Court Opinion

ID: 7967718
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:52:10.162988+00
Date Added: 2024-06-11T16:34:41.480042
License: Public Domain

Dickinson, J.,
(dissenting.) I am not prepared to concur in the foregoing opinion. I agree that the bond was one of indemnity; but dissent from the proposition that, because the mortgagee bid in the premises for the full amount of its debt, it is to be considered that no injury has been suffered from the prior incumbrance which the mortgagee has been compelled to pay for its Own protection. It is true that in thus purchasing the mortgagee necessarily took the interest thereby acquired subject to the prior lien. The mortgage could not have been foreclosed and the property sold except with that condition. But I do not consider that by thus purchasing, although it was for the amount of the debt, the mortgagee is to be regarded as having relinquished or lost the benefit of the undertaking of indemnity. I would rather say that it purchased the property still retaining, relying upon, and entitled to the benefit of the bond which obligated the defendants to protect the mortgagee against incumbrances which might or might not be enforced against the property. Le.t us. *30suppose that in a jurisdiction where covenants against incumbrances are held to be covenants only in prcesenti, and not running with the land, — -as has been the more common rule as to such covenants, — a mortgage has been given containing such a covenant, and that it was broken by the existence of a prior incumbrance. While the land is thus burdened, the mortgagee forecloses his mortgage, and bids in the property for the amount of his debt. If after that he is compelled to pay off the prior incumbrance to protect his interest or estate, has he not then a right of action on the covenant for the recovery of the amount so paid? But in the case supposed, — the covenant not running with the land, — the right of action could not rest upon the ground that by the purchase the covenant had passed with the estate, thus inuring to the benefit of the purchaser. If a stranger to the covenant had purchased, he would have had no such right of action. Is not the case simply this: that the mortgagee is entitled to and does purchase relying upon his covenant as a protection- against the incumbrance ?
This case is not really different from that just supposed. The mortgagor and his sureties undertook to save the mortgagee harmless by reason of the enforcement of any liens such as that upon which the premises were sold subsequent to the foreclosure, and which the mortgagee has been compelled to pay off. The mortgagee was entitled to the full benefit, not only of the mortgage security, but of the indemnity as well. It might purchase at the foreclosure ■sale relying upon the express obligation of the defendants for protection against the enforcement of mechanics’ liens. I see no reason against this view in the fact suggested, that the mortgagee and •any stranger desiring to purchase do not bid on equal terms. In legal contemplation, no one is prejudiced by that fact. The advantage of the undertaking of indemnity, which the mortgagee enjoys, was conferred by the mortgagor, and he has no reason to complain that the mortgagee avails himself of it. Strangers who might desire to purchase have no right to be placed in the same advantageous position, or to' complain that the mortgagee thus enjoys the benefit of his contract.
(Opinion published 53 N. W. Rep. S67.)