Lackawanna Trust & Safe Deposit Co. v. Gomeringer

Citations

• 236 Pa. 179
• 84 A. 757
• 1912 Pa. LEXIS 732

Syllabus

<p>Equity — Subrogation — Payment by volunteer — Mortgage.</p> <p>1. The doctrine of subrogation rests fundamentally on the equitable principle that when a party is required to pay a debt for which another is also liable and which that other in good conscience ought to pay, such payment should operate to invest the party paying with the creditor’s rights and remedies against the other debtor.</p> <p>2. Subrogation can be invoked only for the protection of one who has paid the debt of another because he had made himself legally liable in connection therewith. When under no liability himself in connection with the debt he voluntarily pays it, no equity can arise from the transaction calling for protection. In such case payment extinguishes the debt, except as the creditor received the money upon the understanding that the debt is to be assigned to the party paying. In such case the transaction being one of purchase, and not payment, the debt survives.</p> <p>3. Where a corporation purchases real estate from two of its stockholders, and assumes the payment of a purchase money mortgage previously given by such stockholders, and subsequently executes a second mortgage, on which it defaults, and thereafter foreclosure proceedings are instituted on the first mortgage to the use of certain stockholders and directors other than the two who had sold the land to the company, who had bought the mortgage, the company in tendering payment of the amount due cannot make as a condition of such payment that the use plaintiffs shall assign the mortgage to a bank which was advancing the money; and if it pays the money into court, it cannot, after the money has been distributed, compel the use plaintiff by rule to make such an assignment.</p> <p>4. In such a case, with the ultimate liability resting upon the corporation, no payment by it of the mortgage could give rise to an equity calling for subrogation, for its payment was of its own debt for which it was ultimately liable.</p> <p>5.