Matzen v. Shaeffer

Sharpstein, J. It appears by the findings that it was arranged between the mortgagee, mortgagor, and appellant that she should pay the sum of thirty-five hundred dollars for the satisfaction of the mortgage, and a conveyance to her of the mortgaged premises by the mortgagor. This entire sum was handed to the mortgagee, who retained the amount due on the mortgage, and gave the residue to the mortgagor. Whereupon the mortgagor executed a conveyance of. the premises to appellant, and the mortgagee entered satisfaction of the judgment which he had previously obtained in an action to foreclose the'' mortgage.

Previous to this the premises had been sold to the respondent under an execution issued upon a judgment recovered against appellant’s grantor after the execution of the mortgage. But the time for redeeming the premises from said execution sale had not expired at the time of appellant’s purchase. Since then respondent has received a deed from the sheriff who sold the [82]premises to him under said execution. This presents a case in which the interests of the appellant required that the lien of the mortgage which she paid off should be kept alive. Her interests can only be fully protected by regarding the transaction in which she paid off the mortgage as an assignment of it to her, and the lien as being kept alive for her security and benefit. “ In general, when any person having a subsequent interest in the premises, and who is therefore entitled to redeem, for the purpose of protecting such interest, and who is not the principal debtor primarily and absolutely liable for the mortgage debt, pays off the mortgage, he thereby becomes an equitable assignee thereof, and may keep alive and enforce the lien so far as may be necessary in equity for his own benefit; he is subrogated to the rights of the mortgagee to the extent necessary for his own equitable protection.” (3 Pomeroy’s Eq. Juris. § 1212.) And this equitable result follows, “even though a receipt was given speaking of the mortgage debt as being fully paid, and sometimes even though the mortgage itself was actually discharged and satisfied of record. (3 Pomeroy’s Eq. Juris. § 1211.)

If the respondent had purchased the premises while the satisfaction of the judgment of foreclosure remained of record, he doubtless would be protected. But the findings show that he purchased the premises and received a certificate thereof, before any action to foreclose the mortgage had been commenced, and that he was made a party defendant, and served with summons in said action. And if it be held that the appellant became the equitable assignee of the mortgage, and as such was entitled to have the lien created by it kept alive for her protection, notwithstanding the satisfaction and discharge of it of record, the respondent will be in no worse position than he would if the judgment of foreclosure had been actually assigned to appellant when she paid it off. The fact of the entry of satisfaction of the judgment could not have influenced him when he purchased the premises, because the action in which said judgment was entered had not then been commenced. He purchased the premises subject to the mortgage, and the rights which he thereby acquired could not be affected by an assignment of the mortgage, either in fact or by operation of law. We think this is one of the cases in which the satisfaction of a mortgage of record does not