The Chancellor.
When this case was formerly before me, upon the demurrer of the defendant M’Crea to the bill of the Purmorts for want of equity, I came to the conclusion that the facts stated in the bill were sufficient to entitle the complainants to equitable relief. And as the defendant did not think proper to appeal from the decree overruling the demur[626]*626ver, that decision must now be considered as the settled law 0f case and cannot again be opened for discussion here. This disposes of the objection of the defendant’s counsel, that
the complainants had a perfect remedy at law upon the covenants in the deed of M’Crea, or by an action for the alleged deceit, and that they had no right to come into this court for equitable relief. Another and a conclusive answer, however, to tin's ejection, is, that it was not insisted upon by the defendant in his answer; and it is too late for a defendant to make the objection for the first time at the hearing, upon pleadings and proofs, that the complainants had an adequate remedy at law. The rule on this subject is so well settled that it is unnecessary to refer to any authorities in its support. I shall therefore proceed to examine the case on its merits. The right of the complainants to relief upon their cross-bill, or move properly their original bill in the nature of a cross-bill, depends principally upon the transactions which occurred at the time of giving the deed to John Purmort, the elder, in 1819, and upon the construction of the covenants contained in that deed. It is necessary, however, that I should advert to certain transactions which had previously occurred, for the purpose of ascertaining what were the rights of the several parties, under the agreement of May, 1810, the subsequent mortgages to the state, and the purchase of the premises, by M’Intyre in the name of M’Crea, at the sale upon the foreclosure. By (he agreement of May, 1812, Purmort, who was previously in possession under claim of title, became the purchaser of all of the interest of M’Crea in the premises, for the consideration of $2000, to be paid in four yearly payments. And by the acceptance of that agreement, he became the tenant at will of the premises, to M’Crea, with a right in equity to compel a specific performance of the contract. This equitable interest was transferred to the state by the giving of the mortgages by Purmort; and a valid equitable interest in the premises would pass to the purchaser under the foreclosure and sale by the officers of the state, subject to the lien of M’Crea for the unpaid purchase money under the contract of May, 1812. It is alleged, in the answer of M’Crea, that this con (ract was abandoned by the parties previous to the new [627]*627agreement which was made in September, 1819 ; but he has introduced ne proof to sustain this allegation in his answer, and the contrary is fairly inferrible from the circumstances of the case and the continued possession of Purmort. Indeed, it was impossible for the original parties to make any valid agreement to rescind this contract, without the assent of the state, which had become the equitable assignee thereof by virtue of the mortgages. If the purchase by M’Intyre, in the name of M’Crea, was unauthorized, the latter might after-wards elect to affirm the contract of purchase made for him and in his name; and there is no evidence that he had dissented from or disaffirmed such purchase previous to the giving of fire deed to Purmort, in September, 1819. On the contrary, 5 think the letters which are made exhibits in the cause show that he had elected to affirm that purchase. In October, 1820, M’Intyre writes to him as follows: “ Dear Sir—More than two years ago you became the purchaser of land mortgaged io the state, in Essex county, by John Purmort. You had not the money at the time to make the first payment, but you engaged to pay it in a few weeks, and to give your bond and mortgage for the balance, as is usual and as required by law. You have however totally neglected it. It is high time the business was closed, and I must beg your immediate attention to it.” In his answer to this letter, written a few days thereafter, the defendant M’Crea quotes that part of the letter in which M’Intyre states that he was to have complied with the terms of the purchase in a few weeks; and so far from denying any part of the statement of M’lntyre as contained in that letter, he makes an excuse for not having complied with the terms of sale, and requests further indulgence to enable him ¿o obtain a payment from Purmort upon his bond and mortgage, taken upon the conveyance of the premises to him the year previous. And in his letter to Dexter, the attorney general's cleric, as late as March, 1826, he recognizes the validity of the purchase in his name, and says he expects to comply with the terms of the sale as he had agreed ; and alleges that he had complied with them in part. These letters, independent of the testimony of Nicholson and Judge Pinch, -vontain written evidence that he had authorized M’Intyre to [628]*628bid off the -premises in his 'name originally, or that he, ha'5 rat*^e^ anc^ affirmed that act afterwards. The payment made thereon, which he alludes to in the letter to Dexter as not having been noted on the books of the comptroller, was probably the costs of the foreclosure, which may have been advanced by him and paid over to the attorney general; which costs, from the statement of the amount bid beyond the principal and interest then due, was about $52.
If I am right in the conclusion at which I have arrived on this part of the case, M’Crea, by the purchase of M’Infyre for him and in his name, had become the owner of Purmort’s equitable interest in the premises under the agreement of May, 1812, upon complying with the terms of sale ; and having the ■legal title in himself previous to that time, the right of redemption of Purmort in this mere equity would have been merged or .extinguished by the payment of the amount of the bid, without any written conveyance of the attorney general, so as to deprive Purmort of the right to claim a specific peformance of the agreement of May, 1812.- And Purmort’s equitable interest being sold for the full amount due to the state on the mortgages, he had a right to insist that the mortgage money should be paid by M’Crea,"as the person who, in equity, was primarily liable to the state. As -between M’Crea ■and Purmort, the mortgage debt was extinguished, and 'M’Crea was, in equity, bound to pay it and indemnify Purmort against it. But until the terms of the mortgage sale were complied with, the state had a lien upon the premises, in the hands of M’Crea, for the unpaid purchase money on that sale. And this lien was, in equity, although perhaps ■not at law, an.encumbrance of M’Ciea upon -the premises ■conveyed to Purmort by the deed of September, 1819. The -complainants have therefore an equitable tight to insist that he should be decreed to pay off and extinguish the debt due to the state, so as to indemnify them against that encumbrance ; and that equitable obligation arises from the deed of ■September, 1819, and the situation of the parties at the time that deed was given, independent of any representations or assumption of the payment of the state debt, by M’Crea, in September, 1819, which are not contained in the deed itself,
[629]*629if I am wrong, however, in this view of the case, and the foreclosure is to be considered as a mere nullity, what was the situation and what were the rights of the parties at the time of making the new contract between Purmort and M’Crea at the time of giving that deed 1
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The Chancellor.
When this case was formerly before me, upon the demurrer of the defendant M’Crea to the bill of the Purmorts for want of equity, I came to the conclusion that the facts stated in the bill were sufficient to entitle the complainants to equitable relief. And as the defendant did not think proper to appeal from the decree overruling the demur[626]*626ver, that decision must now be considered as the settled law 0f case and cannot again be opened for discussion here. This disposes of the objection of the defendant’s counsel, that
the complainants had a perfect remedy at law upon the covenants in the deed of M’Crea, or by an action for the alleged deceit, and that they had no right to come into this court for equitable relief. Another and a conclusive answer, however, to tin's ejection, is, that it was not insisted upon by the defendant in his answer; and it is too late for a defendant to make the objection for the first time at the hearing, upon pleadings and proofs, that the complainants had an adequate remedy at law. The rule on this subject is so well settled that it is unnecessary to refer to any authorities in its support. I shall therefore proceed to examine the case on its merits. The right of the complainants to relief upon their cross-bill, or move properly their original bill in the nature of a cross-bill, depends principally upon the transactions which occurred at the time of giving the deed to John Purmort, the elder, in 1819, and upon the construction of the covenants contained in that deed. It is necessary, however, that I should advert to certain transactions which had previously occurred, for the purpose of ascertaining what were the rights of the several parties, under the agreement of May, 1810, the subsequent mortgages to the state, and the purchase of the premises, by M’Intyre in the name of M’Crea, at the sale upon the foreclosure. By (he agreement of May, 1812, Purmort, who was previously in possession under claim of title, became the purchaser of all of the interest of M’Crea in the premises, for the consideration of $2000, to be paid in four yearly payments. And by the acceptance of that agreement, he became the tenant at will of the premises, to M’Crea, with a right in equity to compel a specific performance of the contract. This equitable interest was transferred to the state by the giving of the mortgages by Purmort; and a valid equitable interest in the premises would pass to the purchaser under the foreclosure and sale by the officers of the state, subject to the lien of M’Crea for the unpaid purchase money under the contract of May, 1812. It is alleged, in the answer of M’Crea, that this con (ract was abandoned by the parties previous to the new [627]*627agreement which was made in September, 1819 ; but he has introduced ne proof to sustain this allegation in his answer, and the contrary is fairly inferrible from the circumstances of the case and the continued possession of Purmort. Indeed, it was impossible for the original parties to make any valid agreement to rescind this contract, without the assent of the state, which had become the equitable assignee thereof by virtue of the mortgages. If the purchase by M’Intyre, in the name of M’Crea, was unauthorized, the latter might after-wards elect to affirm the contract of purchase made for him and in his name; and there is no evidence that he had dissented from or disaffirmed such purchase previous to the giving of fire deed to Purmort, in September, 1819. On the contrary, 5 think the letters which are made exhibits in the cause show that he had elected to affirm that purchase. In October, 1820, M’Intyre writes to him as follows: “ Dear Sir—More than two years ago you became the purchaser of land mortgaged io the state, in Essex county, by John Purmort. You had not the money at the time to make the first payment, but you engaged to pay it in a few weeks, and to give your bond and mortgage for the balance, as is usual and as required by law. You have however totally neglected it. It is high time the business was closed, and I must beg your immediate attention to it.” In his answer to this letter, written a few days thereafter, the defendant M’Crea quotes that part of the letter in which M’Intyre states that he was to have complied with the terms of the purchase in a few weeks; and so far from denying any part of the statement of M’lntyre as contained in that letter, he makes an excuse for not having complied with the terms of sale, and requests further indulgence to enable him ¿o obtain a payment from Purmort upon his bond and mortgage, taken upon the conveyance of the premises to him the year previous. And in his letter to Dexter, the attorney general's cleric, as late as March, 1826, he recognizes the validity of the purchase in his name, and says he expects to comply with the terms of the sale as he had agreed ; and alleges that he had complied with them in part. These letters, independent of the testimony of Nicholson and Judge Pinch, -vontain written evidence that he had authorized M’Intyre to [628]*628bid off the -premises in his 'name originally, or that he, ha'5 rat*^e^ anc^ affirmed that act afterwards. The payment made thereon, which he alludes to in the letter to Dexter as not having been noted on the books of the comptroller, was probably the costs of the foreclosure, which may have been advanced by him and paid over to the attorney general; which costs, from the statement of the amount bid beyond the principal and interest then due, was about $52.
If I am right in the conclusion at which I have arrived on this part of the case, M’Crea, by the purchase of M’Infyre for him and in his name, had become the owner of Purmort’s equitable interest in the premises under the agreement of May, 1812, upon complying with the terms of sale ; and having the ■legal title in himself previous to that time, the right of redemption of Purmort in this mere equity would have been merged or .extinguished by the payment of the amount of the bid, without any written conveyance of the attorney general, so as to deprive Purmort of the right to claim a specific peformance of the agreement of May, 1812.- And Purmort’s equitable interest being sold for the full amount due to the state on the mortgages, he had a right to insist that the mortgage money should be paid by M’Crea,"as the person who, in equity, was primarily liable to the state. As -between M’Crea ■and Purmort, the mortgage debt was extinguished, and 'M’Crea was, in equity, bound to pay it and indemnify Purmort against it. But until the terms of the mortgage sale were complied with, the state had a lien upon the premises, in the hands of M’Crea, for the unpaid purchase money on that sale. And this lien was, in equity, although perhaps ■not at law, an.encumbrance of M’Ciea upon -the premises ■conveyed to Purmort by the deed of September, 1819. The -complainants have therefore an equitable tight to insist that he should be decreed to pay off and extinguish the debt due to the state, so as to indemnify them against that encumbrance ; and that equitable obligation arises from the deed of ■September, 1819, and the situation of the parties at the time that deed was given, independent of any representations or assumption of the payment of the state debt, by M’Crea, in September, 1819, which are not contained in the deed itself,
[629]*629if I am wrong, however, in this view of the case, and the foreclosure is to be considered as a mere nullity, what was the situation and what were the rights of the parties at the time of making the new contract between Purmort and M’Crea at the time of giving that deed 1 Purmort was then in the possession of the premises under the agreement to purchase, made with M’Crea in 1812, which agreement had never been entirely abandoned; the alleged agreement of M’Crea to purchase in the premises on the foreclosure of the mortgages being perfectly consistent with the contract of 1812, as it was the interest acquired under that contract, which was covered by the mortgages to the state. And as time was not made an essential part of the contract, the neglect of Purmort to pay the money at the times specified, was not, in equity, a forfeiture of bis rights, under the agreement of 1812. (Getchell v. Jewett, 4 Greenl. Rep. 350. Brashier v. Gralz, 6 Wheaton’s Rep. 528.) As Í have before observed, there is no evidence in this case of the abandonment of the agreement of 1813, by either party ; and the continuance of Purmort in possession without the payment of rent, or any attempt to remove him, is strong evidence that the fact was otherwise. The amount, due upon that agreement, in September, 1819, was about $3032, and Purmort was entitled to a specific performance thereof upon the payment of that sum; but he would have been obliged, in that case, to pay off and discharge the mortgages to the state, which at that time amounted to about $1200 more. Upon the payment of these two sums, considering the mortgage sale a nullity, he would have obtained a perfect title to the premises, discharged of all claims whatever. I cannot believe, therefore, that it was the intention of either of the parties, at the time of. the execution of the deed of September, 1819, that Purmort should pay the whole consideration mentioned in that conveyance, fifty-one tons of -iron, estimated at $100 the ton, and should also be liable to pay off and discharge the mortgages to the state. It will be seen that the $5100 secured by Purmort’s bond and mortgage at that time, discounting thé interest on the payments, which were not on interest, amounts to just about the two sums due to the state upon the mortgages, and to the de« [630]*630fendant M’Crea under the agreement of May, 1812. I aisd think the defendant is under a mistake in supposing, as aU Ieged in his answer, that the written clause, at the end of the printed covenants of warranty in the deed, was inserted by him for the purpose of showing that he was not liable for the payment of the amount due to the state, and did not intend to warrant the title against that encumbrance, I think it is very, evident, from the whole transaction, that the written clause was inserted in the deed, by him, for a different and much more honest purpose. The printed blank, used upon that occasion, was from a form which I had myself prepared and had printed, to be used only in special cases. And the concluding clause, making the grantor liable, in case of eviction, for the full value of the premises, with the improvements, at the time of such eviction, without reference to the amount of the consideration expressed in the conveyance, was not usually inserted in full covenant warranty deeds. The defendant, although he admits that he delivered this conveyance to Purmort as a good warranty deed, and represented the same to him as such, had a right to insert the written qualification, of this extraordinary and unusal covenant, to pay the increased value of the premises, with the improvements, to the case of an eviction on account of an encumbrance created by himself. I am satisfied, therefore, that he inserted the written clause for this purpose only, and not to qualify or alter the legal effect of any of the other covenants in the conveyance. And this is, I think, the fair legal construction of this written clause, when taken in connection with the printed covenants of warranty, &c. Any other construction of this clause would be inconsistent with-the admission of M’Crea that he delivered the conveyance as a. good warranty deed, and with the proof of his declarations at the time the conveyance was given. It would also operate as a fraud upon the grantee y for if the written clause should be construed as a restriction upon the covenants, of seisin and for quiet enjoyment, and upon the .general covenant of warranty against the lawful claims of all persons, it would render those covenants nugatory, and only amount to a warranty against the encumbrances which [631]*631the grantor had himself created; that is, to very little more than a quit claim deed.
The testimony of Nicholson and Judge Finch, who were present when the deed was given, establishes the fact, beyond all question, that the parties acted upon the assumption that M’Crea had become responsible for the payment of the debt due to the state, and that the amount of such debt was included in, and formed a part of, the consideration of the §5100 bond and mortgage, which has since been paid. And the letters of M’Crea, of October, 1820, and March, 1826, show that he considered himself as under obligation to pay that debt, long subsequent to the conveyance of September, 1819.
I cannot discover any valid objection to the complainant’s claim arising out of the statute of frauds. The amount of the debt was included in the bond and mortgage to M’Crea, under the assumption or understanding that M’Crea had become responsible to the state for the payment thereof; and Purmort having subsequently paid the whole amount of that bond and mortgage, under the supposition that the state debt had been discharged, the defendant M’Crea is, in equity, bound to make good his representations made to Purmort at the time when such bond and mortgage was given. Neither can the statute of limitations avail the defendant in this case. Even if there had been an express promise to pay the debt to the state, upon which Purmort might have sustained an action at law if such promise was not complied with, the letter of March, 1826, is a recognition of an existing indebtedness at that time from which a new promise might be inferred. But, in this case, the bond and mortgage were given upon the assumption that M’Crea had already become responsible to the state for the payment of the debt; and this being a case of equitable cognizance merely, the six years limitation is not applicable.
Upon every principle of justice and equity, the defendant M’Crea is bound to pay off and discharge the mortgages to the state, and to fully indemnify the complainants against any costs or charges on account thereof. I shall therefore direct a decree to be entered, in these suits, requiring the defendant M’Crea to pay to the attorney general the amount [632]*632reported due by the master, with interest thereon from the date of the report, together with the costs of the attorney general in both suits; and that he also pay to the complainants.in. the last suit their costs in both. If the amount due to the state, and the attorney general’s costs, are not paid by or collected from M’Crea within three months after the entering of the decree, the mortgaged premises must be sold in the usual manner, for the payment thereof, with the usual resort over against the mortgagor for. any deficiency which may exist... And in that case, the complainants in the second suit are to be permitted to collect the whole amount of the decree against the defendant M’Crea.,