Court Opinion

ID: 6850598
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:35:27.1035+00
Date Added: 2024-06-11T16:05:03.957428
License: Public Domain

THOMSON, District Judge
(dissenting).
As I find myself unable to concur in the views of the majority of the court, and feeling that a fundamental principle is involved of very considerable importance, I hatfe thought it not inappropriate to briefly express my views by way of dissent.-
A corporate citizen of Florida conveyed to an Ohio corporation a tract of land in Florida. In part consideration of the purchase price, the purchaser executed and delivered to the vendor 31 promissory notes, and, as security for their payment, executed a mortgage on the property to the vendor. After-wards, the purchaser conveyed the land in question to the defendant Berk, of Cleveland, Ohio. By the terms of this deed, the land was conveyed subject to the aforesaid mortgage; the deed expressly providing that the purchaser (Berk) would assume and agree to pay the notes owing to the mortgagee. After the conveyance, the purchaser paid about $90,000 of the notes, but refused to pay the balance; thereupon, suit was.brought by the Florida Company, mortgagee, against Berk to recover the balance of the notes, in the United States District Court for the Western District of Pennsylvania. Judgment was entered for the defendant, which the opinion of this court affirms. My positions are as follows :
First. The Pennsylvania Act of 1878 (21 PS §§ 655, 656) has no application to this case, because, under its provisions, the grantee of real estate bound by a mortgage is not personally liable for the payment of the same unless he shall, by an agreement in writing, have expressly assumed a personal liability therefor, or there shall be express words in the deed of conveyance stating that the grant is made on condition of the grantee assuming such personal liability; and the right to enforce such personal liability shall not inure to any person other than the person with whom such an agreement is made, nor shall such personal liability continue after the grantee has bona fide parted with the ineum-*1037bered property, unless he shall have expressly assumed such continuing liability.
Under the terms of this act, the right to enforce any personal liability could not inure to the original mortgagee, because it was not the person with whom the agreement for personal liability was made.
Second. The law of this ease is to be determined and governed by the law of Ohio, where the contract was made.
Third. Under the decisions of the Ohio courts, which are very numerous, a mortgagee is allowed an action against a grantee who has assumed and agreed to pay the mortgage.
An excellent annotation on the liability of the grantee assuming a mortgage debt to a mortgagee is found in 21 A. L. It. 439, note, the general rule being stated as follows: “In the great majority of jurisdictions the doctrine is well settled that whore a purchaser of mortgaged lands from the mortgagor, assumes and agrees to pay the mortgage thereon he becomes personally liable therefor, which liability enures to the benefit of the mortgagee, who may enforce it in an appropriate action.”
Among the Ohio cases, the following may be cited: Brewer v. Maurer, 38 Ohio St. 543, 43 Am. Rep. 436; Poe v. Dixon, 60 Ohio St. 124, 54 N. E. 86, 87, 71 Am. St., Rep. 713; Butler v. Creager, 2 Ohio C. C. 542; Society of Friends v. Haines, 47 Ohio St. 423, 25 N. E. 119 ; Pendery v. Allen, 50 Ohio St. 121, 33 N. E. 716, 19 L. R. A. 367; Tuscany v. Papp et al., 30 Ohio App. 49, 164 N. E. 126.
Fourth. The line of distinction which I think reconciles the various decisions is the difference between taking a property “under and subject” to the payment of a mortgage, in which case no personal liability is created, and the case where the purchaser takes the property subject to the mortgage which he assumes and agrees to pay. In this latter ease, a personal liability is created. Such contract is made upon a consideration moving to the promissor. As the courts have said, the true import of it is not to pay the debt of another, hut to discharge the prom-issor’s own obligation. Instead of paying the whole of the stipulated purchase price to his grantor, he agrees to pay it to the one who holds the incumbrance, thus making the sum due his own debt. And, when he pays it, he is but paying what he agreed to pay for the land in the manner agreed upon; and there is no reason which can be asserted why such a contract may not he enforced in favor of the mortgagee which might not be equally effective against its enforcement by the vendor. See, particularly, Society of Friends v. Haines, supra.
In Poc v. Dixon, supra, the court said: “As between themselves [the grantor and grantee], the one who has thus assumed the debt is regarded as the principal debtor, and the other as a surety, and they respectively incur the obligations and acquire the rights that are by law attached to the relation each occupies.”
Fifth. There was no duty resting on the plaintiff to first exhaust the real estate. The action was properly brought in the United States District Court, and the court erred in not applying the law of Ohio in the disposition of the suit, which would have necessarily resulted in a judgment for the plaintiff. I would therefore reverse the judgment.