Court Opinion

ID: 3498220
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:05:40.459467+00
Date Added: 2024-06-11T13:39:18.620181
License: Public Domain

I am only partially in accord with the foregoing opinion. The deed from Applebaum and Steingold ran to Colgrove individually. He assumed and agreed to pay the mortgage and thus became individually liable. After all members of the syndicate had defaulted, Colgrove gave a deed to himself as trustee for the members of the syndicate and in it referred specifically to the syndicate agreement and declaration of trust. The second deed was simply a redeclaration of the provision in the original trust agreement that all right, title and interest of the trustee as grantee in the warranty deed was held by him solely for the benefit of the syndicate members. The trust agreement contained no direct personal assumption of the mortgage by the members. It provided that in case of failure by the syndicate members to make the required payments when called upon by Colgrove, such payments might be secured from others, who should be compensated out of the interests of the defaulting members, the interests of the latter in the syndicate being decreased accordingly. This was the entire extent to which the contributions from the syndicate members to the mortgage payments could be enforced. In another clause the syndicate members agreed to indemnify *Page 412 
the trustee against all liability which might arise out of the transaction. However, the ultimate liability of the members under this indemnity clause was not to be based upon the proportionate interests originally purchased by them, but was expressly limited to the proportion of ownership held by each at the date when such liability should be imposed. At most, the members agreed to indemnify Colgrove to the extent of their proportionate interests in the syndicate. Notwithstanding rather loose and inconsistent language in the first and fourth paragraphs of the preliminary subscription agreement, there was no direct assumption of the mortgage by the syndicate members, and none can be implied. See 3 Comp. Laws 1929, §§ 13281 and 13282.
Nor can the syndicate members be held liable as joint adventurers. In the deed executed by Applebaum and Steingold title was taken, and the mortgage assumed by Colgrove individually. The provisions of the trust agreement above noted indicated that the parties intended that the assumption of the mortgage by Colgrove in his own name was to be his own individual act, and not that of the syndicate members. Since Applebaum and Steingold, as members of the syndicate, were parties to the trust agreement, they are bound by this intention as expressed in the agreement, and the mortgagees can have no greater right. Williams v. Gillies, 75 N.Y. 197. I therefore believe that there was no assumption of the mortgage by the syndicate members, and that they cannot be held liable.
However, Colgrove, who expressly assumed and agreed to pay the mortgage, is liable. I cannot agree with Justice NELSON SHARPE that the failure of Applebaum and Steingold, as syndicate members, to contribute their proportionate share of the sums required for the mortgage payments, destroyed *Page 413 
their right, as grantors of the property under the deed of conveyance, to enforce against Colgrove the mortgage assumption agreement contained in that deed. When the deed was executed, Colgrove made the down payment of $38,000, as agreed, and paid the balance of the purchase price by the assumption of the $77,500 mortgage. At the same time Applebaum and Steingold took a 7/38 interest in the syndicate, in response to Colgrove's earlier request that this be done in the event his clients should not desire to subscribe for the full amount of the agreed down payment. Colgrove thus received the full consideration for his assumption agreement. At the time of the trial, Colgrove did not recall whether Applebaum and Steingold actually paid to him the amount of their subscription, and then received back from him the entire amount of the cash down payment, or whether the subscription was simply a bookkeeping entry. However, it would appear that what actually took place was that while Colgrove took a deed to the entire property and assumed the entire mortgage, 7/38 of the down payment was represented by Steingold and Applebaum's retention of that proportionate interest in the syndicate. As members of the syndicate, they agreed to pay to Colgrove, when called upon, their proportionate share of the sums due on the mortgage, or, in the event of their failure to make such payments, to suffer a corresponding diminution of their interest in the syndicate. Applebaum and Steingold were the first parties to default, but the amounts due from them were, for a time, contributed by others, so that they were released from the liability to that extent, and their interest was decreased proportionately in accordance with the terms of the trust agreement. By the express terms of that agreement, their liability for the failure to make such *Page 414 
contribution was limited, in common with that of all other syndicate members, to the corresponding reduction of their interest in the syndicate. I do not believe it follows that in addition to this Applebaum and Steingold incurred the loss of their right to enforce against Colgrove the mortgage assumption agreement for which the latter received full consideration when the property was conveyed to him. It should be noted that in 1930, when the final default took place, not only Applebaum and Steingold, but all other members of the syndicate had defaulted.
I therefore believe that the deficiency decree should run against Colgrove, but subject to this qualification: Should Applebaum and Steingold pay the deficiency, and then recover from Colgrove under the assumption agreement, the latter could secure indemnity from them for his loss, under the terms of the trust agreement, to the extent of their proportionate interest in the syndicate at the time the liability was imposed. Therefore, under the rule that in an equity action brought by the mortgagee to recover a deficiency judgment against the assuming grantee, the latter is entitled to raise against the mortgagee any defenses which he could raise against the grantor, the deficiency decree against Colgrove should be decreased by the amount of Applebaum and Steingold's proportionate interest in the syndicate at the time of this decree.
The case should be remanded to the trial court for taking such further testimony as may be necessary and entering a decree in accordance with this opinion. Plaintiffs should recover costs from defendant Colgrove, and the defendants, other than Colgrove, Steingold and Applebaum, should recover their costs from plaintiffs.
BUSHNELL, J., concurred with BUTZEL, J. *Page 415