Gifford v. Corrigan

Ona previous appeal we determined in this case that the record of the deed to the defendant’s testator, McOloskey, 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 evidence of the acceptance. Both facts are now explicitly found by the trial court, but the appellant again denies the sufficiency of the proof.

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 McCloslcey, 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 Masterton, 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 own.

But another circumstance introduces an additional defence and raises a further question. Just after the issue of a summons in this action and the filing of a lis pendens, the executor of McEvoy formally released McOloskey 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 one dollar for molly releases the cardinal from his covenant. This release was executed after knowledge of the deed to McOloskey and the covenant contained in it had reached the mortgagee; after the latter had accepted and adopted it as made for his benefit and communicated that fact to the debtor by a formal demand of payment; after the mortgagee had for three years permitted the grantee to absorb and appropriate the rents and profits in reliance upon the covenant; and after he had commenced an action of foreclosure by the issue of a summons and filing of a lis pendens; at a moment when the executor who released was aware that trouble was approaching; but before McOloskey was actually served or had appeared in the action.

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. Neelon, 78 N. Y., 137 ; Comley v. Dazian, 114 N. Y., 167 ; 22 N. Y. State Rep., 813, 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 knowledge of the creditor, and he has assented to it and adopted it as a security

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 permitted to enforce. If it be possible to say that he does not acquire it at the moment when the promise for his benefit is made, it must be that he obtains it when it has come to his knowledge and he has assented to and acted upon it. For he may sue; that is decided and is conceded. If he may sue, he must at that moment have a vested right of action. If it was not obtained earlier, it must have vested in him at the moment when his action was commenced, so that the right and the remedy were born at the same instant. But there is no especial magic in a law suit. If it serves for the first time to originate the right which it seeks to enforce, it can only be because the act of bringing it shows unequivocally that the promise of the grantee has come to the knowledge of the plaintiff, that the latter has accepted and adopted it, that he intends to enforce it for his own benefit, and gives notice of that intention to the adversary. From that moment he must be assumed to act or omit to act in reliance upon it. But if all these things occur before a suit commenced, why do they not equally vest the right of action in the assignee ? What more does the mere lawsuit accomplish ? And so the contract between grantor and grantee, if revocable earlier, ceases to be so when by his assent to it and adoption of it the creditor brings himself into privity with it, and elects to avail himself of it, and must be assumed to have governed his conduct accordingly. I see no escape from that conclusion.

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 mo.

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 N. Y., 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 Co., 48 N. Y., 258 , the court said that it saw no reason for invoking 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 it to a later period, it must certainly attach when the creditor asserts his right to it and notifies the other party of his intention to rely upon it. As a right founded upon the equity of the statute it must have come into being before the foreclosure suit was commenced, for the permission reads “ any person who is liable to the plaintiff for the payment of the debt secured by the mortgage may be made a defendant in the action.” His liability must precede the commencement of the action. It must exist as a condition of his being sued at all; and so, assuming that this action can be maintained against him upon his promise, the right of action must have arisen at once upon the delivery of the- deed, or at the latest when the promise came to the knowledge of the creditor and he assented to and adopted it.

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

It seems to me, therefore, that however we may reasonably differ as to the doctrine underlying the plaintiff’s right of action, yet all the roads lead to the one result: that upon the facts of this case the release to McOloskey was wholly ineffectual

The judgment should be affirmed, with costs.

All concur, except Danforth and Peckham, JJ., dissenting.