Stewart v. Groce

¶1The opinion of the court was delivered by

¶2The facts of this controversy, with the exception of some additional ones, are thus summarized in the opinion of this court [in Earle v. Groce), as reported in the 87 S. C., 560: “It appears from the pleadings and other proceedings in this case that on the 6th day of December, 1886, the Crawfordsville Factory tract of land was sold by the sheriff of Spartanburg County, and bid off by W. L. Morgan, A. J. Morgan, and O. P. Morgan, and L. A. Green, who complied with the terms of sale by paying one-half in cash and giving their bond to the sheriff secured by a mortgage of the premises for the other half, which mortgage was in the usual form of mortgages to public officers, and contained no power of sale; that on the lltb of December, 1886, the same persons executed a second mortgage to John Wheeler, the intestate of defendant Groce, on the same land, which last mentioned mortgage did contain a power of sale; that on the 14th of January, 1888, the said W. L. Morgan, A. J. Morgan, and O. P. Morgan executed a third mortgage on the same tract of land to the judge of probate for Spartanburg County, which was subsequently assigned to the plaintiff herein; that on the 4th of February, 1888, the said John Wheeler, by virtue of the power of sale contained in his mortgage, offered the said land for sale, and himself became the purchaser thereof, and applied the proceeds of the sale to the payment of the debt secured by the mortgage to the sheriff and to the payment of the debt secured by his *507own mortgage, which exhausted the proceeds. Whereupon the plaintiff commenced this action, to which the said L. A. Green has not been made a party, claiming that the said John Wheeler had no right to apply any part of the proceeds of sale made by him to the payment of the debt secured by the mortgage to the sheriff, but that the said Wheeler was bound, after satisfying the debt due to himself, to apply any surplus of the proceeds of sale that then remained in his hands first to the payment of the debt secured by the mortgage to the judge of probate, which had been assigned to her, and the balance, if any, to the mortgagors in the mortgage to Wheeler, of whom, as has been stated, L. A. Green is one. The issues in the action were referred to the master, who found in accordance with this view; but upon exceptions to his report, the Circuit Judge overruled the report of the master, and rendered judgment dismissing the complaint. From this judgment the plaintiff … appeals.” … On that appeal this court decided that L. A. Green was a necessary party, and in its judgment reversed the decree of the Circuit Court without prejudice, and remanded the cause to the Circuit Court to carry out its direction.

¶3The said L. A. Green has been made a party defendant, but disavows any interest therein, having long since conveyed all his interest to the defendants, Morgan. A change was made in the person of the plaintiff, Mrs. W. L. Stewart being substituted for Mrs. Lily Earle under the following circumstances: The wife of W. L. Stewart was the daughter of Samuel Morgan, deceased, who was in his lifetime a surety on the bond of his brother, W. L. Morgan, as the guardian of the estate of Mrs. Lily-Earle, nee Montgomery, and the said Samuel Morgan had conveyed for love and affection to his daughter, Mrs. Stewart, a tract of land of over 235 acres, worth $2,500. Of the 235 acres, sixty acres were sold for $930, and, with $1,070 advanced by Mr. Stewart, was paid to Mrs. Earle in full payment of the balance due, and she thereupon assigned the whole claim to W. L. Stewart. Thus he became plaintiff in her stead. The action came on to be heard before Judge Witherspoon on the following papers: the pleadings, the testimony, and the report of the master submitted at the previous hearing before Judge *508Hudson, and some additional testimony taken befoi’e the master. By the decree of Judge Witherspoon, filed 29th December, 1893, he sustained the master’s report, which, as was stated heretofore, gave the plaintiff the relief sought in the complaint. The defendant, A. B. Groce, as the administrator of John Wheeler, deceased, appealed from that decree. As the decree itself and the exceptions of appellant will appear in the report of the case, we will not reproduce them here. Nor will we, in our consideration of these exceptions, stop to formally repeat such as are overruled, and such as may be sustained.

¶41 In our anxiety to have an eud of this already protracted litigation, we have taken the pains to set out fully what we conceive should be the final judgment in this case, having a due regard to the rights and equities of all the parties. The senior mortgage was held by the sheriff, and contained no power of sale. The second mortgage was held by John Wheeler, with a power of sale coupled with this stipulation of the mortgagor, that the proceeds of sale, if made under the power, should be first applied to the payment of his debt, including accrued interest and costs of sale; second, that the surplus should be applied to junior liens, who should give written notice thereof, and in lieu of such notice, or if none such, then to the mortgagors. The third mortgage was to the probate judge, who assigned it to the plaintiff. Now when John Wheeler sold the property for $8,500, it was his duty, under his mortgage, to pay his debt, $4,729.26, and his costs, $17.50, and this left in his hands as mortgagee the sum of $3,753.24 to go to junior liens, if they should have given written notice to him of such liens, or if not to the mortgagors, the Morgans. But no written notice of any junior liens was given to Wheeler, and it would seem that this sum of $3,753.24 should have been paid to the mortgagors, the Morgans. If this were so, the case would be soon ended, for it is in proof and not disputed that the Morgans were at Wheeler’s elbow urging him to take up the senior mortgage, that held by the sheriff, and this Wheeler did. Unfortunately for Wheeler, at the time the sale took place and at the time he had this conference with the Morgans, the mortgagors, these very mortgagors, *509had deprived themselves of the power to give him (Wheeler) any such directions, for, by operation of law, when they (the Morgans) made the mortgage to Thomason, the judge of probate, they thereby transferred to such judge of probate all their rights under their mortgage to Wheeler, to have him pay to them any surplus at the sale made by Wheeler, and it was his duty to have paid enough of the surplus to Thomason as judge of probate to satisfy his mortgage.

¶5But here the appellant brings to the attention of the court these circumstances: (1) That at the sale of the lands made by Wheeler, the price realized ($8,500) was the full value of the fee simple title. This finding of fact is that of both the master in his report and the Circuit Judge in his decree, and is not assailed by any party to the record. Therefore, it is to us a fact. (2) That of these proceeds of sale paid by Wheeler to the sheriff in liquidation of the amount due on the senior lien by mortgage, there was paid on the junior mortgage of Thomason, as judge of probate, the sum of $1,688.68, and that the balance of the $3,753.24 was applied by the sheriff to the Morgans, the mortgagors, and, therefore, not a dollar thereof remained in the hands of John Wheeler. (3) That when W. L. Morgan was appointed guardian of the estate of Mrs. Earle, his sureties were Samuel Morgan, A. J. Morgan, and O. P. Morgan, but that by reason of the death of Samuel Morgan insolvent, this mortgage to Thomason, as judge of probate, was given, and thus Samuel Morgan was responsible for one-third part of what the sureties to W. L. Morgan had to pay for his default as guardian; and that inasmuch as the $3,107.50, with interest thereon at seven per cent, from the 12th December, 1889, will, on the 30th October, 1894, amount to $4,151.62, which, after allowing $1,383.87 as the amount thereof paid by W. L. Morgan as principal (he being guardian), will thus leave $2,767.65 to be paid by Samuel, A. J., and O. P. Morgan, as sureties, of which amount Samuel is responsible for $922.91; and as the present holder of Mrs. Lily Earle’s claim as the ward of W. L. Morgan used about $922.91 of the funds of Mrs. Stewart, the daughter of Samuel Morgan, derived from the sale of land conveyed to her for love and affection of her father, *510in payment of the $1,900 paid to Mrs. Lily Earle on the settlement with her by the present plaintiff on the 22d February, 1892, which payment by Mrs. Stewart was proper, by deducting $922.91 from the $1,900, there will be due to the plaintiff $978.09, with interest thereon from the 22d February, 1892, as the amount to be recovered by the present plaintiff from the estate of John Wheeler, deceased.

¶62 We will now consider the effect of these propositions of fact. We regret to say that we do not see how this sale for the full value of the lands by John Wheeler, at the sale thereof under the power of sale in his mortgage, can help the defendant here. It is no longer an open question in this State that all that one acquires as a purchaser under a sale of property by virtue of a junior lien, is the property sold, freed from all junior liens, but still subject to the senior liens. Norman v. Norman, 26 S. C., 41, and the authorities there cited. The interest of the junior lien by such a sale is transferred from the land sold to the purchase money, and in that fund there is no claim except for the surplus that may remain. As to that surplus, the holders of junior liens have a right to look to it as a fund held in trust for them. Such j unior liens can not be prejudiced by any mistakes the purchaser may make, to w'hich they have in no wise contributed. In the case at bar, it is not contended that Mrs. Earle or the probate judge Thomason did any act which led to the mistake of Wheeler. Not so the mortgagors, the Morgans. They insisted upon Wheeler making the sale and payment to the sheriff, in order to stop the sheriff in his suit for foreclosure of his mortgage given by them, which was then pending. They are estopped by their conduct from questioning Wheeler’s actions in the premises, but they did not represent Mrs. Earle or Mr. Thomason, the judge of probate. As we have heretofore remarked, when the Morgans made their third mortgage on the lands in question, they assigned and transferred all their rights to any surplus that might remain at a sale made by Wheeler to Thomason, as judge of probate. This fact was actually and constructively known by Wheeler, and he, therefore, acted at his peril in paying as the purchase money of what is sometimes called the equity of redemption of *511the Morgans, the full value of a fee simple title to said lands when discharged of all encumbrances.

¶73 We think, however, the receipt by Thomason, as probate judge, of the $1,532.62 from the proceeds of sale, with a full knowledge, as he had, of all the facets connected with the payment thereof by Wheeler to the sheriff, and the subsequent receipt of this money by Mrs. Earle, bound them to the extent of this payment as so much payment of the surplus in the hands of Wheeler applicable to their (third) mortgage, but no further than such payment extends. We conclude, also, that the present plaintiff having used $922.91 derived from the sale of a part of the lands in the hands of his wife, derived as a gift from Samuel Morgan, who was also a surety on the bond of W. L. Morgan as guardian, and, therefore, liable along with A. J. and O. P. Morgan to make good all defaults of W. L. Morgan as such guardian, in the purchase from Mrs. Earle of this mortgage, must have his claim for $1,900 reduced by this $922.91, and that all he can recover from A. B. Groce, the administrator of the estate of John Wheeler, deceased, is $978.09, with interest from the 22d February, 1892. As before remarked, none of the Morgans are entitled to anything at the hands of said administrator.

¶8It is the judgment of this court, that the judgment of the Circuit Court be modified as herein required, and that the cause be remanded to the Circuit Court to there enter a judgment for the present plaintiff against A. B. Groce, as administrator of John Wheeler, deceased, for $978.09, with interest thereon from the 22d February, 1892, and, also, that the claims of W. L. Morgan, A. J. Morgan, and O. P. Morgan against said A. B. Groce, as administrator of John Wheeler, deceased, be disallowed.