Court Opinion

ID: 3587710
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:37:13.15475+00
Date Added: 2024-06-11T13:59:26.193090
License: Public Domain

A portion of the surplus moneys in controversy proceeded from the foreclosure and sale in the two suits first above entitled. The mortgages were a part of a large number referred to hereafter, made by the defendant George G. Johnson to Richard F. Blydenburgh for purchase-money of the lands hereafter also referred to, and by him assigned to the plaintiff Samuel J. Underhill as security for a loan of money. There was a surplus after paying Underhill, but a large deficiency to pay the sums secured by the mortgages. So that had no other interests intervened, Blydenburgh would have been entitled to the money.
The surplus in the four actions secondly above entitled, were the proceeds of the foreclosure and sale of mortgages made by Richard F. Blydenburgh to Samuel J. *Page 428 
Underhill, as mortgagee, and were incumbrances upon the lands hereafter mentioned as conveyed by Blydenburgh to George G. Johnson, and upon which the latter executed back to the former mortgages to secure the purchase-money, and which were unpaid, so that Blydenburgh would also have been entitled to this surplus had not other interests intervened. Bingham claimed the surplus, as grantee of Johnson, of the mortgaged lands, and also, as assignee of Johnson, of certain unliquidated damages for a breach of the covenants of warranty in his deed, by which portions of his property had been lost to Johnson, and also for a breach of the agreement hereafter referred to in assigning mortgages given by Johnson on the purchase of the lands. Blydenburgh claimed the surplus, as also did William Peet, as receiver of the property and effects of Blydenburgh, duly appointed upon proceedings in the City Court and County Court of Brooklyn. The referee, to whom the claims of the creditors to the surplus was referred, awarded the moneys to the receiver. Bingham and Johnson appealed to the General Term of the Supreme Court for the second district, which affirmed the report; and thereupon Bingham and Johnson appealed to this court. The appeal is to be determined by the stipulations and agreements of Johnson and Blydenburgh in their contract of purchase and sale of the 15th of March, 1858, and their respective rights, duties and obligations under it. Its provisions are numerous and somewhat complicated, and I shall only refer to such of them as affect the question of the right to the surplus moneys in controversy.
By the contract, which was collateral to the deed, Blydenburgh sold to Johnson 211 lots of land in the city of Brooklyn, portions of which were subject to the payment of mortgages made by Blydenburgh, and to taxes and assessments to more than $80,000. The deed contained the usual covenants; the cash consideration for the lots was $200,000, but the credit price which was inserted in the deed was $266,350, and if the title to any of the lots failed, the grantor was to respond in the first proportion of the $200,000.
No money was paid, but in lieu thereof 211 mortgages. *Page 429 
One upon each lot, except five of the lots, which were covered by one mortgage. $80,000 of the mortgages, at the cash estimate, were at interest at seven per cent, payable annually, and the residue, $120,000, at the cash estimate, were at six per cent interest, payable annually, and were all payable five years from the date. Any one or more of the mortgages were to be assigned to any purchaser Johnson might obtain, for a sum equal in cash to the cash value of the premises, or on payment by Johnson of any taxes, assessments or prior mortgage of an equal amount, computing the mortgages at their cash value, and Blydenburgh was to assign the mortgages in any way to facilitate improvement. Blydenburgh was not to enforce payment, or use in any way the seven per cent mortgages so long as the prior mortgages upon the property remained unpaid, except so far as he paid taxes and assessments, or was required to pay and did pay the prior mortgages. And he was not to prevent Johnson, at his own expense, from getting as long credit as he could obtain upon the prior mortgages. Johnson, also, in terms, agreed to pay Blydenburgh $15,000 to enable him to pay off taxes and assessments, viz.: $5,000 on the 15th of May, $5,000 on the 15th of June, and $5,000 on the 15th of July thereafter, and Blydenburgh was to assign to him, or to a person he should name, seven per cent mortgages, at the rate of $6,666.66 for every $5,000 paid, or assign such mortgages as collateral security at double the amount of the money loaned. If Johnson failed to pay any or either of the said sums of $5,000 at the time appointed, then Blydenburgh was at liberty to enforce the payment of all the bonds and mortgages. Upon the payment of the $80,000 with the interest at seven per cent., and the $120,000 with the interest at six per cent, upon the assignment of such bonds and mortgages, without expense, to Blydenburgh, or upon the same being unassigned, the latter was to hold the balance or residue of such bonds and mortgages for the use and account of Johnson. And until the said $200,000, with the interest, should be realized by him over and above all expenses and taxes or accruments by assignment, Blydenburgh should be entitled *Page 430 
to enforce and collect all the said bonds and mortgages at their nominal amount. Johnson also agrees to pay everything he realizes from the property to Blydenburgh, or the holder of the mortgages in extinguishment thereof. Johnson never paid any part of the $15,000.
The same identical question presented upon this appeal arose in the case of Braman v. Johnson and others, decided at the General Term of the Supreme Court for the second district, where Mr. Justice LOTT, in the opinion, said: "It is evident from these different provisions, that the mortgages, taxes and assessments upon the property, at the time of the purchase, were to be satisfied with funds to be furnished by Johnson, and that he relied on the covenant of Blydenburgh, that the seven per cent bonds and mortgages for $80,000, were not to be used by him until the property was freed from incumbrances. Indeed, the effect of the agreement is to prevent Blydenburgh from paying off the old incumbrances unless with the assent of Johnson, or upon compulsion, or, at least, without being required so to do by the holders thereof. There is therefore no ground for the claim now made by Johnson, that Blydenburgh immediately, on the execution of the deed, became liable to him on his covenants therein, for the amount of the old mortgages, and such taxes and assessments, and that he, Johnson, is therefore entitled to a credit or set-off for the value of the property sold under the foreclosure of such mortgages as have been foreclosed, and for such taxes and assessments against the mortgage in question, which is one of those bearing six per cent, especially as it appears he has not made any payments to Blydenburgh to enable him to pay off such incumbrances. On the contrary, he is precluded from making any such claim by his express agreement, that Blydenburgh should not be sued on his covenants in respect to such incumbrances, unless and until such payments were made. The claim made for a deduction, founded on a want of title at the time of the sale, to some of the lots, is equally untenable. One of the means contemplated and relied upon in the arrangement of the parties for raising the purchase-money, was the sale and transfer of the *Page 431 
mortgages given therefor, and the more effectually to facilitate that object, separate mortgages were given upon the separate lots." This argument, it seems to me, is quite conclusive. The covenants in the deed were qualified by the provisions of the agreement, and the omission to pay off and extinguish the old mortgages, is attributable to Johnson, and not to Blydenburgh. It was not intended the latter should pay them.
In that part of the agreement which provides for the payment of the $15,000 in their several installments, it is declared to be essential for the security of Blydenburgh, and the proper working of the arrangement, that the arrears of taxes and assessments should be promptly paid, and that the $15,000 were necessary for that purpose. It then provides that Johnson should furnish it at the time specified, and declared that if he failed to do so, Blydenburgh might at once demand and enforce payment of any or all the bonds and mortgages. Johnson paid no part of it, indeed he never paid anything upon this large purchase, and now claims that the loss resulting from his omission to pay, shall be borne by Blydenburgh, who is to be made responsible to him. His neglect to pay the $15,000, which was so essential to the due and successful execution of the contract, was, in fact, an abandonment of it altogether. He had the nominal title to the premises, but that was all. The real title and right of property, was in Blydenburgh and the holders of the mortgages.
I think he has no claim, neither has Bingham, his grantee and assignee, upon the surplus moneys, and that the order of the General Term should be affirmed, with costs.