Case Name: Nathaniel A. Cowdrey, plaintiff and appellant, vs. William A. Coit, defendant and respondent
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1865-05-27
Citations: 3 Rob. 210
Docket Number: 
Parties: Nathaniel A. Cowdrey, plaintiff and appellant, vs. William A. Coit, defendant and respondent.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 26
Pages: 210–214

Head Matter:
Nathaniel A. Cowdrey, plaintiff and appellant, vs. William A. Coit, defendant and respondent.
1. Where the owner of land purchases the same upon the foreclosure of a mortgage existing prior to his acquisition of the title, this will only give him a right of action on covenants in the deed to him, to the extent of the amount paid by him to relieve the land from the burden of such mortgage, precisely as if ho foreclosure had taken place.
2. The obligee of a bond given for the purchase money of land, (or his assignees,) is entitled to recover in an action on such bond, at least the excess of the amount due by its condition, over the sum for which the obligee is liable on the covenants in his deed to the obligee, if no more.
3. If one in possession of premises under a deed with full covenants, upon a sale thereof under a prior mortgage becomes himself the purchaser, and assigns his bid to another, who obtains a deed of the premises from the sheriff, this is not such an eviction of the original grantee as is produced by the act of the law, or is the necessary and legitimate consequence of the existence of the mortgage foreclosed, and the action upon it; but is the result of the party’s own voluntary sale of his interest acquired by bidding off the premises, and allowing his vendee to take the sheriff’s deed.
4. Such sale of his interest in the land, to another, will not create anew a liability on the part of the obligee in the bond, to refund the whole pui'chase money, by way of damages for breach of the covenants in his deed.
(Before Robertson, Ch. J. and Garvin and McCunn, JJ.)
Heard February 14, 1865;
decided May 27, 1865.
This was an action upon a bond given by the defendant upon the purchase of certain land in Brooklyn, to secure payment of the purchase money thereof, of which bond the plaintiff was assignee. Such premises were conveyed in fee by the seller, who was the obligee in such. bond, (Hawke,) to the defendant -by a deed with covenants of seisin, for quiet enjoyment, against incumbrances, for further assurance, and with warranty. They were, when so conveyed, subject jointly with other premises to a prior mortgage not mentioned in such deed. Upon a subsequent foreclosure of such mortgage both parties attended upon the sale of such premises and bid for the same; they were bid off for a certain sum by the defendant, who forthwith assigned his bid to a third person (Hardy) who took the deed directly to himself from the sheriff, and entered into and has since retained possession^ of the premises by virtue thereof. The obligee in such bond and original vendor of the' premises, at the time of their sale by him, delivered to the defendant to sell a certain mortgage by a third person to such obligee, upon certain other premises, in order to have its proceeds applied to paying off the mortgage upon the premises so sold. It did not appear that the defendant was authorized to apply such proceeds to payment; but the first mentioned mortgage was subsequently redelivered to such obligee and canceled. Such obligee testified that by agreement he was to take care of the mortgage on the premises conveyed to the defendant. The defendant testified that when he took the deed to himself, and received the mortgage before mentioned, to sell it, he told the obligee that he could not buy the property and give his mortgage, unless the prior mortgage was paid off, who replied that he gave him (the defendant) such other mortgage to sell, to enable him to pay off the prior mortgage.
The answer alleges that it was understood and agreed between the obligee and the defendant,, at the time of the execution of the bond in question, that the obligee should pay off the prior mortgage, and that until such mortgage was so paid off, the bond should not become binding upon the defendant. And the defendant claimed that the prior mortgage having been foreclosed, and the land sold, and the defendant ousted, these facts constituted a failure of the consideration for the bond. - On the trial, the court decided that the defendant was entitled to a judgment, dismissing the complaint; and judgment having been rendered accordingly, the plaintiff appealed.
F. N. Bangs, for the appellant.
B. W. Bonney, for the respondent.

Opinion:
By the Court, Robertson, Ch. J.
The liability of the defendant in this action depends entirely upon that of the obligee of the bond, which forms its subject, upon his covenants contained in' the conveyance by him in the defendant, which formed the consideration of such bond. If, upon any of such covenants, the obligee. in such bond was liable to refund the whole amount of purchase moneys with interest and expenses, the defendant would, of course, not be liable at. all upon a bond which formed the consideration, for-such conveyance; but.if such obligee were liable on such covenants, for a less sum only, the plaintiff would be entitled to recover merely the difference between such sum and the amount-.of such bond. The defense of a- failure of. consideration for a contract is allowed simply to prevent circuity of action, particularly in case of an action.for the recovery of any unpaid portions of-the purchase money of real .estate, where the conveyance to the purchaser contains covenants' respecting it. (Platt v. Gilchrist, 3 Sandf. 118.) Of course, where the amounts of the two recoveries would not.be the same,.a complete defense to a bond for the purchase money would not.be made out,.although by way of recoupment or counter-claim, the, amount paid by the purchaser, to remove the defect covenanted: against, might be deducted from the recovery for the purchase money unpaid.
. :By the purchase. by the defendant of the premises in question, with others, upon the foreclosure of the original mortgage upon .them, if he had taken the deed for them to himself, he would- have become entitled to recover, on the covenant for quiet possession in the conveyance; to him, the proportion of the'amount which he so paid which was. chargeable against the premises in question for their share, of the burden of such mortgage, (Hunt v. Amidon, 4 Hill, 345;) he would have been entitled to recover only the same amount on the covenant against incumbrances. (Hall v. Bean, 13 John. 105. DeForest v. Leete, 16 John. 122.) The rule of damages would, of course, also be the same on the covenant of warranty in such conveyance, although it covers the title as well as the possession ; since a conveyance in such foreclosure suit to the present defendant would equally have prevented his title from being affected by the mortgage foreclosed. Indeed, it is doubtful whether any action could be maintained upon such covenant at all where the defendant had not been actually evicted. (Kent v. Welch, 7 John. 258. Miller v. Watson, 5 Cowen, 195.) If the doctrine laid down in Waldron v. McCarty, (3 John. 471,) as to recovery under a covenant for quiet possession in consequence of such purchase, were applicable to a covenant of warranty, no such action would lie. If the doctrine of equitable or presumptive eviction, first started in Hunt v. Amidon, (ubi supra,) is to govern, the liability upon both covenants would be the same. If that be so, the result of a purchase of land by its owner, upon a foreclosure of a mortgage existing prior to his acquisition of title, would give him simply- a right of action on covenants in the deed to him, to the extent of the amount paid by him to relieve such land from the burden of such mortgage, precisely as if no foreclosure had taken place.
There would be no hardship in applying such rule in this case. The plaintiff attended the sale under the foreclosure, and endeavored by bidding to become the purchaser of the land, and thereby be enabled to complete the title of the defendant, and relieve it from the incumbrance of such mortgage; the defendant thwarted him in such purpose, by bidding against him, thereby compelling him, if he became the purchaser, to pay a larger amount; but by the land being struck down to the defendant, he became the equitable owner of an indefeasible title thereto, and assignee of the mortgage. His subsequent transfer of such right to a third person could not divest the obligee in the bond in question, of the right thereby acquired by him to a reduction of his liability on the covenants in his deed to the defendant, to such'share of the amount paid by the latter as was justly chargeable against the prem ises, to relieve them from such mortgage. Such being the case, the plaintiff, as assignee of such obligee, would be entitled to recover on such bond at least the excess of the amount due by its condition over the sum for which such obligee was so liable, if no more.
The eviction of the defendant from the premises in question, under the sheriff's deed, to his vendee in the foreclosure suit, was not the act of the law, or the necessary and legitimate consequence of the existence of the mortgage foreclosed, and the action upon it; it was the result of the defendant's own voluntary sale of his interest acquired under the striking off of the premises to him, and allowing his vendee to take the deed; as much so as if he had taken a deed directly from the sheriff, and executed a new conveyance. By intervening, he lost his right to recover back the whole purchase money, if paid, or resist its recovery, if unpaid, and elected to confine himself to a claim for money necessarily spent to make his title complete. No subsequent sale by him of that title could re-create a liability of the obligee for the whole purchase money, by way of damages for breach of the covenants in his deed.
The preceding view renders it necessary for this case to go back for a new trial, when the questions of any additional consideration having been given for the bond in suit, beyond the conveyance of the land in question, and the right of the defendant to apply the sum paid by his vendee on the foreclosure as damages for breach of the covenant in the deed to him, and the amount taken by the plaintiff, out of court, in satisfaction of any part of,the claim of the plaintiff, as a bona fide purchaser of such bond, may be disposed of. It is not necessary now to express any opinion on those points.
The judgment should, therefore, be reversed, and a new trial had, with costs to abide the event.