## Facts

- Mary Covert owned real property subject to a preexisting senior mortgage held by Hardy.
- Covert sold the property to Morris Windt and gave Windt a promissory note secured by a junior mortgage; Hardy’s mortgage remained the senior lien.
- Hardy initiated foreclosure on the senior mortgage.
- To protect his junior security interest, Windt paid about $4,440 to discharge Hardy’s mortgage and prevent foreclosure.
- Windt then sued to judicially foreclose his junior mortgage for the remaining $375 due on his note and for reimbursement of the $4,440 paid to satisfy the senior mortgage.
- The trial court included both amounts in the foreclosure decree; Covert appealed.

## Issues

1. Whether a junior mortgagee who pays off a senior mortgage to protect his security is equitably subrogated to the senior mortgagee’s lien rights.
2. Whether the amount paid to discharge the senior mortgage may be treated as part of the debt secured by the junior mortgage and recovered through foreclosure, absent an express contrary agreement.

## Decision

- The California Supreme Court affirmed the foreclosure decree.
- Windt was not a volunteer; he paid the senior debt to protect his existing lien from impairment by the senior foreclosure.
- Equity subrogated Windt to the rights of the discharged senior mortgagee to the extent of the payment.
- Windt held a special lien on the property for the $4,440 and could enforce that lien in the same foreclosure action along with the $375 balance on his note.

## Legal Principles

- A junior mortgagee who satisfies a prior mortgage to protect his security is equitably subrogated to the prior mortgagee’s rights to the extent necessary to prevent injustice.
- Protective payments made to preserve mortgage security (including payment of prior encumbrances) may be added to the secured obligation and collected through foreclosure unless the parties expressly agree otherwise.
- Treating the paying junior mortgagee as only an unsecured creditor would allow the mortgagor to receive the benefit of a cleared title without bearing the cost of the discharged senior lien.

## Conclusion

A junior mortgagee who discharges a senior mortgage to protect his lien is subrogated to the senior lien and may foreclose a special lien on the property for the amount paid, together with any remaining balance due under the junior mortgage obligation.


Windt v. Covert, 152 Cal. 350, 93 P. 67 (Cal. 1907)