Hyperlawhypertext legal database Russell v. Pistor 7 N.Y.3d 171

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Russell v. Pistor

7 N.Y.3d 171 Court N.Y. English

Delivered by *173 Welles, J.

Contents

Majority

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Russell v. Pistor et al.

Headnote

Assumption of mortgage by grantee.
If a mortgagor sell a portion of the mortgaged- premises, the grantee assuming the payment of the mortgage-debt, as part of the consideration, the land so pm-chased becomes the primary fund for its payment; and if a remote grantee of such part of the land, purchase the mortgage, it is thereby discharged, and cannot he enforced against the residue of the mortgaged premises.
Appeal from the general term of the Supreme Court, in the third district,' where a decree of the late vice-chancellor of the second circuit, in a foreclosure suit, had been reversed.
This was a suit in equity, commenced in the court of chancery, for the foreclosure of a mortgage, dated the 1st August 1830, given by John Neely to the New York Life Insurance and Trust Company, to secure the payment of the sum of $750, which covered certain lands in Twaalfskill, in Ulster county.
On the 13th April 1836, John Neely, the mortgagor, sold and conveyed to William Burnett, a part of the mortgaged premises, in consideration of the sum of $4000 (which included the mortgage-debt); “subject, nevertheless, to a certain mortgage for $750 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.” The deed was recorded on the 28th November 1836.
On the 30th April 1836, Burnett gave a purchase-
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money mortgage to Neely, to secure the sum of $2500, upon the part of the premises so conveyed to him.
On the 13th April 1836, Neely conveyed to Nathaniel Dunn, another portion of the mortgaged premises, with a covenant against incumbrances; and on the 25th October 1836, Neely conveyed to George W. Gorum another portion of the mortgaged premises, with full covenants. Pistor, the defendant, subsequently became the owner of the two latter portions of the land, by mesne conveyances from Dunn and Gorum.
On the 14th November 1837, Neely assigned to the plaintiff Burnett’s mortgage for $2500, covenanting that the mortgaged premises were free from other incumbrance. This mortgage was foreclosed, by advertisement, in 1841, and the plaintiff became the purchaser of the premises for the sum of $2758.82.
' After the recording of the affidavits of publication and sale, the plaintiff, on the 8th December 1841, procured from the New York Life Insurance and Trust Company, an assignment of Neely’s bond and mortgage for $750, which he sought,- in this suit, to foreclose against Pistor.
* 173 1 *Up° a hearing of the cause, on the plead- -* ings and proofs, before the vice-chancellor of the second circuit, there was a decree of foreclosure and sale; with special directions as to the order in which the parts of the mortgaged premises should be sold. Pistor appealed from this decree, and on a rehearing before the supreme court, at general term, the decree of the vice-chancellor was reversed, and the bill dismissed, on the ground that the mortgage was paid and discharged in the hands of the plaintiff; whereupon, the latter took an appeal to this court.
Hogeboom, for the appellant.
Schoonmaker, for the respondent.

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 ^mortgage, as a portion of the purchase-money, the latter be- *- comes personally liable for the payment of the debt o‘ the former, to the holder of the mortgage, in the firs* instance; and if the mortgagor be 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 Id. 595-97 ; Cornell v. Prescott, 2 Barb. 16 ; Blyer v. Monholland, 2 Sand. Ch. 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. Reed, 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 13th April 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 party of the second part, his heirs and assigns, to his and their own proper use, benefit and behoof for ever, 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-

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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 *taken by him from Burnett upon the por175 ] tion 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 mortgage 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

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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 its 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 *to the' Trust company which had been devoted to L ' 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.

Decree affirmed.

Cases cited