BURR v. BEERS. COURT OF APPEALS OF NEW YORK, 1861. Appeal from a judgment of the Supreme Court. The action was brought to recover the amount of two mortgages executed, with his bonds, by E. F. Bullard to John Cramer, committee of the estate of Charles Burr (the plaintiff's intestate), for $1,000 and $2,000 respectively. After giving the mortgages, which covered several parcels of land, Bullard conveyed both parcels to the defendant by a deed containing a recital and covenant in the following words: "Subject to two mortgages held by John Cramer, committee of the estate of Charles Burr, bearing date, &c. (describing the mortgages), which mortgages are deemed and taken as a part of the consideration of this conveyance, and which the party of the second part hereby assumes to pay." Charles Burr was restored to the possession and control of his estate, by an order of the Supreme Court; and he prosecuted this suit to judgment, but died pending this appeal, when the action was continued in the name of the plaintiff as his administratrix. The plaintiff on the trial proved the actual delivery of the deed by Bullard, to the defendant. The defendant objected that there was no privity of contract between him and the plaintiff; but the justice (before whom the case was tried without a jury) held otherwise. Judgment was given for the plaintiff for the amount of the mortgages, which was affirmed at a general term when the defendant appealed to this court. DENIO, J. If the plaintiff had sought to foreclose the mortgages in question, and to charge the defendant with the deficiency which might remain after applying the proceeds of the sale, and had made both the mortgagor and the present defendant parties, the authorities would be abundant to sustain the action in both aspects. (Curtis v. Tyler, 9 Paige 432; Halsey v. Reed, id. 446; March v. Pike, 10 id. 595; Blyer v. Monholland, 2 Sandf. Ch. R. 478; King v. Whitely, 10 Paige 465; Trotter v. Hughes, 2 Kern 74; Vail v. Foster, 4 Comst. 312; Belmont v. Coman, 22 N. Y. 438.) But I do not understand that the right to a personal judgment for the deficiency is based upon the notion of a direct contract between the grantee of the equity of redemption, and the holder of the mortgage. The cases proceed upon the principle, that the undertaking of the grantee to pay off the incumbrance is a collateral security acquired by the mortgagor, which inures by an equitable subrogation to the benefit of the mortgagee. Then the statute relating to foreclosures provides that if the mortgage debt be secured by the obligation or other evidence of debt executed by any other person besides the mortgagor, such person may be made a defendant, and may be decreed to pay the deficiency. (2 R. S., p. 191, sec. 154.) Chancellor Walworth, puts the right to a personal judgment in such a case, upon the equity of this statute (9 Paige 432); and Vice-Chancellor Sandford expressly says, that the obligation is not enforced as being made by the grantee of the equity of redemption under such a deed to the mortgagee, but as a promise by the former to the mortgagor to pay him the amount of the mortgage, by paying it to the mortgagee in payment of his debt, which promise the mortgagee is equitably entitled to lay hold of and enforce under the equity of the statute referred to. (2 Sandf. Ch. R., 480.) It is obvious, that the judgment of the Supreme Court in the present case, cannot be sustained upon the doctrine referred to. The plaintiff does not ask to foreclose the mortgage and does not make the principal debtor Bullard, a party. If the judgment can be supported at all, it must be upon the broad principle that if one person make a promise to another, for the benefit of a third person, that third person may maintain an action on the promise. Upon that question there has been a good deal of conflict of judicial opinion. As long ago as 1817, Chancellor Kent, laid it down as a point decided, and referred to not less than eight English and American cases, as sustaining the principle. (Cumberland v. Codrington, 3 J. C. R., 255;) and since then it has been frequently affirmed by judges, after an attentive examination of cases, as in Barker v. Bucklin (2 Denio, 45.) and in the cases therein referred to. These cases, and also those referred to by Chancellor Kent, are doubtless subject to some of the criticisms which have since been applied to them. Some of the opinions were pure obiter dicta, and in others, the cases though presenting the point were decided upon other grounds. It cannot however be denied, that the doctrine had been so often asserted, that it had become the prevailing opinion of the profession, that an action would lie in such a case in the name of the creditor, for whose benefit the promise was made. Finally the question came squarely before this court in Lawrence v. Fox (20 N. Y., 268), and we held, with hesitation on the part of a portion of the judges who concurred, while others dissented, that the action would lie. We must therefore regard the point as definitely settled, so far as the courts of this State are concerned. The judgment appealed from being in accordance with the law as adjudged in that case, must be affirmed. LOTT, J., also delivered an opinion for affirmance, and all the judges concurred. Judgment affirmed.3 3 For a collection of authorities, see Williston's Wald's Pollock on Contracts, 260 ff. NORWOOD v. DE HART. COURT OF CHANCERY OF NEW JERSEY, 1879. On bill and general demurrer by De Hart. THE CHANCELLOR [RUNYAN]. This suit is brought to obtain a decree against the defendants for the amount remaining unpaid upon a decree in favor of the complainants in a suit for foreclosure of a mortgage upon premises which were owned by the defendants respectively at different times, subject to the mortgage. The mortgaged premises were sold under the execution issued on the decree in that suit, and were purchased by the holder of a mortgage prior to that of the complainants', for a sum less than the amount due on his mortgage, so that nothing was realized by the complainants on their mortgage. The bill states that the complainants' mortgage, which is for $2,000 and interest, was given by Charles Meyenberg, on or about the 30th of July, 1869; that the prior mortgage, which was for $2,000 and interest, was given in 1868, by Frank Hunkley; that in May, 1871, one Nicholas Pflaum, then being the owner of the mortgaged premises, and both of the mortgages being subsisting liens thereon for the full amount of the principal thereof, conveyed the property to De Hart, for the consideration of $10,000, as stated in the deed; that the deed contained the declaration and acknowledgment that the conveyance was made subject to the mortgages, and that the principal thereof was computed as part of the purchase-money, and contained, also, the stipulation that the existence of the mortgages should not be held to work a breach of any of the covenants in the deed; that in August, 1871, De Hart conveyed the premises to Benjamin Sire expressly subject to those mortgages and a subsequent one for $1,000 and interest, which had been given thereon by De Hart; that the deed to Sire contained the declaration that the principal of those mortgages was computed as so much of the purchasemoney of the property; that in September, 1871, Sire conveyed the property to Moses H. Williams, expressly subject to the three mortgages, and Williams therein assumed the payment of them; that Williams afterwards died, and the executors of his will, in March, 1873, conveyed their right, title and interest in and to the property, to De Hart, subject to the three mortgages, the payment of which he thereby assumed; that subsequently, in December, 1873, De Hart sold and conveyed all his interest in the premises to the defendant Genung, subject, as stated in the deed, to the encumbrance of two mortgages, the principal of which amounted to $4,000, the payment of which Genung thereby expressly assumed; and that, in January, 1872, the complainant's testator began the above-mentioned suit for foreclosure, which resulted as before stated. The complainants' claim to a decree against the defendants, rests on the ground that the creditor is entitled to the benefit of all the collateral securities which the debtor has obtained to re-enforce the primary obligation. Klapworth v. Dressler, 2 Beas. 62. But a mortgagee cannot avail himself of an assumption to pay his mortgage contained in a deed to a subsequent purchaser, unless the grantor was himself personally liable to pay the debt. Crowell v. Hospital of St. Barnabas, 12 C. E. Gr. 650, 656; King v. Whitely, 10 Paige 465; Trotter v. Hughes, 12 N. Y. 74. In this case, it does not appear, from the bill, that De Hart's grantor, Pflaum, was personally liable for the payment of the complainants' mortgage. It, therefore, does not appear (giving to the acknowledgment contained in the conveyance from Pflaum to De Hart, that the mortgage debt was allowed as part of the consideration of the conveyance all the effect which, under the decision of this court in Tichenor v. Dodd, 3 Gr. Ch. 454, it would have as between grantor and grantee) that there has ever existed any obligation, on the part of De Hart, to indemnify Pflaum against the complainants' mortgage debt. And this consideration is equally fatal to the claim made un * * * 4 In this case the conveyance recited that "The above lots are conveyed subject to the payment of a certain mortgage which said mortgage, or the amount thereof, is computed as so much of the consideration to be paid to the said grantor," and the grantee seems to have paid the consideration named in the deed, less the amount of the mortgage. The grantor, having been required to pay the deficiency due on the mortgage after a sale, sued his grantee for reimbursement. It was held that he should recover, the court saying, "The purchaser agrees to pay a sum of money for the land; but a part of that sum is to be applied to the discharge of the mortgage. Had he paid the whole sum to the mortgagor, he would have had the means with which to pay the mortgage. If he withhold the money, he has no ground of complaint if the mortgagor asks him to pay the amount remaining due." "Even though there is no clause in the conveyance imposing a personal liability upon the transferee, he may assume such liability by a collateral agreement, either written or oral; (Schmucker v. Sibert, 18 Kans. 104; Strohauer v. Voltz, 42 Mich. 444; Merriman v. Moore, 90 Pa. St. 78; Wright v. Briggs, 99 Ind. 563; Bowen v. Kurtz, 37 Iowa 239; Bolles v. Beach, 22 N. J. Law 680; Society of Friends v. Haines, 47 Ohio St. 423) and, according to a number of decisions, such an agreement is implied from the fact that, when a purchaser has agreed to pay a particular sum for the mortgaged land, the amount of the mortgage is deducted from this sum in fixing the amount actually paid by him, and the land is conveyed to him subject to the mortgage. (Twitchell v. Mears, Fed. Cas. No. 14,286; Townsend v. Ward, 27 Conn. 610; Comstock v. Hitt, 37 Ill. 542; Bristol Sav. Bank v. Stiger, 86 Iowa 324; Tichenor v. Dodd, 4 N. J. Eq. 454; Heid v. Vreeland, 30 N. J. Eq. 591; Rockwell v. Blair Sav. Bank, 31 Nebr. 128, as explained in Green v. Hall, 45 Nebr. 89; Thompson v. Thompson, 4 Ohio St. 333. But see Belmont v. Coman, 22 N. Y. 438; Bennett v. Bates, 94 N. Y. 354; Fiske v. Tolman, 124 Mass. der the assumption contained in the deed from the executors of Williams, for it does not appear that they were liable to indemnify their grantor. Each grantee who assumed the payment of the mortgages was bound thereby only to indemnify, and if no liability to pay the mortgage debt existed on the part of his immediate grantor, there is no ground for claim of indemnity on the part of the grantor, and, consequently, no personal liability on the part of the grantee to pay the mortgage debt. The fact that it does not appear that Pflaum was personally liable to pay the mortgage debt, is fatal to the claim of the complainants against the demurrant. The demurrer will be sustained, with costs.5 HARE v. MURPHY. SUPREME COURT OF NEBRASKA, 1895. HARRISON, J. The plaintiff, as assignee and owner of two promissory notes, and a mortgage on certain real estate given to secure their payment, instituted this action against the defendant, to whom the real estate had been sold by the grantee or party purchasing from the mortgagor, to recover the amount due upon the notes and mortgage, basing the suit upon a clause in the conveyance of the lands to defendant, by which it is claimed defendant assumed and agreed on his part to pay the mortgage indebtedness. There was a trial of the issues to the court and a jury, and at the close of the testimony the trial judge instructed the jury to return a verdict for defendant, which instruction was complied with by the jury, and after motion for new trial heard and overruled, judgment was rendered, and the plaintiff brings the case here by petition . in error. * * * Counsel for the parties, in the briefs filed, agree in the statement that the trial judge was moved to instruct the jury to return a verdict for the defendant by the following considerations: That the petition did not allege, and the evidence failed to show, that defendant's grantor was in any manner or to any extent connected 254; Granger v. Roll, 6 S. Dak. 611; Moore's Appeal, 88 Pa. St. 450.)" Tiffany, Real Property, § 526. For a discussion of the construction of various unusual and more or less ambiguous stipulations, such as that of "subject to the payment of, &c.," see Jones, Mortgages, § 749. 5 Compare Ward v. De Oca, 120 Cal. 102. As to whether the grantee's promise is one of indemnity only, see Williston's Wald's Pollock on Contracts, 268-270. |