Gifford v. Corrigan

On a previous appeal we determined in this case that the record of the deed to the defendant’s testator, McCloskey, by which the grantee assumed the payment of plaintiff’s mortgage, was not, under the circumstances, sufficient proof of the delivery and acceptance of the deed. As the case now stands the effect of that record is fortified by direct proof of the delivery and strong circumstantial evi

The mortgage was executed in 1869. The land which it covered was sold and conveyed to McEvoy in 1870. McEvoy was a parish priest and held the title until 1878, when he conveyed to McCloskey, the defendant’s testator, who in and by the deed assumed the payment of the outstanding mortgage. Two things occurred the next year. McCloskey was informed by letter that- upon the premises owned by him, describing those conveyed by McEvoy, there was a mortgage to Master-ton, payment of which was requested, and a few days after, in a personal interview with the attorney acting for the mortgagee, was told of the deed and its record and the assumption clause was read to him and his liability under it asserted. McCloskey answered that he would communicate with Father Keogh; that he had referred the matter to him, and that the witness would hear from Keogh. The latter was the successor of McEvoy as parish priest and owed his appointment to the cardinal. The second thing was that the account for the rents of the property collected by Keogh were by him returned once a year to the chancery office which managed the cardinal’s business affairs relating to the church. Within one year, therefore, after the record of the deed McCloskey knew all about it, and instead of repudiating it and refusing acceptance, simply referred the creditor to the parish priest, who began a uniform system of collecting the rents of the property and returning the facts to the cardinal’s business office, which was their proper repository. Keogh not only remained in possession under McCloskey, but insured the premises in the name of the cardinal. For some time after its record the deed remained in the custody of McEvoy, but as early as 1882 he delivered it to O’Connor, who was a clerk in the chancery office. The superintendent of that office was Preston. He is called in the record vicar-general and chancellor and monseigneur. Whatever his ecclesiastical title, his

But another circumstance introduces an additional defense and raises a further question. Just after the issue of a summons in this action and the filing of a Us pendens, the executor of McEvoy formally released McCloskey from his covenant, and the latter pleads that release. It asserts that the deed was never delivered, which is found to be an untruth; that the assumption clause was inserted by mistake and inadvertence, of which there is not a particle of proof; and then in further consideration of $1 formally releases the Cardinal from his covenant. This release was executed after the knowledge of the deed of McCloskey and the covenant contained in it had reached the mortgagee; after the latter had accepted and

Is this release thus executed a defense to this action ? I shall not undertake to decide, if, indeed, the question is open, (Knickerbocker Life Ins. Co. v. Nelson, 78 N. Y. 137 ; Comley v. Dazian, 114 id. 161, 167 ), whether in the interval between the making of the contract and the acceptance and adoption of it by the mortgagee it was or was not revocable without his assent. However that may be, the only inquiry now presented is, whether it is so revocable after it has come to the knowlege of the creditor, and he has assented to it and adopted it as a security for his own benefit. My judgment leads me to answer that question in the negative.

Of course, it is difficult, if not impossible, to reason about it without recurring to Lawrence v. Fox ( 20 N. Y. 268 ), and ascertaining the principle upon which its doctrine is founded. That is a difficult task, especially for one whose doubts are only dissipated by its authority, and becomes more difficult when the number and variety of its alleged foundations are considered. But whichever of them may ultimately prevail, I am convinced that they, all involve, as a logical consequence, the irrevocable character of the contract after the creditor has accepted and adopted it, and in some manner acted upon it. The prevailing opinion in that case rested the creditor’s right-upon the broad proposition that the promise was made for his benefit, and, therefore, he might sue upon it, although privy neither to the contract or its consideration. That view of it necessarily involves an acquisition at some moment of time of the right of action which he is permited to enforce. If it be

But two of the judges who concurred in the decision of Lawrence v. Fox stood upon a different proposition. They held that the mortgagor granting the land accepted the grantee’s covenant, as agent of the mortgagee who might ratify the act with the same effect as if he had originally authorized it. While I think the idea of such an agency is a legal fiction, having no warrant in the facts, yet the same result as to the power of revocation follows. While the agency remained unauthorized it might be possible to change the transaction, but after the ratification the promise necessarily becomes one made to the mortgagee, through his agent, the mortgagor, acting lawfully in his behalf, and from that

But another basis for the action has been asserted, applicable, however, only to cases like the present, where, on foreclosure of the mortgage, its owner seeks a judgment for a deficiency against the new covenantor. In Burr v. Beers ( 24 N. Y. 179 ), and again in Garnsey v. Rogers (47 id. 242 ) it was pointed out that the liability of the grantee to the mortgagee rested upon the equitable right of subrogation, and had been recognized and enforced long before Lawrence v. Fox made its appearance. It was held that where the mortgagor acquired a new security for his indemnity against the debt which he owed to the mortgagee, the latter might, in equity, be subrogated to the right of his debtor, and, under the statute permitting any person liable for the mortgage debt to be made defendant and charged with a deficiency in the foreclosure, the new covenant became available to the mortgagee It was so held in Halsey v. Reed (9 Paige, 446), and the right of the mortgagee was put upon the equity of the statute. That, if a sound proposition, was all very well so long as there was supposed to be no equivalent remedy at law, but after the decision of Lawrence v. Fox that remedy existed. And so in Thorp v. Keokuk Coal Company ( 48 N. Y. 258 ) the court said that it saw no reason for invoicing the doctrine of equitable subrogation, or resting upon it in such a case. When the law has absorbed, in a broader equity, the narrow one enforced in chancery, the form and measure of the latter ceases to be of consequence. One does not seek to trace the river after it has lost itself in the lake. And so I think the suggestion is well founded. But if I am wrong about that, as, perhaps, I may prove to be, and the right of the present plaintiff against the Cardinal’s estate does stand upon the doctrine of equitable subrogation, still I think the same result follows. When does that equitable right arise and become vested in the creditor ? It would seem that it must be when the situation is created out of which the equity is born. If it be possible to adjourn

I have been quite favorably impressed with a fourth suggestion respecting the basis of these rights of action which appears in the opinion of Andrews, J., rendered when this case was before 'us on a previous appeal. “ After all,” he says, “ does not the direct right of action rest upon the equity of the transaction ? ” If we discard the fictitious- theory of an agency, what remains is the equitable right of subrogation swallowed up in the greater equity of the legal right founded on the theory of a promise made for the benefit of the creditor. It is no new thing for the law to borrow weapons from the arsenal of equity. The action for money had and received is a familiar illustration. May we not deem this another? If we do, and the door is thus opened wide to equitable considerations, I am quite sure it will follow that while no right of the mortgagee is invaded by a change of the contract before it is brought to his knowledge, and he has assented to it and acted upon it, yet to permit a change thereafter, while the creditor is relying upon it would be grossly inequitable and practically destroy the right which has maintained itself after so long a struggle.

It seems to me, therefore, that however we may reasonably differ as to the doctrine underlying the plaintiff’s right of

The judgment should he affirmed, with costs.

All concur except Danfobth and Peck ham, JJ., dissenting, Judgment affirmed.