Carpenter, J.
The defendant having a claim of nearly two thousand dollars against one Mead, took a deed, absolute in form but intended as a mortgage, of certain real estate, which was a part of a larger tract of land, all of which was subject to three prior mortgages. The contract .between the parties was, that Mead should procure the third mortgagee to release to him the portion mortgaged to the [239] defendant so that it should be subject only to two mortgages, the defendant agreeing to pay those mortgages, so that the third mortgage should be the first on the remaining portion of the land. The owner of the third mortgage did release his interest to Mead as agreed, and Mead thereupon conveyed the land, subject only to the two mortgages to the defendant by a warranty deed in which a clause was inserted, that the defendant assumed and agreed to pay the amount of the first two mortgages.
The building on the premises was used as a plow-manufactory. The contract further provided that the personal property therein contained, consisting of stock, tools, manufactured goods, etc., should also be conveyed to the defendant.
A defeasance executed on the same day provided that the defendant, his own debt being first paid, would at any time within three years, at Mead’s request, reconvey the land, tools, etc., to Mead. The defendant leased the mortgaged premises to Mead, who continued in possession carrying on business as before. The deed and the lease were recorded; the defeasance was not recorded.
The defendants’ claim, excepting about four hundred dollars, was paid, when the buildings were destroyed by fire. Soon after the note described in the declaration was presented to the defendant and payment demanded, which was refused. Thereupon this suit was brought. A few days afterwards the defendant, without any request from Mead, executed and tendered a re-conveyance of the premises to him, but he declined to accept it. The defendant then caused the deed to be recorded.
The buildings were uninsured, and the land is now worth no more than the first mortgage.
The Superior Court having rendered judgment for the plaintiffs, the defendant filed a motion for a new trial.
The question presented by the motion is, whether the defendant’s promise to Mead to pay the amount of the prior mortgages can be enforced.
The authorities substantially agree that when one pur[240] chases real estate incumbered by a mortgage, and agrees to pay the mortgage debt as a part of the consideration of the deed, the promise may be enforced by the mortgagee. In such cases the purchaser merely agrees' to pay his own debt to a third person, the mortgagee, and he, by an equitable subrogation, stands in the place of the promisee. It would seem that such an action might also be sustained upon the familiar principle which governs assumpsit for money had and received.
The mortgagee may also sustain an action whenever the circumstances are such as to justify the conclusion that the promise was made for his benefit.
Where however the conveyance in which the grantee assumes a prior mortgage is itself a mortgage, the case -is somewhat different, and the obligation may be materially modified or abrogated altogether by subsequent events. In such a case, the grantee owes the grantor no debt which he can promise-to pay to a prior mortgagee, and if he makes such a promise it is ordinarily a mere agreement to advance money to pay the prior mortgage, or rather an agreement with the mortgagor to purchase it. In such cases there is little room for the conclusion that the promise was made for the benefit of the prior mortgagee. It is simply a transaction between the immediate parties. To what extent such a contract may be enforced must depend upon the circumstances of the case.
The question whether the promisee, Mead, his mortgage to the defendant being still outstanding, can enforce the promise, is another form of stating the question involved in this case. After the last mortgage is satisfied and discharged, it seems quite clear, both upon principle and authority, that, in an ordinary case the promise is canceled, and cannot be enforced by any one. Presumptively that is the intention of the parties, unless there is something in the case showing a contrary intention. In the present case Northrop, the third mortgagee, had, upon a valuable consideration, acquired certain rights which, it would seem, could not be affected by a discharge of the mortgage by the mortgagor, but as those [241] rights are not involved in the case, we need not consider them. This subject is fully and ably discussed in Garnsey v. Rogers, 47 N. York, 233. That case is a leading case and is cited with approbation in Jones on Mortgages, and was followed in Arnauld v. Griggs, 29 N. Jersey Eq. R., 482.
These authorities show that such a promise contained in a mere mortgage imposes upon the promisor no absolute continuing obligation which can be enforced by the prior mortgagee. They do not however touch the question whether he may not acquire and enforce the rights of the mortgagor in the promise.
Assuming the law to be as stated in the cases cited, how does it affect the present case ? Erom what has already been said it is obvious that the obligation would not continue after the mortgage containing the promise had been satisfied and the property re-conveyed to the mortgagor. That had been done in the case of Garnsey v. Rogers, supra, although the decision does not rest on that ground.
In the present case, at least so far as this question is concerned, we must regard the mortgage to the defendant as still outstanding. Eour hundred dollars of the debt remained unpaid. Mead had not called for a re-conveyance under the defeasance, and indeed had no right to call for it. It can hardly be regarded as the privilege of the defendant to discharge the mortgage at his pleasure, and thereby relieve himself of his obligation against the wishes of Mead. Mead had an interest in having the prior mortgages paid ; he had for a valuable consideration contracted with the defendant to pay them, and had placed in his hands sufficient property to indemnify him therefor. That property, without his fault we must presume, had been reduced in value so that it was insufficient for that purpose. The defendant having failed to protect himself by insurance was not in a condition to insist that the loss should fall upon Mead. Mead therefore might well refuse to accept the re-conveyance; and having done so, the relation of mortgagor and mortgagee between himself and the defendant still exists and the defendant’s promise still remains in force.
Free access — add to your briefcase to read the full text and ask questions with AI
Carpenter, J.
The defendant having a claim of nearly two thousand dollars against one Mead, took a deed, absolute in form but intended as a mortgage, of certain real estate, which was a part of a larger tract of land, all of which was subject to three prior mortgages. The contract .between the parties was, that Mead should procure the third mortgagee to release to him the portion mortgaged to the [239] defendant so that it should be subject only to two mortgages, the defendant agreeing to pay those mortgages, so that the third mortgage should be the first on the remaining portion of the land. The owner of the third mortgage did release his interest to Mead as agreed, and Mead thereupon conveyed the land, subject only to the two mortgages to the defendant by a warranty deed in which a clause was inserted, that the defendant assumed and agreed to pay the amount of the first two mortgages.
The building on the premises was used as a plow-manufactory. The contract further provided that the personal property therein contained, consisting of stock, tools, manufactured goods, etc., should also be conveyed to the defendant.
A defeasance executed on the same day provided that the defendant, his own debt being first paid, would at any time within three years, at Mead’s request, reconvey the land, tools, etc., to Mead. The defendant leased the mortgaged premises to Mead, who continued in possession carrying on business as before. The deed and the lease were recorded; the defeasance was not recorded.
The defendants’ claim, excepting about four hundred dollars, was paid, when the buildings were destroyed by fire. Soon after the note described in the declaration was presented to the defendant and payment demanded, which was refused. Thereupon this suit was brought. A few days afterwards the defendant, without any request from Mead, executed and tendered a re-conveyance of the premises to him, but he declined to accept it. The defendant then caused the deed to be recorded.
The buildings were uninsured, and the land is now worth no more than the first mortgage.
The Superior Court having rendered judgment for the plaintiffs, the defendant filed a motion for a new trial.
The question presented by the motion is, whether the defendant’s promise to Mead to pay the amount of the prior mortgages can be enforced.
The authorities substantially agree that when one pur[240] chases real estate incumbered by a mortgage, and agrees to pay the mortgage debt as a part of the consideration of the deed, the promise may be enforced by the mortgagee. In such cases the purchaser merely agrees' to pay his own debt to a third person, the mortgagee, and he, by an equitable subrogation, stands in the place of the promisee. It would seem that such an action might also be sustained upon the familiar principle which governs assumpsit for money had and received.
The mortgagee may also sustain an action whenever the circumstances are such as to justify the conclusion that the promise was made for his benefit.
Where however the conveyance in which the grantee assumes a prior mortgage is itself a mortgage, the case -is somewhat different, and the obligation may be materially modified or abrogated altogether by subsequent events. In such a case, the grantee owes the grantor no debt which he can promise-to pay to a prior mortgagee, and if he makes such a promise it is ordinarily a mere agreement to advance money to pay the prior mortgage, or rather an agreement with the mortgagor to purchase it. In such cases there is little room for the conclusion that the promise was made for the benefit of the prior mortgagee. It is simply a transaction between the immediate parties. To what extent such a contract may be enforced must depend upon the circumstances of the case.
The question whether the promisee, Mead, his mortgage to the defendant being still outstanding, can enforce the promise, is another form of stating the question involved in this case. After the last mortgage is satisfied and discharged, it seems quite clear, both upon principle and authority, that, in an ordinary case the promise is canceled, and cannot be enforced by any one. Presumptively that is the intention of the parties, unless there is something in the case showing a contrary intention. In the present case Northrop, the third mortgagee, had, upon a valuable consideration, acquired certain rights which, it would seem, could not be affected by a discharge of the mortgage by the mortgagor, but as those [241] rights are not involved in the case, we need not consider them. This subject is fully and ably discussed in Garnsey v. Rogers, 47 N. York, 233. That case is a leading case and is cited with approbation in Jones on Mortgages, and was followed in Arnauld v. Griggs, 29 N. Jersey Eq. R., 482.
These authorities show that such a promise contained in a mere mortgage imposes upon the promisor no absolute continuing obligation which can be enforced by the prior mortgagee. They do not however touch the question whether he may not acquire and enforce the rights of the mortgagor in the promise.
Assuming the law to be as stated in the cases cited, how does it affect the present case ? Erom what has already been said it is obvious that the obligation would not continue after the mortgage containing the promise had been satisfied and the property re-conveyed to the mortgagor. That had been done in the case of Garnsey v. Rogers, supra, although the decision does not rest on that ground.
In the present case, at least so far as this question is concerned, we must regard the mortgage to the defendant as still outstanding. Eour hundred dollars of the debt remained unpaid. Mead had not called for a re-conveyance under the defeasance, and indeed had no right to call for it. It can hardly be regarded as the privilege of the defendant to discharge the mortgage at his pleasure, and thereby relieve himself of his obligation against the wishes of Mead. Mead had an interest in having the prior mortgages paid ; he had for a valuable consideration contracted with the defendant to pay them, and had placed in his hands sufficient property to indemnify him therefor. That property, without his fault we must presume, had been reduced in value so that it was insufficient for that purpose. The defendant having failed to protect himself by insurance was not in a condition to insist that the loss should fall upon Mead. Mead therefore might well refuse to accept the re-conveyance; and having done so, the relation of mortgagor and mortgagee between himself and the defendant still exists and the defendant’s promise still remains in force.
[242] Again: If the defendant may in this way, of his own will, escape liability, it will operate as a fraud upon Northrop, the third mortgagee. He had released the property mortgaged to the defendant from his own mortgage, and probably upon the strength of the defendant’s promise to pay the prior mortgages. The defendant thereby obtained better security for his own debt, and, had the contract been carried out, Northrop would have had the security of a first mortgage on the remaining property. If now the two prior mortgages are to be collected from the property they will more than absorb the whole, and Northrop loses his whole claim. Thus the loss occasioned by the fire falls in fact on him, while he had no interest in the property and had no power to protect himself by insurance.
Moreover, one of the plaintiffs, before purchasing the Per-. kins note, had an interview with the defendant respecting his liability to pay the same. The defendant, with full knowledge that the plaintiffs were negotiating for it, told him that he had bought the property and “ had assumed and agreed to pay the Perkins note, as his deed would show,” and that “ it showed what he considered the property worth when he had paid on it or it had cost him some $1,800 more than the mortgages.” This conversation was reported to the other plaintiffs ; and relying mainly on Bradley’s liability 'to pay the Perkins note they purchased it. Now, upon the .theory of the defense that there was no subsisting valid ■promise to pay the note, his declaration is a misrepresentation, which having been acted upon amounts to an equitable ¡estoppel. If it was true, as he stated, that he had agreed to pay the note, then there was a valid promise at that time which Mead could enforce, and that obligation not having ¡been discharged, he is still liable.
And this brings us to a more important distinction between 'this case and the case of Garnsey v. Rogers. In that case the prior mortgagee, having foreclosed and sold the property, and the avails being insufficient to pay his demand, sought to make the subsequent mortgagee liable for the deficiency on his promise to assume, and that after the mortgagor, to [243] ■whom the promise was made, had discharged the same by satisfying the mortgage debt and taking a release of the property. In this case Mead has not discharged the promise. On the contrary, the mortgage to the defendant remains unpaid; the release deed which the defendant executed and tendered to him he refused to accept, on the ground that other parties were interested in the defendant’s promise; and after the note in suit had been presented to Bradley and payment demanded and refused, he assigned his claim against Bradley under the promise to the plaintiffs. And that is the claim which the plaintiffs are prosecuting and the ground on which they ask for a judgment on the first and third counts in the declaration. We think they are entitled to it. Foster v. Atwater, 42 Conn., 244. There is nothing illegal in the contract and nothing in it contrary to public policy. The promise was made upon a sufficient consideration, and, but for the accident of the fire, would have been beneficial to the defendant as well as to the others. It may be hard for him to bear the loss, but it is not inequitable, while to transfer the loss from the defendant to the plaintiffs would be both hard and inequitable.
We conclude, then, that the plaintiffs, standing in the place and having the rights of Mead, are entitled to maintain this action, and that a new trial must be denied.
In this opinion the other judges concurred.