This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
While the payment of the debt secured by a mortgage extinguishes thei mortgage so far as the mortgage creditor is concerned, it does not necessarily have that effect as regards the person making the payment. In his favor the courts will frequently apply the equitable doctrine of subrogation, by which one who, in order to protect his interests, pays a debt for which he is not primarily liable, is entitled to stand in the place of the original creditor, with all the rights belonging to the latter, including particularly the right to enforce any security which the latter may have held for the payment of the debt. This right is sometimes given the name of "equitable assignment," as being in effect an assignment, implied by equity, to the person making the payment. As a general rule, any person who, as being liable for the mortgage debt, or as having an interest in the land, is entitled to pay the debt, that is, to "redeem from the mortgage," as it is ordinarily expressed,91 is entitled to be subrogated on making such payment, provided he is not primarily and solely liable for the debt. If he is so liable, he is not entitled to be subrogated, since this would involve his substitution, by operation of law, as claimant under an obligation as against himself and his performance of the obligation consequently extinguishes the obligation and the incidental security.
The doctrine of subrogation is frequently applied for the benefit of a surety who, upon paying his principal's debt, thereby becomes entitled to stand in the place of the creditor, in order to obtain indemnity; and, accordingly, when the debt is secured by mortgage, the statutory period for redemption from a foreclosure sale.
90. Winchester v. Paine, 11 Ves. 194, 199; Casserly v. Witherbee.
119 N. Y. 522; Flanders v. Hall, 159 Mass. 95; Pitman v. Thornton, 6G Me. 469. 91. Ante, 645(a).
The mortgagor himself may or may not be entitled to subrogation. So long as he is primarily liable for the whole debt, he cannot pay it and assert a right of subrogation.94 If, however, he shares with others the primary liability for the debt, as when he is one of two or more co-owners of property who mortgaged it to secure their joint debt, he is but a surety for the others as regards their shares of the debt, and if he pays the whole debt, or a part thereof greater than his proportionate part, he is subrogated to the extent of such overpayment, for the purpose of enforcing contribution by the others.95
In case the mortgage debt is paid by one of the parties to a transfer of the mortgaged land or of a part thereof, the question whether the party paying has a right of subrogation will depend upon the character or circumstances of the transfer. If the property was transferred subject to the mortgage, though without any assumption of the debt by the transferee, the mortgaged property is subject to a primary liability for the debt,96 and consequently, if the transferor pays the debt, he is subrogated to the rights of the mortgagee against the property;97 and conversely, if the transferee pays the debt, he is not subrogated to the rights of the mortgagee against the transferor personally or against a part of the land not transferred,98 except, it seems, to the extent to which the debt paid by him exceeds the value of the land transferred to him,99 the relation of suretyship extending to such value only.1 The transferee of mortgaged land, who assumes payment of the debt, becomes primarily liable therefor,2 and cannot, on paying the debt, assert a right of subrogation as
92. Matthews v. Fidelity Title & Trust Co. (C. C), 52 Fed. 687; Telford v. Garrels, 132 111. 550. 24 N. E. 573.; Jones v. Tincher. 15 Ind. 308, 77 Am. Dec. 92; Lynn v. Richardson, 78 Me. 367, 5 Atl. 877; Conner v. Hows, 35 Minn. 518, 29 N. W. 314; Taylor v. Tarr, 84 Mo. 420; Ellsworth v. Lock-wood, 42 N. Y. 89; Smith v. Fol-som, SO Ohio St. 218, 88 N. E. 546; Bowen v. Barksdale, 33 S. C 142, 11 S. E. 640; Wilder v. Wilder, 82 Vt. 123, 72 Atl. 203.
93. Kingsley v. Purdom, 53 Kan. 56, 35 Pac. 811; Nichols v. Lee, 10 Mich. 526, 82 Am. Deo 57; Wright v. Patterson, 45 Mich. 261, 7 N. W. 820; Shepherd v. McClain, 18 N. J. Eq. 128; Hammond v. Barker, 61 N. H. 53; Kinley v. Hill, 4 Watts. & S. (Pa.) 426; Shepherd v. McClain, 18 N.
J. Eq. 128; Fears v. Albea, 69 Tex. 437, 5 Am. St. Rep. 78, 68. S W. 286.
94. Clay v. Banks, 71 Ga. 363; Butler v. Seward, 10 Allen ( Mass. ) 466.
95. Pratt v. Law, 9 Cranch. (U S.) 456, 3 L. Ed. 791; Young v. Williams, 17 Conn. 393; Randolph v. Stark, 51 La. Ann. 1121, 26 So. 59; Dunesn v. Drury, 9 Pa. 3:12; Holland v. Citizens' Sav. Bank, 16 R. I. 734, 8 L. R. A. 553. 19 Atl. 654; Wheatley v. Calhoun, 12 Leigh (Va.) 264, 37 Am. Dec. 654: Baugh & Sons Co. v. Black. L20 Va. 12, 90 S. E. 607; Lamherson v. Bailey, 158 Wis. L05, 147 N. W. 1066. Part of the co-promisors cannot purchase the note and enforce it for the full amount against the others. Peaks v. Dexter, 82 Ale. 85, 19 Atl. 100.
96. Ante, Sec. 622.
97. Funk v. McReynolds, 33 III. 481; Gregory v. Arms, 48 Ind. App. 562, 96 N. E. 196; Kinnear v. Lowell, 34 Me. 299; Hermanns v Fanning, 151 Mass. 1, 23 N. E. 493; Pratt v. Buckley, 175 Mass. 115, 55 N. E. 889; Baker v. Terrell, 8 Minn. 195; Gerdine v. Menage, 41 Minn. 417, 43 N. W. 91; Greenwell v. Heritage, 71 Mo. 459; Stillman v. Stillman. 21 N. J. Eq. 126; Marsh v. Pike, 10 Paige (N. Y.) 395; Johnson v. Pike, 51 N. Y. 333; Arnold v. Green. 116 N. Y. 566, 23 N. E. 1; Howard v. Robbins, 170 N. Y. 498, 63 N. E. 530; Fogarty v. Hunter, 83 Ore. 183, 162 Pac. 964; Hansell v. Lutz, 20 Pa. 284.
98. Drury v. Holden, 121 III. 130, 13 N. E. 547; Bunch v. Grave, III Ind. 351, 12 N. E. 514; Shirk v. Whitten, 131 Ind. 455, 31 N. E. 87; Northwestern Nat. Bank v. Stone, 97 Iowa, 183, 66 N. W. 91; Moore v. Olive, 114 Iowa, 650, 87 N. W. 720; Wedge v. Moore, 6 Cush. (Mass.) 8; In re Wisner's Estate, 20 Mich. 442; Landau v. Cottrill, 159 Mo. 308, 60 S. W. 64; Robinson v. Lowery, 52 S. C. 464, SO S. E. 487; Guernsey v. Kendall, 55 Vt. 201; Gayle v. Wilson, 30 Gratt. (Va.) 166; Bennett v. Keehn, 67 Wis. 154, 29 N. W. 207, 30 N. W. 112. So when the payment was by a purchaser at execution sale. Dollar Sav. Bank v. Burns, 87 Pa. 491; Steele v. Walter, 204 Pa. 257, 53 Atl. 1097.