William J. Mexico and wife, prior to the happening of the events involved herein, were the owners of a 94.72-acre tract of land in the township of Huron, Wayne county, Michigan; and on April 17, 1917, mortgaged the above premises to the Rockwood State Bank to secure the payment of $4,000. August 18, 1919, Mexico and wife conveyed the above premises to Frank H. Stoflet and wife. On March 30, 1923, Stoflet and wife mortgaged 68.49 acres of the above mentioned premises to the Rockwood State Bank to secure the payment of $2,200. Upon default of Stoflet and wife to pay the principal and interest of the above described mortgages, the same were foreclosed by advertisement and sold and conveyed to the Rockwood State Bank on August 23, 1929, and September 12, 1929, respectively.
On December 28, 1929, Stoflet and wife mortgaged the 68.49-acre tract to the State Savings Bank of Carleton for the sum of $3,100. On the 21st day of May, 1930, the Rockwood State Bank discharged their mortgages and conveyed to Stoflet and wife the premises described in the mortgage dated April 17, 1917.
On May 22, 1930, Stoflet and wife paid the State Bank of Rockwood $6,399.01 by check on the back of which was the notation "Anton Kaier" and below that "paid by Stoflet." The record also shows that Anton Kaier loaned this money to Stoflet and wife as agent for plaintiffs and on the same day a mortgage was executed in favor of plaintiffs in the sum of $16,000 upon the above 68.49-acre tract and two other parcels of land containing 35.90 acres. At the time the above mortgage was given no mention was made of the fact that the State Savings Bank of Carleton had a mortgage upon a part of the above described premises. *Page 449
Plaintiffs filed their bill of complaint to foreclose the last above described mortgage and as additional affirmative relief asked that their mortgage be declared a prior lien upon the premises described in the mortgage dated April 17, 1917. The defendant State Savings Bank of Carleton filed an answer to the bill of complaint and a cross-bill to foreclose their mortgage claiming said mortgage to be a first and prior lien upon the land above described. The cause came on to be heard upon an order of reference before a circuit court commissioner who made a finding of facts and conclusions of law in favor of the defendant bank. An order was entered confirming the report of the circuit court commissioner and from which order plaintiffs appeal.
The sole question involved in this cause is the right of plaintiffs to be subrogated to the rights of the Rockwood State Bank in its two mortgages. It is the claim of defendant bank that there was no legal obligation on the part of plaintiff to pay the indebtedness of Stoflet and wife to the Rockwood State Bank. It is conceded by all parties that plaintiffs are not entitled to legal subrogation.
In French v. Grand Beach Co., 239 Mich. 575, we said:
"The doctrine of subrogation rests upon the equitable principle that one who, in order to protect a security held by him, is compelled to pay a debt for which another is primarily liable, is entitled to be substituted in the place of and to be vested with the rights of the person to whom such payment is made, without agreement to that effect. This doctrine is sometimes spoken of as 'legal subrogation,' and has long been applied by courts of equity. Stroh v. O'Hearn, 176 Mich. 164,177. There is also what is known as 'conventional subrogation.' It arises from an agreement between the debtor and a third person *Page 450 whereby the latter, in consideration that the security of the creditor and all his rights thereunder be vested in him, agrees to make payment of the debt in order to relieve the debtor from a sacrifice of his property due to an enforced sale thereof. It is wholly independent of any interest in the property which the lender may have to protect. It does not, however, inure to a mere volunteer who has no equities which appeal to the conscience of the court."
In 25 R. C. L. p. 1324, § 11, it is said:
"While subrogation is founded on principles of equity and benevolence, and may be decreed where no contract exists, yet it will not be decreed in favor of a mere volunteer, who, without any duty, moral or otherwise, pays the debt of another; for such a person can establish no equity, and can obtain the right of substitution by contract only."
In Stroh v. O'Hearn, 176 Mich. 164, 177, we said:
"Subrogation is an equitable doctrine depending upon no contract or privity, and proper to apply whenever persons other than mere volunteers pay a debt or demand which in equity and good conscience should have been satisfied by another. It is proper in all cases to allow it where injustice would follow its denial, and in allowing it all injustice should be guarded against so far as possible. We need not go afield in other jurisdictions for authority upon this subject; the law is well settled in this State."
In Dunitz v. Woodford Apartments Co., 236 Mich. 45, 49, we said:
"Ordinarily, subrogation will not in any event be accorded a purely volunteer. Plaintiff had here no interest to protect until he voluntarily, and for surely no benevolent reason, but solely for the purpose of self-aggrandizement, injected himself into the already troubled affairs of those interested in this property. It is clear that one who seeks to be subrogated *Page 451 must show some ground for equitable intervention. Bond v.Montgomery, 56 Ark. 563 (20 S.W. 525, 35 Am. St. Rep. 119), andRichards v. Cowles, 105 Iowa, 734 (75 N.W. 848)."
The theory of equitable or conventional subrogation is that the junior lienor's position is left unchanged by the conduct of the party seeking subrogation and that he is not wronged any by permitting subrogation. An examination of the facts involved in this cause in the light of the above rule shows that the total amount of money which Stoflet and wife owed to the Rockwood State Bank on May 22, 1930, was $6,399.01 and that the indebtedness incurred by Stoflet and wife in the transaction with plaintiffs was $16,000. The mortgages formerly held by the Rockwood State Bank covered only 94.72 acres of land while plaintiffs' mortgage not only incumbered 68.49 acres of the above mentioned land but also 35.90 acres of land owned by Stoflet and wife in addition thereto. The possibility of realizing on any deficiency judgment or decree granted against Stoflet and wife would be lessened because of plaintiffs' prior lien. When plaintiffs loaned the money they had no interests to protect. It was done without any agreement or understanding that they were to enjoy the fruits of subrogation. It was voluntarily done upon their part and to grant it would not leave defendant in its former position. A mere volunteer is not entitled to subrogation.
The decree of the lower court is affirmed. Defendants may recover costs.
FEAD, C.J., and NORTH, WIEST, BUSHNELL, and CHANDLER, JJ., concurred with SHARPE, J.