Ward, 121 Cal. 115, 53 Pac. 427; Shaeffer, 65 Cal. 81, 3 Pac. 92; Shaffer v. McCloskey, supra; George v. Butler, 16 Utah, 111, 50 Pac. 1032; Look v. Horn, 97 Me. 283, 54 Atl. 725; Clute v. Emmerich, 99 N. Y. 342, 2 N. E. 6; Emigrant Industrial Sav. Bank v. Clute, 114 N. Y. 634, 21 N. E. 1021; Gatewood v. Gatewood, 75 Vt. 407; 3 Pom. Eq. Jur. §§ 1311, 1312; Jones, Mortg. §§ 850, 972; Barnes v. Mott, 64 N. Y. 397, 21 Am. Rep. 625; Runyan v. Stewart, 12 Barb. 537; Warner v. Blakeman, 36 Barb. 501; Elliott v. Tainter, supra; Geib v. Reynolds, 35 Minn. 331, 28 N. W. 923;77 Va. 242; Bryson v. Myers, 1 Watts & S. Bruse v. Nelson, supra; Robinson v. Sampson, 23 Me. 388; Vannice v. Bergen, 16 Iowa, 555, 85 Am. Dec. 531; Cansler v. Sallis, 54 Miss. 446; Barnes v. Camack, 1 even if he has assumed and agreed to pay the mortgage. It does not expressly appear in these cases whether or not the purchaser, at the time he paid the mortgage, had actual notice of the junior lien. It would seem, however, that be must have had constructive notice thereof from the record, otherwise he would have been pro tected by the recording laws without the necessity of invoking the doctrine of subrogation: Matzen v. Shaeffer, 65 Cal. 81, 3 Pac. 92; Shaffer v. McCloskey, 101 Cal. 576, 36 Pac. 196; Young v. Morgan, 89 Ill. 199; Smith v. Dinsmoor, 119 Ill. 656, 4 N. E. 648; Wilson v. Kimball, 27 N. H. 300.

Matzen v., Barb. 392; Swift v. Kraemer, 13 Cal. 526, 73 Am. Dec. 603; Rumpp v. Gerkens and Pearce v. Buell, supra; McNeil v. Miller, 29 W. Va. 480, 2 S. E. 335; Johnson v. Tootle, 14 Utah, 482, 47 Pac. 1033; Fears v. Albea, 69 Tex. 437, 5 Am. St. Rep. 78, 6 S. W. 286; Smith v. Dinsmoor, 119 Ill. 658, 4 N. E. 648; Bressler v. Martin, 133 Ill. 278, 24 N. E. 518; Ayers v. Adams, 82 Ind. 109; Beall v. Walker, 26 W. Va. 741; Hoke v. Jones, 33 W. Va. 501, 10 S. E. 775; Stimpson v. Pease, 53 Iowa, 572, 5 N. W. 760; Downer v. Miller, 15 Wis. 612; Hudson v. Dismukes,

420; Backer v. Pyne, 130 Ind. 288, 30 Am. St. Rep. 231, 30 N. E. 21; Yaple v. Stephens, 36 Kan. 680, 14 Pac. 222; 2 Warville, Vend. & P. 858, note 4; Harris, Subrogation, § original mortgagee, or the purchaser, holds the prior lien, the doctrine of subrogation merely changing the ownership, without prejudice to the junior lienor.

The court said, in Shaffer v. McCloskey, supra: "The fact that the deed of trust was recorded, is of no value. [The purchaser] clearly intended that his payment of the mortgage should inure to his own benefit, and not to the benefit of

. [the junior lienors]; and there is no equitable ground upon which [the latter] can object to it so inuring. They were not led astray by the payment of the prior mortgage, and are left in the exact position which they expected to occupy when the trust deed was taken."

The following cases apply the doctrine that, where the mortgage is paid out of the purchase money, or the property is merely taken subject to the mortgage, without be

And this doctrine will be applied where the purchaser, without actual notice of the junior judgment lien, which was improperly indexed, assumed and paid a prior mortgage, which was released of record, in reliance upon representations of the morting assumed, and is paid by the purchaser gagor that there were no judgment liens against the property. Johnson v. Tootle, 14 Utah, 482, 47 Pac. 1033.

Or where a joint tenant, in consideration of the conveyance to him of his cotenant's interest in lands, paid off and released of record their joint mortgage, without actual knowledge of the existence of a duly recorded junior mortgage given by the grantor on his interest in the property. Shaffer v. McCloskey, supra.

Or where the purchaser assumed and paid a mortgage in reliance upon the discharge of a junior mortgage, which, however, had been assigned to a third person, the assignment not being of record, and the original holder having falsely entered a satisfaction thereof on the record. Wilson v.

Kimball, supra.

The basis for the above decisions is stated, in substance, in Smith v. Dinsmoor, supra, to be that the junior lienor acquires his lien, merely upon the equity of redemption, in subordination to that assumed by the purchaser, the latter not being bound to satisfy the mortgage and have it discharged for the benefit of others; and it makes no difference to the junior lienor whether the

to protect his interest in the property, and is released of record, the purchaser may have the mortgage revived, and be subrogated to the lien thereof as against the junior lien, if, without fault on his part, he is ignorant of the existence thereof. Barnes v. Mott, 64 N. Y. 397, 21 Am. Rep. 625; Ayers v. Adams, 82 Ind. 109.

This doctrine will be applied where one purchasing the equity of redemption from the grantor in a trust deed, without knowledge of a junior lien, subsequently pays off the trust deed and receives a conveyance of the property from the trustee. Darrough v. Herbert Kraft Co. Bank, 125 Cal. 272, 57 Pac. 983.

Or where a purchaser from a mortgagor of a portion of a larger tract of land encumbered by a mortgage, without knowlthe purchase money to the mortgagee, and edge of the junior lien, pays a portion of receives a release of that portion of the encumbered land so purchased. Duffy v. McGuiness, 13 R. I. 595; Hudson v. Dismukes, 77 Va. 242.

Or where the purchaser at an execution sale under a junior lien obtained after the discharge of a mortgage had actual knowledge that a grantee's money paid e prior

816; Farm Land Mortg. & Debenture Co. v., scribed real estate. On the 11th day of Elsbree, 55 Kan. 562, 40 Pac. 906; Home March, 1902, she executed a note for $1,500 Sav. Bank v. Bierstadt, supra; Campbell v. Trotter, 100 Ill. 281; Union Mortg. Bkg. & | T. Co. v. Peters, 72 Miss. 1058, 30 L.R.A. 829, 18 So. 497; Bennett v. First Nat. Bank, 128 Iowa, 1, 102 N. W. 129.

to one Hugh McFetrich, and, on the same date, to secure the payment of said note, executed a mortgage on said real estate. Thereafter, and on September 10, 1904, the appellant, the Capitol National Bank, Messrs. Miller & Barnd also for appel caused to be filed with the county clerk and

lees.

recorder of Adams county, Colorado, where the land was situated, a transcript of a

Goddard, J., delivered the opinion of judgment obtained against Mary Wright for the court:

the sum of $586.77 and costs. On the 19th The facts set out in the pleadings and day of September, 1904, and before the found by the court that are pertinent to the appellant had taken any steps to enforce its question presented in this case are, in brief, judgment by execution, Mary Wright sold, as follows: On the 11th day of March, and by warranty deed conveyed, the land 1902, Mary Wright was the owner in fee to Orel Holmes, one of the appellees herein. simple and in possession of certain de- Holmes immediately went into possession mortgage on the premises, notwithstand- | paid by the purchaser of encumbered real ing the latter had constructive notice estate, cannot be revived so as to defeat a at the time of his purchase of the pendency junior mortgage, given to protect the mortof the action out of which the lien origi-gagee from liability as surety for the mortnated. Neff v. Elder, 84 Ark. 277, 105 S. W. 260.

gagor on certain promissory notes, where such discharge proved to be ineffectual as In Barnes v. Mott, supra, the court, in against the holders of the unpaid promissory substance, said that, upon such payment, notes. The court observed that, notwiththe purchaser was entitled to all the rights standing such mortgage was paid out of the of the mortgagee, and to an assignment of purchase money, it being the manifest inthe mortgage; and, having caused the same tent of the parties that the mortgage should to be satisfied under circumstances authorizbe extinguished as a lien, it is within the ing an inference of mistake of fact, equity doctrine that the payment of an will presume such mistake in order to give brance by one whose duty it is to discharge the party the benefit of the equitable right it extinguishes the lien thereof. of subrogation, and, in so doing, prevent manifest injustice and hardship, without in terfering with intervening equities.

encum

It will be observed, however, that in the following cases, where the mortgage was not assumed, the purchaser taking subject to it, the right of subrogation is denied on the ground that the purchaser knew, or ought to have known, of the junior lien. But in Joyce v. Dauntz, supra, the court stated that the fact that the purchaser knew of the junior lien would not deprive him of the right to subrogation.

It was held in Joyce v. Dauntz, 55 Ohio St. 538, 45 N. E. 900, that one purchasing a portion of a greater tract of land from a mortgagor, the entire purchase money being applied in part payment of each of three mortgages covering the entire tract, will be subrogated to the liens of the two earlier mortgages as against the third mortgage, to Subrogation will be denied to one who the extent the money paid by him was ap- purchases subject to a mortgage which is plied in satisfaction of the two prior mort-released of record, relying upon an abstract gages. The court said the payment of the mortgages was not assumed, and, therefore, the doctrine that subrogation will be denied where the purchaser, as part consideration, assumes the payment of the mortgage, was not applicable.

Nor is it necessary that, in order to secure the purchaser in his right of subrogation, he should have been ignorant of the existence of junior liens at the time of his purchase. Ibid.

The purchaser of the equity from a grantor in a trust deed, who pays the same and receives a satisfaction thereof, will be subrogated to the lien thereof as against a junior judgment lien, as the interest of the grantor, after the giving of the deed of trust, is not analogous to that of a mortgagor, and is not subject to execution at law. McIntyre v Agricultural Bank, Freem. Ch. (Miss.)

105.

But it was held in Boyd v. Parker, 43 Md. 182, that a satisfied mortgage, which was

title which failed to disclose two duly docketed junior judgment liens, as he is chargeable with laches in failing to examine the court records which would have disclosed such liens. Hayden v. Huff, 60 Neb. 625, 83 N. W. 920; Garwood v. Eldridge, 2 N. J. Eq. 145, 34 Am. Dec. 195.

And this doctrine will be applied where the purchaser, who, without assuming it, paid a mortgage, which was released of recactual, notice of a junior judgment lien. ord, is chargeable with constructive, if not Hargis v. Robinson, 63 Kan. 686, 66 Pac.

988.

In the absence of an allegation that the purchaser of encumbered property, who received an assignment of the mortgage, canceled it in ignorance of a junior lien, the mortgage will not be revived as against the junior lien. Talbot v. Garretson, 31 Or. 256, 49 Pac. 978.

So, in the absence of an allegation that

The contention of counsel for appellant is that, in the circumstances of this case, the payment of the mortgage by Holmes and the release of the same on record operated as a satisfaction and discharge of said mortgage, and that its judgment lien thereby became a prior and paramount lien upon said property. To the contrary, counsel for

of said property, and, on September 21, ... be canceled and held for naught, as 1904, paid said mortgage, and caused the of the date in which the same was executed same to be satisfied of record. As alleged by the said mortgage; . . . and that in the cross-complaint, and as found by the said mortgage be fully restored on the court below, the defendant Wright had, as records where the same is recorded as a lien an inducement to the said purchase, repre- upon the said premises senior, prior, and susented to the defendant Holmes that the perior to the lien of the said judgment of said premises were free of all liens and en- the plaintiff against the defendant Wright." cumbrances except the mortgage given by And thereupon proceeded to foreclose said the defendant Wright to secure to Hugh mortgage in behalf of the defendant McFetrich the sum of $1,500 and interest Holmes, and ordered that the proceeds thereon. That, previous to the completion realized from a sale of said premises under of said purchase, the defendant Wright fur- such foreclosure proceeding be first applied nished to the defendant Holmes an abstract to the payment of the mortgage debt, and of title prepared by a reputable abstract the excess, if any, be applied upon the said company which was engaged in the busi- judgment in favor of the appellant. ness of furnishing abstracts of title to lands in said Adams county. That thereafter the defendant Holmes had caused said title to be examined by attorneys at law in regular practice in this state, who found the title to the same free from encumbrance except said mortgage as shown by the entries on said abstract of title. That the defendant Holmes, at the time he completed said pur-appellees insist that the payment of the chase and paid the amount of said mortgage note and the satisfaction of the mortgage and filed for record the release of said mort- being made by Holmes, without actual notice gage, had no actual knowledge of the judg- of the lien of the judgment, and he being, ment, and the entry of the same had, by as the court found, free from negligence, accident or otherwise, been omitted from and having paid the mortgage under a misthe said abstract of title of the said prem- take of fact, that he is entitled in equity ises. That the defendant Holmes, in to be subrogated to the rights of the making the said purchase, and in examining original mortgagee under the well-settled the title to the said premises, pursued the equitable doctrine that the mere fact of a usual and customary method to inform charge having been paid off does not ipso himself as to the condition of the title to facto extinguish it; but, if there is any said premises, and adopted the usual and reason for keeping it alive, such as the customary cautions in order to learn the existence of another encumbrance, equity condition of the said title, and was, in that will not destroy it. The rule invoked is behalf, free from negligence; and it was stated by 3 Pomeroy, in his work on Equity ordered, adjudged, and decreed by the court Jurisprudence, § 1212, as follows: "In "that the defendant Orel Holmes be subro- general, when any person having a subsegated to the rights of Hugh McFetrich in quent interest in the premises, and who is and under said mortgage, and that the said therefore entitled to redeem for the purpose mortgage be revived and restored as if the of protecting such interest, and who is not same had never been released, and that the the principal debtor, primarily and absodefendant Holmes be regarded as the equi-lutely liable for the mortgage debt, pays off table assignee thereof; that the release of the mortgage, he thereby becomes an mortgage executed by said Hugh McFetrich equitable assignee thereof, and may keep

he is without remedy, a purchaser will be, denied subrogation to the lien of a deed of trust which was satisfied out of the purchase money and released of record, in ignorance by him of the existence of a junior lien which failed to appear on the abstract title upon which he relied, as, in making such payment, so far as the judgment creditor is concerned, the former must be considered a volunteer. Wade v. Beldmeir, 40 Mo. 486.

tion will be denied the purchaser as against
a judgment lien obtained during the time
the deed is withheld from record, where
the statute renders all conveyances of land
void as against the grantor's creditors un-
til the registration thereof. Tarboro v.
Micks, 118 N. C. 162, 24 S. E. 729.
As to the right to reinstatement of a
mortgage when released or discharged by
mistake, see the subject note to Attkisson
v. Plumb, 58 L.R.A. 788.

Where the deed of encumbered property is As to the right of one paying a stranger's deposited with the mortgagee and retained debt to be subrogated to the rights of the by him until the purchase money is paid, creditor, see notes to Charnock v. Jones, part being applied in discharge of the mortante, 233, and Crumlish v. Central Improv. gage, which is released of record, subroga Co. 23 L.R.A. 120.

er made the payment for his own benefit, and not for the benefit of the junior lienholder, and, for the protection of his interests, equity will treat such owner as the assignee of the original senior lienholder, and will revive and enforce such senior lien for his benefit.” In Bruse v. Nelson, 35 lowa, 157, the court said: “But it is urged that the Lamb mortgage was of record, and plaintiff had constructive notice of it, and therefore cannot be relieved. This position proves too much. In order that a debt may attach as a lien prior to a mortgage, it must always, in some way, appear of record.

alive and enforce the lien so far as may be, and that it will be presumed that such ownnecessary in equity for his own benefit. He is subrogated to the rights of the mortgagee to the extent necessary for his own equitable protection." In Vaughn v. Comet Consol. Min. Co. 21 Colo. 54, 39 Pac. 422, this court held that the purchase of a prior charge or encumbrance upon property by one who claims the ownership in fee does not in equity necessarily merge the charge or encumbrance; and therein we applied the rule as announced in § 798 in volume 2 of his work, which is also particularly applicable to the facts in this case: "When an owner of the premises who is not personally and primarily liable to pay the debt seThe argument, then, would amount cured pays off a mortgage or other charge to this, that a mortgage released in misupon it, he may keep the lien alive as a take could never be restored against a prior security for himself against other encum-claim, which was in a condition to become brances or titles, and thus prevent a merger. a lien. In other words, that the lien of the Whether he does so is a question of intention, governed by the rules laid down in the previous paragraphs." Counsel for appellant, however, while conceding the general| rule to be as above stated, insist that it is not applicable to the facts in this case, for the reason that, their judgment being a lien of record, Holmes paid the mortgage in question with legal notice of its existence, and that, the consideration in the deed to him being practically the full value of the land, as between Wright and himself, the real consideration was the extinguishing of the debt secured by the mortgage.

There is some authority to support the first contention, and also to the effect that, where a grantee agrees, as a part of the consideration, to pay off the mortgage, such payment results in the extinguishment of the mortgage, and the party is not entitled to subrogation; but, the question of merger being governed by the intention of the parties, we think that, upon principle and under the rule announced in a large majority of cases, when the owner of the fee title pays off a prior encumbrance, without actual notice of the junior judgment lien, it will be presumed that he paid the same for his own benefit and the protection of his own interests, and equity will treat him as the assignee of the original encumbrance, and will revive and enforce it for his benefit. In Darrough v. Herbert Kraft Co. Bank, 125 Cal. 272, 57 Pac. 983, 984, the facts were very similar to those in the case at bar. It is there said that the rule laid down by the California court in previous decisions, citing them, was: "That a junior lienholder shall derive no advantage over a senior lien, where such senior lien has been paid off and canceled by the owner of the premises to which the liens attached with out actual knowledge on the part of such owner of the existence of such junior lien;

mortgage could never be restored, except
when the restoration is unnecessary and un-
important." In Johnson v. Tootle, 14 Utah,
482, 47 Pac. 1033, 1034, a case very like in
its facts to those before us, it is said:
"The general principle which runs through
nearly all the cases of this character is that,
'when the legal rights of the parties have
been changed by mistake, equity restores
them to their former condition, when it can
be done without interfering with any new
right acquired on the faith and strength of
the altered condition of the legal rights,
and without doing injustice to other per-
sons.'" We think that the authorities
largely preponderate in favor of the propo-
sition that, although the deed recites that
the purchaser shall pay off the mortgage as
a part of the purchase price, he is entitled
to subrogation. Among them are: Young
v. Morgan, 89 Ill. 199; Johnson v. Tootle,
supra; Barnes v. Mott, 64 N. Y. 397, 21 Am.
Rep. 625; Emmert v. Thompson, 49 Minn.
386, 32 Am. St. Rep. 566, 52 N. W. 31;
Ayers v. Adams, 82 Ind. 109; Rumpp v.
Gerkens, 59 Cal. 496; Elliott v. Tainter, 88
Minn. 377, 93 N. W. 124. And that the
taking of a deed containing a recital that
the premises are "subject to a mortgage"
does not import a promise on the part of
the purchaser to pay the mortgage debt. 1
Jones, Mortg. § 865; Pike v. Goodnow, 12
Allen, 472; Strong v. Converse, 8 Allen, 557,
85 Am. Dec. 732; Campbell v. Knights, 24
Me. 332; Weed Sewing Mach. Co. v. Emer-
son, 115 Mass. 554; Belmont v. Coman, 22
N. Y. 438, 78 Am. Dec. 213. Barnes v. Mott,
supra, was an action to have a lien of a
judgment upon certain premises discharged,
and to restore the lien of a former mort-
gage thereon that had been paid off and
satisfied by a subsequent owner in ignorance
of the judgment. The court, per Allen, J.,
said: "So much of the judgment as re-

B. D. FRY et al., Commissioners of Dickin the sum of $1,000, conditioned that we will son County, Kansas.