Court Opinion

ID: 3604126
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:50:04.169004+00
Date Added: 2024-06-11T13:57:36.335658
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 173 
It is a general principle that where the owner of land mortgages it to secure the payment of a debt, and afterwards sells the equity of redemption subject to the lien of the mortgage, and the purchaser assumes the payment of the *Page 174 
mortgage as a portion of the purchase money, the latter becomes personally liable for the payment of the debt of the former to the holder of the mortgage in the first instance; and if the mortgagor is compelled to pay it, he can recover it from the purchaser of the equity of redemption. In such case, the mortgagor and purchaser stand in the relation of principal and surety, the latter as security for the former, to the extent of the mortgage debt (Halsey v. Reed, 9 Paige, 446; Marsh v.Pike, 10 Paige, 595-97; Cornell v. Prescott, 2 Barb.S.C.R., 16; Blyer v. Monholland, 2 Sand. Ch. R. 478;Ferris v. Crawford, 2 Denio, 595); and where the mortgagor sells and conveys the equity of redemption of a part of the premises mortgaged, subject to the mortgage, and the purchaser retains enough of the purchase money to satisfy the mortgage, and agrees to pay it, the same rule prevails, and the premises so sold are primarily chargeable with the payment of the mortgage (Halsey v. Reid, supra).
In the present case, after the execution and delivery of the mortgage to the Trust Company, Neely, the mortgagor, conveyed a portion of the premises to Burnett by deed bearing date April 13th, 1836, for the consideration of $4000, containing the following habendum clause: "To have and to hold the above granted, bargained and described premises with the appurtenances, unto the said part of the second part, his heirs and assigns to his and their own proper use, benefit, and behoof forever, subject nevertheless to a certain mortgage for seven hundred and fifty dollars on the said premises held by the New York Life Insurance and Trust Company, which the said party of the second part agrees and undertakes to pay, he having retained so much of the purchase money agreed to be paid for the premises hereby conveyed, in his own hands for that purpose." After the execution and delivery of that deed, Burnett according to the foregoing principles, became the principal debtor to the Trust Company, and the portion of the mortgaged premises purchased by him of Neely, was thereafter primarily chargeable with the payment of that mortgage.
After these transactions, while Neely owned the mortgage *Page 175 
taken by him from Burnett upon the portion of the premises sold him for the balance of the purchase money, and while Burnett owned the same premises, Neely conveyed two other portions or parcels of the premises mortgaged to the Trust Company, the title to which, by subsequent mesne conveyances, has become vested in the defendant Pistor. After Neely had conveyed these two other portions, it was not in his power to disturb the equities which existed in favor of the owners thereof. He conveyed all the rights which he possessed in relation to them; one of which was to have the Trust Company's mortgage satisfied out of the portion sold to Burnett so far as they would go, and another was to hold Burnett the principal debtor, quoad the mortgage debt to the Trust Company. Neely's grantees of other portions of the premises were not divested of those or any other rights by his subsequent assignment of the Burnett mortgage to the plaintiff containing the covenant that the premises covered by it were free and clear of incumbrances. It was res inter alios acta, and incapable of affecting equities which had previously attached in favor of parties unconnected with the transaction.
After the plaintiff in 1841 had foreclosed the Burnett mortgage, and become the purchaser at the sale of the mortgaged premises, he succeeded to the rights of Burnett, was the owner of the premises embraced in that mortgage, and held them, as Burnett had done, subject to the lien of the Trust Company's mortgage, with no other rights than Burnett had possessed, excepting the right to require Neely to remove the incumbrance of the Trust Company's mortgage; but with none whatever in reference to Pistor or his grantors — with respect to them, the premises purchased by him remained chargeable with the payment of the whole of that incumbrance, and liable to be first sold to satisfy it. His purchase of it afterwards and the assignment of it to him by the Trust Company, effected it's entire extinguishment. He was left with only his personal claim upon Neely under the covenant in Neely's assignment of the Burnett mortgage. This is plain and common equity. He was the purchaser of that portion of the premises mortgaged *Page 176 
to the Trust Company which had been devoted to its payment, and which, if applied to that object, would have been ample, as is apparent from the amount he bid for it at the mortgage sale. It was his duty to remove the incumbrance, and if Pistor had been compelled to pay it off in order to remove the cloud from his own title, equity would subrogate him to the rights of the Trust Company and allow him to proceed and sell the premises contained in the Burnett mortgage in the first instance for the purpose of satisfying it.
The judgment of the supreme court at general term should be affirmed with costs.
Judgment affirmed.