Case ID: ny-st-rep_16/html/0827-01.html
Source: Caselaw Access Project
Author: {"author": "Finch, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Frances E. Cole, App’lt, v. Jay M. Cole, Resp’t.
    
    
      (Court of Appeals,
    
    
      Filed June 19, 1888.)
    
    Deed—When a mortgage—Liability of mortgagee on covenant to make advances.
    The plaintiff’s husband owned the farm in question, hut had mortgaged it In addition he had borrowed money of the defendant, and the latter had become liable as indorser for more money which said husband had borrowed. In this condition of affairs plaintiff's husband and plaintiff conveyed said farm to the defendant, who by a covenant in the deed, assumed and agreed to pay the outstanding incumbrances. This deed was in reality but a mortgage as security for the debt of said husband to defendant. After a time, and without paying the prior liens, the defend' ant, by a quit-claim deed, conveyed the farm to plaintiff upon her agreement to pay to the defendant the debt due him from her husband. There was no other consideration. Thereafter, on a foreclosure of one of the prior mortgages, the defendant became purchaser and holds the referee’s deed and the possession. Held, that the defendant never became liable to anyone as primary debtor for the sums due the mortgagees; that the covenant of assumption contained in said deed was an agreement to make further advances upon the security of the land for the payment of the. mortgagor’s debt; that plaintiff had no right of action upon the defendant’s covenant to make advances, for he had released to her the consideration and security which supported it.
    Appeal from, a judgment of the supreme court, general term, fifth department, affirming a judgment in favor of the defendant entered at special term.
    
      H. H. Woodward, for app’t; J. A. Stull, for resp’t.
    
      
       Affirming 39 Hun, 652, mem.
      
    
   Finch, J.

The complaint in this case alleged an agreement of purchase and sale of real estate, the plaintiff being vendor and the defendant vendee; and asked a recovery of the balance of the price over and above outstanding incumbrances. "Upon the foreclosure of one of these, defendant obtained the title and went into possession, the plaintiff alleging that this was done pursuant to the contract between the parties. The defendant refused to pay and this action was brought to enforce the contract and make the purchase money an equitable lien on the land. The action was successfully defended; the special term finding as a fact that no contract was made between the parties and that the allegations of the complaint stood wholly unproved. Each party testified on the trial and flatly contradicted each other as to the fact or falsehood of a bargain. The extrinsic circumstances turned the scale in the judgment of the court and led to a dismissal of the complaint which the genera,! term has affirmed. Of course that leaves open no question for our consideration and no more would need to be said but for a view of the facts taken by the appellant which seeks to substitute a new cause of action and justify even a larger recovery than that claimed.

Richard Cole — the plaintiff’s husband—originally owned the farm, but had mortgaged it for about $8,500. In addition he had borrowed of the defendant about $1,700, and the latter had become liable as endorser for something over $2,000 more which Richard Cole had borrowed of other parties. In this condition of affairs Richard and his wife, who valued the farm at about $13,000, conveyed it to the defendant who by a covenant in the deed assumed and agreed to pay the outstanding incumbrances. But this deed, though absolute on its face was in reality but a mortgage and was held by the defendant beyond the prior incumbrances as security for the debt of Richard to him. After a time and without paying the prior liens the defendant by a quit-claim deed conveyed the farm to Richard’s wife, the present plaintiff, upon her agreement to pay to the defendant the debt due him from Richard.

Beyond this promise the plaintiff paid nothing to the defendant and the quit-claim deed to her amounted only to an assignment or release of the defendant’s mortgage, taking the wife’s simple promise to pay in place of the security. Thereafter on a foreclosure of one of the prior mortgages the defendant became purchaser, and holds the referee’s deed and the possession.

Upon these facts it is now argued that the defendant is liable to the plaintiff for the amount of the prior incumbrances, because he became hable upon his covenant of assumption to the mortgagees, and by his purchase under their foreclosure has taken the land of the plaintiff to pay his own debt for which that land stood only charged as surety for the performance of his obligation. This contention involves a very serious misunderstanding and misapplication of the authorities and a result in no respect equitable or just. The defendant never became hable to any one as primary debtor for the sums due the mortgagees. If the grant to him had been absolute so that the grantors parted with their title and put into his hands the means with which to pay; the debt and he had thereupon covenanted to discharge it he might have become hable on that covenant to the mortgagees and made himself the primary debtor. (Lawrence v. Fox (20 N. Y., 268). But the grant was not absolute. The deed was simply a mortgage and the covenant of assumption an agreement to make further advances upon the security of the land for the payment of the mortgagor’s dept. (Garnsey v. Rogers, 47 N. Y.,233); Pardee v. Treat (82 N. Y., 385). If the defendant made the advances the debt of the land and of the mortgagor would remain, the creditor only having been changed, and if he did not make them his liabihty would be to the mortgagor only and entirely personal in its character. He did not make them. On the contrary he released his mortgage by the deed to one of the mortgagors upon the sole consideration of her personal covenant to pay his debt. She has no right of action upon his covenant to make advances for he has released to her the consideration and security which supported it. (Wadsworth v. Lyon (93 N. Y., 201) has no sort of application to the present facts.

If there was adequate foundation for the claim made it would still be a sufficient answer that no trace of it is to be found in the complaint. The judgment should be affirmed, with costs.

All concur.