Thompson et al. v. The Connecticut Mutual Life Insurance Co. et al.

dollars and four cents, and that all said sums are payable without relief from valuation or appraisement laws.

"And as a further conclusion of law the court finds that said mortgaged lands should be sold, and that the plaintiff, the Connecticut Mutual Life Insurance Company, should be first paid out of the proceeds of such sale the sum of one thousand one hundred and thirtysix dollars, with six per cent. interest from this date.

"2. That the plaintiff's costs and costs of sale should next be paid.

"3. That the defendants, Thompson, Borders and Dukes should then be paid the sum of five hundred and twenty dollars, with six per cent. interest from this date. "4. That the costs of Thompson, Borders and Dukes should then be paid.

"5. That the plaintiff, from the proceeds derived from the sale of the west half of said land, be paid ninety-four dollars and four cents, and out of the east half of said lands ninety-four dollars and four cents, with six per cent. interest on said sums from this date.

"And the court further finds that the plaintiff is entitled to recover from the defendants, Thompson, Borders and Dukes, its costs herein upon the issues joined between the plaintiff and said defendants, and is entitled to recover from the defendants, Sourbeer and Gellinger, its costs herein.

"And the court further finds, as a conclusion of law herein, that Christian Blockberger has no interest in the subject-matter herein, he having assigned all his interest to said Thompson, Borders and Dukes.

"(Signed)

JOHN H. GILLETT, Judge."

It is first contended by appellants that the facts found do not show a right in the Connecticut Mutual Life Insurance Company to be subrogated to the rights of the Etna Insurance Company's mortgages.

Thompson et al. v. The Connecticut Mutual Life Insurance Co. et al.

It appears, from the second and third findings of the court, that the first Etna mortgage, given by the Kupfers, then owners of the land in controversy, on the 14th day of August, 1877, was a superior lien to the Blockberger mortgage, given by the same owners on September 4, 1877.

By the sixth finding, it appears that the Etna company foreclosed its first mortgage against the owners of the land and others, including Christian Blockberger, holder of the junior mortgage, and that, on the 31st of May, 1879, the land was sold at sheriff's sale and a certificate given to the Etna company.

From finding seven, it appears that on August 26, 1879, the Kupfers sold the land to the Pipers, subject to the Etna and also to the Blockberger mortgage, both of which, together with other liens, Pipers agreed to pay, as part of the purchase-price of the land. This assumption of payment was recited in the deed of conveyance from Kupfers to Pipers.

From the eighth finding, we learn that on or about September 20, 1880, the Pipers paid to the clerk of the Pulaski Circuit Court, for the Etna company, three hundred and thirty-three dollars and thirty-three cents, and also executed to the company a mortgage on the land for eight hundred dollars, "the same being accepted by the said Etna company in full satisfaction of the amount found due the said company upon the judgment referred to in finding number six herein, and to redeem from the aforesaid sheriff's sale."

This finding shows further that the company then assigned its sheriff's certificate to the Pipers, upon which they took out a sheriff's deed for the land. The purpose in receiving the sheriff's certificate and deed was to cut off the lien of the Blockberger mortgage.

Appellants, who have succeeded to the ownership of

Thompson et al. v. The Connecticut Mutual Life Insurance Co. et al.

the Blockberger mortgage contend that these findings show that the first Etna mortgage was released and fully discharged by the payment made and the new mortgage given by the Pipers, and that consequently the Blockberger mortgage had priority of lien over the second Etna mortgage.

Appellee, the Connecticut company, contends, on the other hand, that the second Etna mortgage debt was a renewal of a part of the first, and that the lien of the first mortgage was not lost, but was retained, together with the priority thereof, in the second mortgage.

The principle on which a prior lien is preserved for the security of a creditor who renews his credit as an accommodation to the debtor, is not different from the principle of subrogation.

The question here is, whether the first Etna mortgage debt was paid and canceled, or whether it was renewed and the lien preserved in the second mortgage.

It is true, as was said in Shinn v. Budd, 14 N. J. Eq. 234, that "Subrogation, as a matter of right, as it exists in the civil law, from which the term has been borrowed and adopted in our own, is never applied in aid of a mere volunteer."

To the same effect, see Gadsden v. Brown, 1 Speer's Eq. (S. C.) 37; Sheldon Subrogation, sections 1, 2, 3, 5, 240; Webster's Appeal, 86 Pa. St. 409; Hoover v. Epler, 52 Pa. St. 522; Pomeroy's Eq. Juris., sections 1212 and 1213, and notes; Suppiger v. Garrels, 20 Ill. App. 625.

In Etna Life Ins. Co. v. Middleport, 124 U. S. 534, it is said that the person seeking subrogation must have paid the debt of another under some necessity to save himself from loss which might arise or accrue to him by the enforcement of the debt in the hands of the original creditor.

The decisions of this State are to the same effect as to

Thompson et al. v. The Connecticut Mutual Life Insurance Co. et al.

volunteers, and hold, substantially, that it is only in case where the person paying the debt stands in the situation of a surety, or is compelled to pay in order to protect his own interests, or in virtue of legal process, that equity, as a matter of course and without special agreement, substitutes him in the place of the creditor; and that, in the absence of an agreement to that effect, a stranger paying the debt of another, will not be subrogated to the creditor's rights. Payment by such stranger absolutely extinguishes the debt. Richmond v. Marston, 15 Ind. 134; Spray v. Rodman, 43 Ind. 225; McClure v. Andrews, 68 Ind. 97; Binford, Admr., v. Adams, Admr., 104 Ind. 41.

From a consideration of the foregoing authorities it might seem that when the Etna company received part payment in cash of its first mortgage debt, and took a mortgage to secure the balance, that alone, without any special agreement operated as an extinguishment of the first debt, and of the mortgage lien securing it. This would doubtless be the case if there were no intervening equity, on account of which the lien of the first mortgage ought to be kept alive.

We think there was such an equity. When the Ætna company foreclosed its first mortgage, it made Christian Blockberger a party, and had judgment of foreclosure. against him. His mortgage was, on its face, made junior to the Etna mortgage. When, therefore, the company took from the owners of the land part payment, and a new mortgage for the original mortgage debt, and when besides it attempted to give to the owners cumulative title by assigning to them, and so keeping alive its sheriff's certificate, it seems clear that the company was of opinion that the Blockberger mortgage was cut out by its foreclosure proceedings, and that, consequently, its new mortgage would be a first lien. Other

Thompson et al. v. The Connecticut Mutual Life Insurance Co. et al.

wise it is plain that the company would not have surrendered its sheriff's certificate and accepted a junior mortgage in place of the senior mortgage which it had already foreclosed. Equity; therefore, will interpose in the interests of simple right and justice to preserve to the company its first lien upon the land.

The Ætna company was evidently in ignorance of the fact that the Pipers, as owners of the land, had assumed payment of the Blockberger mortgage, and that on payment and release of the first Etna mortgage the Blockberger mortgage would become a first lien, and prior to the lien of the second Etna mortgage.

In Sidener v. Pavey, 77 Ind. 241, it was said that, "when a new mortgage is substituted in ignorance of an intervening lien, the mortgage released through mistake may be restored in equity, and given its original priority as a lien, where the rights of innocent third parties will not be affected." Citing Jones Mort., section 971, and Bruse v. Nelson, 35 Iowa, 157.

There were no innocent third parties in this case whose rights would be affected. Blockberger and those who have since succeeded to his rights are all shown to have been aware of the foreclosure and other proceedings in relation to the mortgages.

The same authority, Sidener v. Pavey, supra, citing numerous authorities, says that a court of equity will keep an incumbrance alive, or consider it extinguished, as will best subserve the purposes of justice, and the actual and just intention of the party. It is further said in that case, citing authorities, that in cases of fraud or mistake, a third person who pays the mortgage at the request of the debtor, and takes a new mortgage for the same debt, will be subrogated to the rights of the original mortgagee, as against intervening incumbrances existing at the time of the cancellation of the first mortgage.