Case Name: Brandreth v. Sandford
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1853-01-29
Citations: 1 Duer 390
Docket Number: 
Parties: Brandreth v. Sandford.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 8
Pages: 390–412

Head Matter:
Brandreth v. Sandford.
On the 26th July, 1849, the plaintiff and defendant entered into and signed the following agreement:— . ,
‘C. W. Sandford, having caused a bond and mortgage for $4,000, from Teunis E. Dikeman to Cathalina Corbett, to be assigned to Dr. Benjamin Brandreth, has received from him on account thereof the sum of $4,000, bearing interest from the date hereof; and said mortgage is to be foreclosed immediately, and out of the proceeds the said sum of $4,000 is to be refunded to the said Brandreth, with the interest for the same, at the rate of seven per cent, per annum, until paid, and the residue due on said mortgage is to be paid to the said C. W. Sandford.” *
Held, that this agreement did not necessarily import a personal liability on the part of the defendant for the sum received, and that prior transactions between the parties which led to the agreement, might be properly resorted to for the purpose of showing that he was acting only as the agent of the mortgagee.
Held, also,.that the agreement did not by its terms imply that the mortgage was assigned as a security for the repayment of the $4,000 as a debt, but that by its fair interpretation it was evidence of a purchase by the plaintiff of an interest in the mortgage to the extent of the sum that he advanced.
Held, also, that if the defendant could be rendered liable at all, he could only be so as a. surety, it being the manifest intent of the parties that the mortgage se- " curities should be the primary fund for the reimbursement of the plaintiff.
(Before Oakley, Ch. J., Paine, Bosworth and Emmett, J.J.)
Nov. 15, 1852;
Jan. 29, 1853.
Held, therefore, that qudcumque via datd, the plaintiff was not entitled to recover, as he had failed to aver or prove that he had exhausted his remedies upon the bond and mortgage.
Judgment for the defendant, Bosworth, Justice, .dissenting.
This was an action for the recovery of $4,000 as moneys lent and advanced by the plaintiff to the defendant, and was tried before the Chief Justice and a jury, in March term, 1852.
The following are the material facts, as established by the pleadings and the evidence :—
The complaint alleges that between the 9th July, 1846, and the 26th July, 1847, the plaintiff lent and advanced to the defendant, at his request, $4,000, partly in cash, and partly in a promissory note, which, when due, was paid by the plaintiff; and that the defendant promised to pay the said sum of $4,000 when required, with interest from the 26th July, 1847; and that he is indebted on account thereof, $1,965 76 principal, with interest from the 27th November, 1850.
The answer denies the allegations in the complaint, and alleges that at or about the times therein stated, the defendant, as the agent and attorney of Cathalina Corbett, received from the plaintiff $4,000, or thereabouts, as the consideration money of an assignment, or assignments, of a certain indenture of mortgage made by Tennis E. Dikeman' to Mrs. Corbett, dated 15th November, 1841, for $4,000 and interest. That the money mentioned in the complaint was received by the defendant, as the attorney and agent of Mrs. Corbett, as the consideration money payable by .the plaintiff to her on the assignment of such mortgage, and that such assignment was received by the plaintiff in full payment and satisfaction of said money.
The reply denies these allegations in the answer.
_ The evidence on the trial, which was entirely documentary, and produced on the part of the plaintiff only, shows the following facts in the order of their occurrence.
On the 15th May, 1843, Mrs. Corbett, being the owner of the mortgage from Dikeman mentioned in the answer, gave her bond to John Strang to secure the payment of $2,000, with interest; and as security for such bond gave him an assignment of the Dikeman mortgage, with the bond therein mentioned, with a proviso that if she should pay her bond to Strang, the assignment should be void.
On the 9th July, 1846, the defendant obtained from the plaintiff his note at ninety days, for $1,750, payable to defendant’s order; and at the same time gave him a receipt for such note, which receipt stated that the note was to be provided -for and paid by him, the defendant, out of the first proceeds of a bond and mortgage from Dikeman to Mrs. Corbett, left in his hands for collection; and this receipt was signed by the defendant, as solicitor for Mrs. Corbett.
On the 10th October, 1846, the day on which the plaintiff’s note for $1,750 became due, defendant gave him a written acknowledgment, stating that there was due to him $1,750, bearing interest from that date, for which he, defendant, was to give him his note, endorsed by John Strang, payable at three ' months, or an assignment of the mortgage above mentioned, from Dikeman to Mrs. Corbett, then in his hand for collection, out of the proceeds of which mortgage, the said $1,750 and interest was to be paid.
On the 20th Movember, 1846, Mrs. Corbett executed an assignment to plaintiff of the bond and mortgage from Dike-man to her, subject to the assignment theretofore made by way of mortgage to Strang. The consideration mentioned in this assignment to plaintiff, was $4,000—the face of the mortgage. The actual consideration was the $1,750,* then due to the plaintiff.
On the 21st May, 1847, Strang executed to the plaintiff an’ assignment of the same mortgage, by which plaintiff became legally vested with the entire interest in that mortgage, divested of Strang’s lien. The consideration mentioned in this assignment from Strang to plaintiff, was $2,000, which was the amount of principal due Strang from Mrs. Corbett.
On the 26th July, 1847, about a month after the date of Strang’s assignment to plaintiff, a paper was signed by both plaintiff and defendant, stating that he, the defendant, having caused the bond and mortgage for $4,000 to be assigned to the plaintiff, had received from him on account thereof, the sum of $4,000, bearing interest from that date. That the mortgage was to be foreclosed immediately, and out of the proceeds the said sum. of $4,000 was to be refunded to thé plaintiff, with interest at seven per cent., until paid; and that the residue due on the mortgage was to-be paid to the defendant.
The plaintiff, as the owner of the mortgage, foreclosed it about three years afterwards, claiming that there was due and unpaid upon it the principal sum of $4,000, with interest from the 20th November, 1846, the day upon which it was assigned to him by Mrs. Corbett. Neither Mrs. Corbett nor the defendant was made a party to the foreclosure. The mortgaged premises were sold under the decree of foreclosure, for $3,700, and purchased by the plaintiff. The principal and interest due on the mortgage, with costs, arrears of taxes, and expenses of sale, &c., amounted to $5,665 76, being on the 27th November, 1850, $1,965 75 more than the price which the premises brought at the sale; and the plaintiff, in his complaint, claims that sum with interest from that date, as the amount due him by the defendant.
At the trial, the defendant moved, on the plaintiff’s evidence, to dismiss the complaint, which motion was denied.
The jury, under the direction of the court, found a verdict for the plaintiff for $1,965 26, with interest from November 27th, 1850, subject to the opinion of the court at general term, on a case to be made, with liberty to either party to turn it into a bill of exceptions.
' J. J. Hoffman, for the plaintiff,
insisted that he was entitled to judgment upon the verdict upon the following grounds :
I. The receipt of $4,000 from the plaintiff by the defendant is not denied.
H. The defence, as gathered from the answer, is as follows : 1. That the several sums of money were received by defendant as the agent of Cathalina Corbett. 2. That they were so received as the consideration money, payable by said plaintiff to said Corbett upon the assignment of a certain mortgage; and the assignment of said mortgage was received by said plaintiff, in full payment and satisfaction of said sum of money.
HI. The money was not received by defendant as the agent of Cathalina Corbett; or if it was, defendant made no declaration, at the time, of his agency to plaintiff. 1. The receipt, dated July 6, 1846 (see fol. 19 of case), contains a promise that the note there mentioned shall be provided for and paid by himself (“ hy me”), and although signed by him as solicitor, yet it is his personal promise", and not his promise as agent, nor the promise of C. Corbett. The fact of the note of plaintiff being payable to and endorsed by the defendant also shows the personal nature of the transaction. 2. As solicitor, he had no power to borrow notes and pledge his credit for the payment, and the signing as solicitor is not an avowal of agency. Should the plaintiff seek to charge C. Corbett upon the instrument, he would be compelled to prove more than that C. W. Sandford was her solicitor. The burden of proving direct agency or authority would be upon him, and that burden now rests upon the defendant. 3. The acknowledgment of October 10,1846, is a distinct personal obligation to secure, in one of two ways, $1,750,' in which he acknowledges himself to be indebted to plaintiff. 4. So also the writing of July 26,1847, the obligation is personal. 5. It is also the last in order of time, and for that ■ reason controls any doubt arising out of the manner of the execution of the former document.
IT. Even if he had disclosed his agency (of which there is no proof), yet having signed in his own name contracts and memoranda in writing which do not upon their face show that he was acting as the agent of another, he is personally liable. (Story on Agency, § 269 ; and cases cited in note.)
Y. The four thousand dollars were not received as the consideration money payable by plaintiff to said Corbett, upon the assignment of said mortgage, nor was the assignment received by said plaintiff in full payment and satisfaction of said sums'of money. 1. At the time of the assignment, the mortgage was encumbered for half its amount, viz., $2,000; subject to which encumbrance the assignment was taken. 2. “ Consideration money,” payable upon the assignment of a mortgage, necessarily implies an absolute purchase; but here an agreement is made with Sandford, supplemental to the assignment, regulating the disposal of the proceeds. If the assignment was by way of sale, for a consideration, nothing but the assignment itself was required. 3. B. Brandreth, as between himself and Sandford, never had the absolute control and right to dispose of the mortgage at his pleasure. 4. There being no purchase, no money was paid as consideration money. The allegation that it was so received, and that the assignment was received in satisfaction thereof, as contained in the answer, 'must be considered as an entire allegation, and the one part necessarily falls with the other.
VI. The advance of $4,000, by plaintiff to defendant, was by way of loan. 1. Upon the credit of O. W. Sandford he acknowledges the receipt, and promises to secure the sum of $1,750. The agreement of 26th July, 1847, explains the manner of the execution of the receipt of July 9th, 1846. 2. Personal credit was given to defendant, that he would pay the note out of a • fund particularly applied to that purpose. 3. The note not having been provided for, he executed the acknowledgment bearing date October 10,1846. The words, “ for which,” here mean “ to secure which,” for the $1,750 is to be paid out of the proceeds. The assignment was not to be absolute. 4. Afterwards, O. W. Sandford, “ having caused” (not Cathalina Corbett having assigned) the bond and mortgage to be assigned, executed the writing dated July 26, 1847. The fact contained here, that money is to be refunded, necessarily conveys the idea of a loan. Loans are refunded. Consideration money is absolute upon a purchase.
VU. The point raised on the trial, that the advance of $4,000 ■ was a loan by plaintiff to defendant, upon particular securities, to which alone he agreed to look for payment, is not made a ground of defence in the answer, and is in no way raised by the pleadings. It should not be considered by the court, a. The fact that the security was to be immediately foreclosed and the advance refunded, precludes the idea of a loan for the sake of an investment.
V JUUL. As between the parties to this suit, the Dikeman mortgage should be considered as having been under the control of G. W. Sandford, and by him caused to be assigned, by way of mortgage or collateral security, to the plaintiff, to secure an indebtedness of $1,750, previously incurred by defendant; together with a subsequent advance. 1. In each of the written instruments in evidence, signed by Sandford, there is a distinct acknowledgment of indebtedness, and no one of them contains a waiver of personal liability. The securities are additional to the defendant’s obligation or liability. 2. The promise to pay out of the proceeds of the mortgage, is the application of a particular fund to the payment of the debt. It implies no release of any other security.
IX. The taking of a mortgage to secure a debt does not extinguish the original debt, so long as it remains unsatisfied. The one is the principal, the other the incident; and the latter cannot merge in the former. (Sterling v. Rogers, 26 Wend. R. 658: see also 15 Wend. R. 218.) 1. The taking of collateral security for his indemnity would not prevent the plaintiff from resorting to an implied promise, unless it was agreed that he should only look to such security. (4 Pickering’s Rep. 444.) 2. In this case the advance of the money constituted the debt, part of which is yet unpaid. The mortgage was taken for security and indemnity. It was not intended to change the nature of the debt, and there was no agreement to look alone to the security.
X. The securities have been exhausted, and the sheriff reports a deficiency, Hov. 27, 1850, of $1,965 76.
XI. In this amount, therefore, defendant is personally liable, and judgment should be entered upon the verdict, with costs.
The defendant in person made and argued the following points:
I. The loan to Strang of $1,750 was a separate transaction, and was closed by Strang’s assignment to the plaintiff in May, 1847; and the money due to Strang was a prior lien on the mortgages payable out of the first proceeds.
II. The plaintiff dealt with the defendant as the agent of Strang & Oorbett, and recognised him as such agent.
HI. The plaintiff paid the balance of the $4,000 as a purchase of the bond and mortgage, and took Mrs. Corbett’s assignment therefor, without any covenant or guarantee; and the whole transaction between Corbett and Brandreth was a pur chase and sale of the mortgage, involving no personal liability of any kind on the part of the defendant.
IV. There was no promise, express or implied, on the part • of the defendant, to pay any deficiency upon the foreclosure of the mortgage.

Opinion:
By the Court. Emmett, J.
If the plaintiff has any claim in this action, it must arise on the paper of the 26th July, 1847, the last in point of date, and which was signed by both parties.
He could have no specific demand for the $1,750 mentioned in the paper of the 10th October, 1846, because the defendant's engagement in regard to that sum was that he should give for it either his note endorsed by Strang or an assignment of the Dikeman mortgage. The assignment of that mortgage was given to the plaintiff, which was a performance of defendant's agreement, and acquitted him of any personal obligation in respect to the $1,750.
In addition to the $1,750 and the interest due on it, the plaintiff subsequently advanced as much more as. made up $4,000; and for this subsequent advance he received an assignment of Strang's lien, which made him the sole legal owner of the Dikeman bond and mortgage. The $4,000 was the consideration for the entire sale of that bond and mortgage to him, and unless he stipulated for some additional security, or reserved some ulterior right against Mrs. Corbett or the defendant, he was to look to that bond and mortgage alone for reimbursement ; and the defendant's answer in that respect is strictly true.
But it is contended that by the paper of the 26th July, 1847, the defendant acknowledged that he had received $4,000 from the plaintiff, and that as this paper does not on its face disclose any agency for Mrs. Corbett, such acknowledgment raised an implied personal promise on defendant's part to pay the $4,000.
The answer to that is, that the paper of the 26th July, 1847, was a part of the same transaction that gave rise to the receipt of the 9th July, 1846, and the paper of the 10th October, 1846, in both of 'which the defendant explicitly stated his agency. It is not pretended that the $4,000 was not made up in part of the $1,750 mentioned in those two antecedent papers, or that the mortgage mentioned in the paper of the 26th July, 1847, was a different mortgage from that described or referred to in those previous papers, in both of which it was expressly stated that the bond and mortgage were in defendant's hands for collection, and the earliest of which was signed by the defendant as solicitor for Mrs. Corbett, thus disclosing the party for whom he was acting. Both those papers were made evidence by the plaintiff himself, and rendered it unnecessary for the defendant to offer any other or further proof of his agency. They sufficiently established the allegation to that effect in his answer; and the assignment of. the mortgage executed by Mrs. Corbett, which was also put in evidence by the plaintiff, proved her ownership of the mortgage, her knowledge of the transaction, and her assent to it. We have no right, therefore, to regard the paper of the 26th July, 1847, otherwise than in connexion with those previous documents, in considering this question of defendant's personal liability under it. They are all parts of a continued negotiation in relation to the same subject matter, in the very inception of which the defendant gave the most ample notice of his agency, disclosed the name of his principal, and subsequently procured her ratification of his acts in her behalf.
But even if the agency of the defendant were not sufficiently established, hów would the parties stand under the paper of the 26th July, 1847 ?
On fhe one hand, the plaintiff acknowledged by it that the defendant had caused the Dikeman bond and mortgage for $4,000 to be assigned to him. On the other, the defendant acknowledged that he had received from the plaintiff on account thereof $4,000, bearing interest from that date; and they agreed,—first, that the mortgage should be foreclosed immediately ; second, that out of the proceeds the $4,000 should be refunded to the plaintiff, with interest at seven per cent, until paid; third, that the residue due on the m'ortgage should be paid to the defendant.
It appears then by that paper, that on the day it bears date, the plaintiff's whole advances amounted to $4,000, and no more. But there was then due on the Dikeman bond and mortgage not only $4,000 principal, but interest from the 20th of November, 1846. The foreclosure proceedings show this.
The amount due on the bond and mortgage, therefore, exceeded the sum of plaintiff's advances by the amount of this cash interest. The paper itself shows that no deficiency on the contemplated foreclosure was anticipated by either party, but on the . contrary, that it was assumed that the foreclosure would yield the full amount of principal and interest due on the mortgage, in which evept, after refunding to the plaintiff his $4,000 with interest, there would be a residue or surplus; and it is manifest that the object of this paper was to provide a check upon the plaintiff's having a greater interest in the bond and mortgage under the assignment which he held, than would be an equivalent for the sum paid by him with interest. Without that paper the assignment would have operated as an absolute sale to the plaintiff of all that was due on the bond and mortgage, for interest as well as principal; and it was not intended that he should have as profit or usury on the transaction, the excess of what was due on the bond and mortgage beyond what he had paid with interest. That paper was drawn therefore, not for the benefit of the plaintiff, but of some interest represented by " the defendant; whether Mrs. Corbett's or his own, is immaterial so far as the plaintiff is concerned. It was an equitable defeasance of the assignment, as to all benefit from it beyond the sum advanced by plaintiff with interest. It provided in distinct terms that the residue due on the mortgage, after refunding the plaintiff's $4,000 with interest, should be paid to the defendant, which merely meant that it should not be paid or go to the plaintiff; and it contained no undertaking or guarantee on the part" of the defendant either personal or fiduciary, to pay anything to the plaintiff in any event. The plaintiff was to look to the proceeds of the mortgage, not merely as the primary source but as the only source from which he was to receive his $4,000 with interest, and that he was to do by an immediate foreclosure—not for the sake of his own interest merely, but for the more certain realization of the residue which did not belong •to him. That paper in fact made him a trustee as the holder of the mortgage, for the defendant, in respect to such residue ; and if by his delay in not foreclosing immediately but deferring it for three years, while the interest was accumulating on his own $4,000, and on the mortgage debt, it could be shown that the property had so depreciated in value as to have caused the mortgage on foreclosure to yield less than sufficient to pay the full amount of principal and interest due on it, so far from having any demand for a deficiency of his own proper claim under it, he would be more likely to have made himself liable to the defendant for having thus occasioned the loss of the surplus or residue, which by the terms of that paper was to be paid to him.
Even if the defendant had been the acknowledged debtor to the plaintiff, and it was admitted that the assignment of the bond and mortgage had been merely as collateral security for such debt, the immediate foreclosure of the mortgage was made an essential part of the consideration for giving such security; and the plaintiff's unexplained neglect to comply with that condition was a failure of consideration on his part, which the defendant might have set up against any attempt to make him liable for the deficiency. That the engagement to foreclose rested on the plaintiff, admits of no question. It could have rested on no other party. He was the holder and owner in law of the bond and mortgage, and as such, did actually foreclose in 1850 ; and it does not appear, nor is it pretended, that the defendant was to have, or that he had in fact, any control over, or agency in the foreclosure proceedings. The delay, therefore, in taking those proceedings, lies at the plaintiff's door. Hor would he have stood on sure ground, even if he had foreclosed immediately; because he took the bond and mortgage under an agreement- to look, directly and in the first instance, to the proceeds for his money, thus, by his own act and consent, placing the defendant in the position of a mere surety to be called upon only in the event of a failure of the primary source or fund. The bond and mortgage together constituted that source. They were inseparable, and had both been assigned to him as one asset or item of property; and he was bound therefore to have exhausted his remedy on the bond as well as the mortgage before he could have recourse to the defendant. It does not appear that he has done so ; and the presumption is, that he still holds the bond, which may be perfectly good against the estate of the obligor. He has not even tendered back the bond to the defendant as a preliminary to his demand against him; and he surely could not recover in this suit and retain the bond also.
If we view this case, therefore, in the most favorable light for the plaintiff, his claim is beset with difficulties. In its true aspect, as .already shown, it is clear that he has none that can be enforced; and the defendant is, therefore, entitled to judgment.