Devlin v. Murphy — 5 Abb. N. Cas. 242

Majority

p. 242

DEVLIN v. MURPHY.

N. Y. Supreme Court, First Department;

Special Term, February, 1878.

Headnote

Agreement for Beconveyance of Land. — Foreclosure of Mortgage. — Belease of Grantee from Liability for a Mortgage.

Where an agreement was made contemporaneous with a conveyance of land, that the grantor would “at any time” thereafter, accept a reconveyance, indemnify the grantee against taxes and assessments paid by him, and release him from the covenants in the deed, which <deed contained a covenant by which the grantee assumed the pay

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ment of a mortgage then existing on the land; — Held, 1. That a subsequent reconveyance of the land, and a release of the original grantee by the grantor from the covenant, was valid and effectual to discharge him from all claims under the mortgage. 2. That the fact that the agreement to accept a reconveyance was verbal only, and the time indefinite, could not be taken advantage of by the holder of the mortgage, that being a question between the parties to the conveyance only, which a stranger could not raise.^[1]

Foreclosure of mortgage.

This was an action by William Devlin against Thomas Murphy, William Fullerton and others, for the foreclosure of a mortgage.

The defendant, Murphy, being the owner of certain lands, executed a mortgage thereon to Henry F. Spaulding. He afterwards conveyed the lands to the defendant, Fullerton. The deed to Fullerton contained a covenant by which he assumed the payment of the mortgage. It is sought in this action to hold Fullerton for any deficiency arising on the sale.

At the time of the conveyance to Fullerton, it was agreed by Murphy that he would, ‘ ‘ at any time ” thereafter, accept a reconveyance of the lots, and reimburse Fullerton for what he had paid out, and release him from all obligations he should assume.

Fullerton afterwards, and after the commencement of this action, reconveyed the land to Murphy, and was released from the mortgage by Murphy.

John E. Devlin, for plaintiff.

E. L. Fancher, for defendant, Fullerton.

The defendant, Fullerton, has testified that it was a part of the terms and conditions upon which he became a purchaser of the lands covered by the mortgage sought to be foreclosed in this action, that his grantor, Murphy, would, at “any time thereafter,” accept of a reconveyance of the lots, and reimburse him for what he had paid out, and “reinstate him as he was at first.” In the event of a reconveyance he was to get back principal and interest, all he should pay as consideration, and all disbursements, including taxes and assessments, and he was to be released from all obligations he should assume. This, according to Mr. Fullerton’s testimony, was the “final agreement” when the conveyance was made and accepted.

The defendant, Murphy, corroborates this statement, at least to the extent.that he would take back the property whenever Fullerton “ got tired of it.”

The deed of Fullerton contains a covenant by which he assumed the payment of a mortgage then existing upon the premises, executed by Murphy to Henry F. Spaulding, and others, for $2,940, being the mortgage in suit. The conveyance to Fullerton was in the year 1872. By deed, dated April 5, 1877, Fullerton reconveyed the premises to Murphy. This conveyance, which is signed by Murphy, contains, among other things, a release of Fullerton from any obligation he had incurred with respect to the mortgage, through the covenants in the deed, and Murphy himself assumed and agreed to pay it. The agreement between Murphy and Fullerton, in effect, contemporaneous with the deed, was verbal. But it was performed in part, at the time, by the making and acceptance of the original conveyance, and the reconveyance was made and received in further performance of it.

It is objected by the plaintiff that this verbal agreement was invalid. But I apprehend that the question

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of the invalidity of the agreement, and whether or not it' should be carried out, rested with Fullerton and Murphy exclusively. Whether or not the agreement was void for indefiniteneness as to time, or because not reduced to writing, was for the determination of Murphy. He only could object that a delay of five years in making the reconveyance was unreasonable. If Murphy felt himself bound in conscience to carry out the agreement, and accept a reconveyance after a lapse of five years, and further to do what he could towards reinstating Fullerton, it is not for others, who are neither parties nor privies to the agreement, to complain. There is certainly nothing inequitable in the result reached through the reconveyance, if the intentions and agreements of the parties made in good faith are fully carried out. A stranger to the contract cannot object that the agreement was not in writing (Dempsey v. Kipp, 61 N. Y. 471 ), nor that Murphy was not bound to accept a reconveyance. He believed that he was bound, and acted upon such belief; that is sufficient.

It is true that Fullerton’s covenant with respect to the payment of the mortgage was to the advantage of the holder of the mortgage, and could have been en-' forced by him so long as the covenant was in force. But that in itself affords no valid reason why the parties who made the covenant should not carry out an agreement honestly made, contemporaneous with the covenant, although the effect be to discharge the covenant and deprive a third person of an advantage he might secure with the covenant in force.

If the holder of the mortgage obtained any right, it is in subordination, and must yield to the earlier rights and equities of Fullerton, through the original agreement in which the covenant in question originated. Stephens v. Casbacker ( 8 Hun, 116 ) is an authority that Murphy’s subsequent release operates as a dis

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charge of Fullerton from all obligations assumed under the deed to him. .And the case under consideration is stronger in its facts for the defendant than Stephens ®. Casbacker. In that case the subsequent conveyance of the land and the release were not the result of an agreement made contemporaneous with the covenant. The fact that plaintiff’s action for the foreclosure of the mortgage was pending when the conveyance was made and the release given, does not affect the question. The commencement of the plaintiff’s action could not prevent the parties from carrying out a prior agreement between themselves.

The action may proceed to judgment of foreclosure, but the defendant, Fullerton, is not liable for any deficiency. As between plaintiff and the defendant, Fullerton, neither should recover costs, as, from the condition of the record, the plaintiff was justified in bringing in Fullerton as a party.

No appeal was taken.