HELMS v. JENKINS

HELMS v. JENKINS
1926 OK 538
247 P. 28
118 Okla. 239
Case Number: 16388
Decided: 06/08/1926
Supreme Court of Oklahoma

HELMS et al.
v.
JENKINS.

Syllabus

¶0 1. Subrogation--Right not Acquired by Volunteer Payment of Mortgage. One owing no duty, who voluntarily and without request so to do, pays the mortgage indebtedness of another and causes the mortgage to be discharged and released, is not thereby entitled to subrogation.
2. Same -- Appeal and Error -- Mandate--Proceedings in Lower Court in Conformity--Settling Equities. Where, in such case, the trial court, pursuant to a mandate of this court to settle the equities between the parties, finds that the indebtedness so paid was paid for the benefit of the mortgagors, and that they received the full benefit thereof, and enters judgment for the plaintiff, payor, for the amount so paid, and erroneously holds the payor entitled to subrogation, but, notwithstanding such holding, does not foreclose the mortgage, but decrees the judgment to be an equitable lien on the land described in the mortgage, the judgment will be affirmed, where it is authorized by the mandate and supported by the evidence.

Cleveland Holland and Caswell S. Neal, for plaintiffs in error.
T. M. McCombs, for defendant in error.

RAY, C.

¶1 This suit was originally brought by George R. Jenkins against S. R. Helms and Mollie Helms to recover on a promissory note in the sum of $ 2,200 and interest, executed to Aurelius-Swanson Company, and assigned to the plaintiff, Jenkins, and to foreclose, a mortgage given to secure the payment of the note. Defendants, by their answer alleged, in substance, that the note and mortgage were executed without consideration, and that the plaintiff, Jenkins, was not a purchaser in due course for value. The evidence showed the note and mortgage were executed October 11, 1919, to Aurelius-Swanson Company, and offered for sale to the plaintiff, Jenkins, a resident of Chicago. December 5, 1919, Jenkins forwarded his check to Aurelius- Swanson Company for the amount of the note, less the commission, and in the letter of transmittal stated he was paying the amount for the Helms loan, subject to approval of the abstract when received; that if the title were not satisfactory, he would return the papers and ask for a return of the money, but, if the abstract were approved, he would send the assignment for record, and, on March 1, 1920, sent the assignment to Aurelius-Swanson Company to be placed of record. The evidence further showed that the proposed loan by defendants Helms was to pay a mortgage held by the State School Land Department in the sum of approximately $ 1500. The Aurelius-Swanson Company, on the 3rd of January, 1920, paid to the School Land Department the amount of the Helms mortgage, and on the 19th day of January, a release of the mortgage was executed and delivered to Aurelius-Swanson Company, and thereafter filed for record. The evidence further showed that the balance of the $ 2,200 loan, above the amount paid the School Land Department in payment of the Helms mortgage, was rendered by Aurelius-Swanson Company to the defendants Helms, and they refused to accept it.

¶2 Defendant S. R. Helms testified that at the time he executed the application for the loan, and the note and mortgage sued on, and left them with Aurelius-Swanson Company's local agent at Sallisaw, it was agreed by them that the local agent would hold the application, note, and mortgage until he, Helms, could decide whether he wanted to make application for the loan of a larger sum; that he executed another note and mortgage for the sum of $ 2,700, and delivered them to Aurelius-Swanson Company's local agent at Sallisaw, and that the agent, in his presence, took from his desk papers purporting to be the original note and mortgage executed by him, tore them up, and threw them away, with the statement, in substance, that he would get rid of the old mortgage. On this evidence judgment was for the defendants against the plaintiff, from which plaintiff appealed. In that case (Jenkins v. Helms, 89 Okla. 77, 213 P. 322), it was held that the Aurelius-Swanson Company was bound by the agreement of its local agent, if such agreement were made, to hold the note and mortgage pending Helm's decision as to whether he wanted to make a larger loan, and that the act of the local agent in tearing up certain papers and representing he was destroying the note and mortgage for $ 2,200, when in fact he was not, amounted to a false representation and fraud. It was also held that plaintiff, Jenkins, was not an innocent purchaser, and the judgment was affirmed. It was further held, however, that the court should have settled the equities between the parties, and "Aurelius-Swanson Company having paid the School Land Department the amount, of its mortgage, the court should have subrogated the plaintiff to the rights of the School Land Department, and protected the plaintiff in the amount actually paid out and interest." The opinion concluded:

"The judgment of the court in finding that the plaintiff was not an innocent purchaser is affirmed, and the cause remanded, with directions to the trial court to proceed and settle the equities between the parties not inconsistent with the views herein expressed, with costs of this appeal taxed to the plaintiff in error."

¶3 On rehearing, the directions to the trial court were modified, in a per curiam opinion, in this language:

"The petition for rehearing in this case is denied, and the cause is remanded to the district, court of Sequoyah county, with directions to the trial court to hear and determine the cause as to any equities existing between the parties and the right of the plaintiff in error, if any, to be subrogated to the rights of the state of Oklahoma under a mortgage paid to the Commissioner of the School Land Department."

¶4 On the going down of the mandate the plaintiff, Jenkins, filed an amendment to his petition, in which he alleged, in substance, that at the time of the purchase of the note and mortgage from Aurelius-Swanson Company, he remitted the amount due, and with the funds so transmitted the Aurelius-Swanson Company, under the directions of the defendants, paid to the Commissioners of the Land Office, the amount of their mortgage, together with the accumulated interest in the total sum of $ 1,559; that upon such payment the mortgage held by the Land Department was released, and by reason of such payment, he was entitled to be subrogated to all the rights of the Land Department in and to the mortgage lien. The defendants, by their answer, specifically denied that they ever requested Aurelius-Swanson Company to pay the note and mortgage held by the School Land Department. The case was tried on the same evidence as on the former trial, and the court found that the plaintiff was entitled to be subrogated to all rights of the Commissioners of the Land Office of the state of Oklahoma, and rendered judgment for the amount paid by the Aurelius-Swanson Company to the Land Department in payment of its mortgage and interest, and the judgment was decreed to be a first and valid lien on the real estate mortgaged to the School Land Department.

¶5 Defendants, in their appeal, present but one question: "Should the doctrine of subrogation be held to extend to the defendant in error, George R. Jenkins, under the facts as presented by this record?" The fact that Aurelius-Swanson Company paid the indebtedness due from Jenkins to the state and secured a release of its mortgage, did not give Jenkins a right to subrogation. Neither did the fact, if a fact, that Aurelius-Swanson Company paid the state's mortgage out of the money advanced by Jenkins in payment for Helms' mortgage, entitled him to subrogation. He was under no duty to pay it. He was a volunteer. Kahn v. McConnell, 37 Okla. 219, 131 P. 682.

¶6 The fourth paragraph of the syllabus in The case of Kiniry v. Davis, 82 Okla. 211, 200 P. 439, is as follows:

"Where the proceeds of a loan, secured by a mortgage, are used to pay a prior mortgage and judgment lien upon the property mortgaged, and said mortgage and judgment lien are released of record, the mortgagee furnishing the money to pay such mortgage and judgment lien, being in no way obligated to pay the same, and there being no agreement that such mortgagee be substituted to the rights of the mortgagee or judgment creditors, the doctrine of subrogation in such a situation has no application."