Lumbermen's Insurance v. Sprague

This action was brought upon three promissory notes for $350, each executed by the defendant, Sprague, to the Minnesota Loan & Trust Company, and by it transferred before maturity, *210for value, to this plaintiff. The defendant admits the making of the notes, and alleges that they were made solely and for the purpose only of securing an extension in the time of the payment of the principal sum of $10,000. The answer is not very explicit in regard to the making of these notes, except as to the purpose for which they were made, but from an examination of the whole record, and the admissions of the appellant’s counsel in his brief, we assume that the notes in suit were given for three semiannual installments of interest falling due upon the mortgage of $10,000 described in the answer, which had been executed upon certain real estate by one Anderson and his wife to A. B. Coe and F. W. Forman, payable in five years, and which, by various assignments, was finally transferred to plaintiff, with the note of $10,000 which it secured. The note and mortgage of $10,000 were dated November 7, 1887, payable in five years from date, with interest at the rate of seven per cent, per annum.

After the execution of the note and mortgage the premises therein described were conveyed several times to different persons, of whom defendant Sprague was one, and he conveyed the same to one Wet-more, in 1892; and, by the terms of the deed, Wetmore agreed to pay the $10,000. Wetmore owned the property at the time of the commencement of this action, and was then in possession.

The contention of the defendant is that, by the terms and conditions of said conveyance, Wetmore assumed and agreed to pay said mortgage of $10,000, and interest thereon, — the interest being the consideration for which the notes sued upon were given, — and that Wetmore became primarily liable therefor, and that, Wetmore being in possession of said premises, defendant is powerless to protect himself against loss, should he be compelled to pay the notes sued upon. The defendant also contends that, as a condition precedent to his being compelled to pay said notes, he is entitled to have from the plaintiff an assignment of said notes sued upon, together with a pro rata interest in the mortgage securing the same.

The plaintiff interposed a demurrer to the whole of the answer, upon the ground that it appeared upon the face thereof that it did not state facts sufficient to constitute a defense. The principal note1 of $10,000 is still unpaid. This is owned by plaintiff, and secured by a mortgage upon the premises owned by Wetmore. That the *211plaintiff has a perfect right to bring suit upon these notes seems unquestionable. If the defendant desire to have the benefit of the mortgage security, he should pay the mortgage debt, including accrued interest. In his answer he does not offer to pay this debt, principal or interest, nor does he express any willingness to do so. He does not bring the amount necessary for such purpose into court, nor allege that he ever tendered to the plaintiff the amount necessary to discharge the mortgage security. He certainly cannot be subrogated to the rights of the plaintiff until he pays the security held by the plaintiff, and when this is done the court, in the exercise of its equitable powers, can, if necessary, compel a transfer to him of the security. See London & N. W. Am. Mortgage Co. v. Fitzgerald, 55 Minn. 71, (56 N. W. 464.) The order sustaining the demurrer to the answer is affirmed.

(Opinion published 60 N. W. 1101.)