage.

A journal entry of judgment was made upon the stipulation of facts, finding- that each of the parties was the owner of a half interest in the property, and that the defendant holds a valid second mortgage on plaintiff’s undivided one-half interest, given by the plaintiff to secure $1,075. The order in the judgment fixed the interest of the parties at one-half each, and quieted the title of Wallrapp to the one-half, and- found the other half to be subject to the mortgages, and denied plaintiff's prayer for judgment for rents and profits. It provided for the recovery from the plaintiff, May Mul-key, of $3,500, and interest at 8 per cent, from March 21, 1922, and $360 attorney’s fees, and also for the recovery of $1,075, with interest at 8 per cent, from March 30, 3 922. It adjudged that the defendant held a mortgage upon the one-half interest to secure both sums, and provided for an execution to issue at the end of six months, and the sale of the undivided one-half, and that the proceeds he applied to the payment of the judgment, and the balance, if any, to he applied as the court might direct. In case of .the proceeds being- insufficient, it provided for no deficiency judgment on the $3,500 claim and interest, hut provided for a deficiency judgment on the $1,075 claim. Objection was made to the rendition of judgment against the plaintiff, and to the action of the court in denying an accounting as to the rents and profits.

A brief has been filed by the plaintiff below, the plaintiff in error here, in which the action of the court is complained of, and the complaint is that the court erred in overruling the plaintiff’s demurrer to the defendant’s answer and cross-petition, and the judgment was contrary to the law and the evidence. The position is taken that the statute of limitations barred a¡ recovery by the defendant on the mortgage that he took up, and the argument is made that under the petition the defendant below assumed the first mortgage on March 10, 1923, and that the suit was instituted on February 0, 1929, only two weeks short of six years from the date the defendant assumed the first mortgage, and it is stated that it would probably be contended that the statute of limitation did not start until the mortgage was due. It is claimed that the second mortgage was surrendered on March 10, 1923. Warner v. Mason, 109 Okla. 13, 234 P. 747, is cited as bearing upon the proposition.

On the second proposition, the doctrine of subrogation is discussed, and several cases are cited from this court and others to the effect that a volunteer was not entitled to subrogation, and the position is taken that some cases have held that a purchaser of land could not be subrogated as a lienholder for the amount of the incumbrances which he had agreed to pay and did pay, and that making a mistake would not help. Complaint is made about ordering the sale of the one-half interest to pay the entire debt, thereby giving- the defendant his one-half free and clear. Complaint is made of the court’s not allowing for rents, and it is claimed that the defendant has received $2,-170 in rents, and has paid out $1,378.30 fox-taxes, which is admitted to be a correct charge, and spent $1,267.50 for improvements, and repairs without the knowledge or consent of the plaintiff. Section 7360, C. O. S. 1921, is cited on the subject of eonti-ibution.

Under the agreed statement in this case, had the defendant in error looked to the record alone, he would have known that the plaintiff had the record title to one-half interest. Her husband, in going into bankruptcy, listed the entire property as his own, and verified it as such. His interest was not thought to be worth much, though he was the full owner, according to the view the bankrupt officials had of the matter, subject to the first and second mortgages. His equity was sold subject to the mortgages, and the defendant paid $300 for it.

We think the court should not have subjected plaintiff’s one-half interest to the satisfaction of the full amount of the notes. It is true that the plaintiff had signed notes, and that the notes had not been paid by her át the time of the decree in this case. Defendant, by his purchase, succeeded to the rights of the husband, his predecessor, who as between himself and plaintiff was justly bound to pay one-half the ineixmbranees. The interest was acquired by the defendant below, and along with it was acquired the burden. By the transactions, defendant became the holder of both mortgages.

We think, therefore, that the court erred in decreeing- the one-half interest found to belong to the plaintiff, subject to the entire debt. If the property was to be divided into two parts so far as interest was concerned, the incumbrance should be divided into two parts, so that the one-half belonging to the plaintiff would be subject to sale only for one-half of the amount equitably chargeable thereto.

We hold that the statute of limitations lias not run In this case. Evidently one-half of the improvements were for the benefit of the plaintiff, and she should be charged with one-half of the cost in the accounting, and should be credited with one-half of the rents received. She should also be charged with one-half of the taxes paid, and she should be charged with one-half of the amount of the mortgages with interest, as set out in the judgment, and one-half of the attorney’s fees should be charged to’ her, and the property subjected to the satisfaction of the amount so found, and judgment rendered in favor of defendant in error against plaintiff in error for such amount and costs. The costs of the proceeding in error are to he taxed to defendant in error, and if not paid should be included in the accounting.

Lflaintiff stood by without objections for six years, and according to this record she knew all of the proceedings in the bankruptcy, wherein her husband claimed to own all. The court, correctly, as we think, held that she did not lose her right to her interest in the property. The costs of the foreclosure should be paid out of the fund realized in the foreclosure, and after these are paid, one-half of the taxes due on .the land should be paid, and the balance of what the property sells for should be applied to the satisfaction of defendant in error’s claims. The remainder, if any, should be paid to the plaintiff below.

The case is reversed and remanded, with directions to proceed in accordance with the views herein expressed.

LESTER, C. J., CLARK, V. O. X, and OULLISON, SWINDALL, ANDREWS, and MeNEILL, JX, concur. RILEY and 'HEFNER, JJ., absent.