Joy A. Chase appealed an order requiring her to pay a portion of an outstanding mortgage held by Ameriquest Mortgage Company. The appellate court denied her appeal.
The plaintiff and her ex-husband, George Chase, purchased a home at 55 Main Street, Rumney, New Hampshire, in August 1996. Using their home as collateral, they later executed a mortgage note and deed with Bankers Trust Company of California. In April 2002, again utilizing the home as collateral, Mr. Chase entered into a mortgage with Ameriquest in the amount of $90,000. The parties stipulated, for purposes of the hearing before the trial court, that Mr. Chase forged the plaintiff’s name when he executed the mortgage instrument with Ameriquest. As part of the mortgage agreement, Ameriquest paid off the Bankers Trust mortgage.
Pursuant to a divorce agreement later executed between the plaintiff and her husband, the plaintiff became the “sole owner of the parties’ marital residence subject to any indebtedness legally secured thereby.” At some point, the plaintiff did not meet the obligations of the mortgage with Ameriquest and foreclosure proceedings began. The plaintiff then sought to enjoin the foreclosure. The proceedings at issue here followed, with Ameriquest seeking $74,439.78 from the plaintiff, the amount it paid to Bankers Trust.
After a hearing, the trial court ruled that Ameriquest‘s mortgage constituted a charge on the homestead and the doctrines of equitable subrogation and unjust enrichment required the plaintiff to pay the $74,439.78. The plaintiff appealed, arguing that the trial court erred in applying the doctrines of equitable subrogation and unjust enrichment because the statutory homestead exemption relieves her from any obligation to pay Ameriquest under the terms of the mortgage.
The appellate court held that although Ameriquest was allegedly negligent in failing to uncover the forgery, the negligence on the part of a surety does not invalidate the right to subrogate. Accordingly, the Court discerned nothing unjust about allowing Ameriquest to obtain relief for the $74,439.78 because that was the amount for which the Chases would have been liable under the Bankers Trust mortgage. To hold otherwise would potentially yield a windfall for the plaintiff and could encourage collusive deception against lenders reasoned the appellate court.
The Court acknowledged that Ameriquest issued a mortgage in the amount of $90,000; however, the plaintiff should not be made to bear an increased financial burden because Ameriquest was not vigilant in making certain that all of the signatures on the mortgage instrument complied with applicable regulations and guidelines. The amount recoverable by operation of equitable subrogation is limited by the general rule as stated by American Jurisprudence … “that a subrogee is entitled to indemnity to the extent only of the money actually paid by him to discharge the obligation, or the value of the property applied for that purpose.” Therefore, the appellate court agree with the trial court that Ameriquest was not entitled to recover the difference between the amount outstanding on the Bankers Trust mortgage and the amount it ultimately lent.
The appellate court found that that the trial court erred in finding that Ameriquest‘s mortgage constituted a charge on the homestead, but affirmed the trial court’s finding on equitable subrogration and therefore affirmed the trial court’s order that Chase is on the hook to Ameriquest to the tune of $74,439.78. Having upheld the trial court’s application of equitable subrogation, the appellate court did not need to reach arguments concerning the application of the doctrine of unjust enrichment.