The facts sufficiently appear in the opinion. *Page 478 The defendant demurred to the plaintiff's complaint on *Page 482 the ground that it does not state facts sufficient to constitute a cause of action. The court sustained the demurrer, and, the plaintiff having declined to amend his complaint, judgment was given against him for costs. From the judgment this appeal is taken.
The following facts are disclosed by the complaint:
That on the 23d day of February, 1897, the defendant purchased of James Pollock, Delia Pollock, and Daniel Powell certain described real property situated in Washoe county, Nevada, for the agreed price of $14,000, received a deed of conveyance therefor and went into possession thereof. That prior to said purchase said Pollock and Powell had given a deed of trust in the nature of a mortgage to all of said property, to secure to the Farmers' Mechanics' Savings Bank, of Sacramento, California, the payment of a certain promissory note they had executed to said bank for the sum of $8,000, with interest, and had also given a mortgage to the plaintiff on the same property to secure the payment of a promissory note for $2,080, with interest, which they had executed to him. Both of said instruments had been executed in the above order and duly recorded in the office of the county recorder of Washoe county, prior to said purchase of the defendant. That at the time of said purchase by, and conveyance to, the defendant, the said deed of trust and mortgage were valid and subsisting liens on said property for the respective amounts of the said promissory notes secured thereby, which amounts remained wholly unpaid, of all of which the defendant had actual and constructive notice at the time of its said purchase. That the defendant, in its negotiation for the purchase of said property, agreed with its grantor to pay out of said $14,000, the purchase money, the said promissory note held by said savings bank, which amounted to $8,800, and apply the remainder thereof, $5,200, in payment of a certain promissory note it held against its said grantors for the latter sum. That subsequently suit was commenced in the district court of Washoe county against said James Pollock, Delia Pollock, and Daniel Powell, the defendant's grantors, to foreclose said deed of trust, and subject said property to judicial sale for the payment of the note secured by said deed of trust. That in *Page 483 said suit the defendant and the plaintiff herein were made parties defendant. That the defendant answered in said suit, alleging its said purchase of said property, and the plaintiff, Martin Gulling, answered therein, setting up and pleading his said mortgage, and asked for decree of foreclosure, and the sale of said property, and that the proceeds arising from such sale be applied to the payment of the sum due him on said mortgage, subject, however, to the payment of the sum due on said deed of trust. That, after said suit was commenced, the defendant procured the trustees named in said deed of trust to sell said property, under the power of sale expressed therein, at public auction, to the highest bidder for cash, and at said sale the defendant became the purchaser for the sum due on the promissory note secured by said deed of trust and the amount of the costs of said sale, and paid the same out of $14,000 purchase money aforesaid, and received a deed of conveyance for said property from said trustees, and that the defendant applied the balance of said $14,000 purchase money to the payment of the said promissory note for $5,200, which it held against its said grantors, Pollock, Pollock and Powell.
It also appears from the complaint that, in said suit for the foreclosure of said deed of trust, the court gave judgment for the defendant, the Washoe County Bank, and against Martin Gulling, the plaintiff herein, decreeing that said defendant had acquired the right and title of said James Pollock, Delia Pollock, and Daniel Powell, and the right and title of said savings bank, under said trust deed, to said property, free and discharged of the lien of the plaintiff's mortgage; and it is alleged by the complaint that said sale made by said trustees was made at the instance and for the sole use and benefit of the defendant, Washoe County Bank, and for the purpose and with the intent to gain an advantage and preference over the plaintiff, and to defeat plaintiff in the enforcement of his said mortgage, and for the purpose and with the intent to enable the defendant to apply a portion of the purchase money and consideration expressed in the deed from said Pollock, Pollock, and Powell to said defendant, to wit, $5,200 thereof in payment and satisfaction of the *Page 484 aforesaid indebtedness of said Pollock, Pollock, and Powell to the defendant.
Upon the facts stated above, substantially, the prayer of the plaintiff's complaint is: "That it be ascertained and determined how much money is due the plaintiff upon his said note and mortgage from James Pollock, Delia Pollock, and Daniel Powell, and how much money, if any, remains in defendant's hands of the purchase money and consideration expressed in said deed from James Pollock, Delia Pollock, and Daniel Powell to defendant, Washoe County Bank, and that said defendant be required to pay the plaintiff the sum of money so found to be due to him."
Upon the foregoing facts, we do not think this action can be maintained. It does not appear that the respondent assumed the payment of the debt due the appellant, on his said promissory note and mortgage, out of the purchase money it agreed to pay Pollock, Pollock, and Powell, for said property, or otherwise. The respondent, having had legal notice of said mortgage at the time of said purchase and conveyance from appellant's mortgagors, succeeded to their interest in and title to said property, subject to the lien of said mortgage thereon. The appellant's rights and remedies under his mortgage were in no manner impaired thereby.
Counsel for appellant contends that "in procuring the Farmers' Mechanics' Savings Bank and the trustees under the trust deed to sell the real property under the power expressed in the trust deed to it, when it was obligated to pay the debt to secure which the trust deed was given, thereby destroying the lien of Gulling, the respondent committed a gross fraud upon Gulling. By this fraud it took away Gulling's security and appropriated it to itself, and became liable to Gulling. More strictly speaking, equity will follow the purchase money into the hands [of respondent], and compel the application of that portion in excess of the sum due upon the trust deed to the satisfaction of Gulling's mortgage."
We think counsel is in error in the above legal conclusions. The respondent, the grantee of Pollock, Pollock, and Powell, having assumed, as aforesaid, the payment of the debt secured by said deed of trust, became personally and primarily liable *Page 485 for the debt, whose duty it was to pay said debt absolutely and before all others, and, when it paid the same, such payment operated, ipso facto, as an end to said trust deed, and the lien thereof was completely destroyed. (Pomeroy's Equity, sec. 1213, and cases cited; Jones on Mortgages, secs. 864, 865, and notes.)
When the respondent paid the said debt which it had assumed to pay, it was not and could not be subrogated to the rights of the holder of said encumbrance, the Farmers' Mechanics' Savings Bank, whether it paid the same in pursuance of said trustees' sale or otherwise paid it. (Birke v. Abbott, 103 Ind. 1.) Upon said payment the lien of the deed of trust was extinguished, and left the plaintiff's mortgage the sole encumbrance.
If the said facts appearing in this case were shown to exist in the suit brought to foreclose said deed of trust, then the judgment and decree given in that suit against Martin Gulling, the appellant herein, was erroneous, and instead thereof judgment and decree should have been rendered in his favor ordering a sale of said property, and the application of the proceeds of the sale, or so much thereof as was necessary, to the payment of the said debt due to him. All the necessary parties were before the court. The senior lien being extinguished, there was nothing in the way of appellant's mortgage. However erroneous that judgment and decree may be, it cannot avail the appellant in this action, nor give him any cause of action against the respondent in this case.
If said trustee's sale was proper under the facts presented in that suit, and the respondent was subrogated to the rights of said savings bank, then the appellant's remedy was to redeem the property from said sale under the provisions of the statute.
The demurrer to the plaintiff's complaint having been properly sustained, the judgment appealed from is hereby affirmed.