Opinion
No. 38/273.
02-09-1915
HOLLAND REFORMED SCHOOL SOCIETY OF PASSAIC COUNTY v. DE LAZIER et al.
Francis Scott, of Paterson, for complainant. Ward & McGinnis, of Paterson, for demurrant De Lazier.
Suit by the Holland Reformed School Society of Passaic County against Jacob De Lazier and another, to charge defendants with a deficiency ascertained in a foreclosure suit. Demurrer to bill overruled, and decree for complainant advised.
Francis Scott, of Paterson, for complainant. Ward & McGinnis, of Paterson, for demurrant De Lazier.
GRIFFIN, V. C. The bill in this cause was filed to charge the defendants with a deficiency ascertained in a foreclosure suit. To the bill the defendant De Lazier demurs, substantially on five grounds: First, that the court was without jurisdiction; second, that the remedy of the complainant is at law; third, that the complainant has no right to call upon the defendant Jacob De Lazier concerning the subject-matter of the suit; fourth, that the complainant has no right to the relief that it prays for; and, fifth, that there is no privity between the complainant and the defendant, Jacob De Lazier.
The facts appearing by the bill are as follows: The complainant executed its mortgage on the 11th day of July, 1894, to Agnes A. Gould, to secure the amount due on a bond for $1,500 and interest. The bond and mortgage, by mesne assignments, became vested in John O. Benson and Jacob De Lazier, executors of the estate of John O. Terhune, deceased, who assigned the same to David H. Wortendyke, and the bill alleges200that said Jacob De Lazier, in consideration of said assignment of said bond and mortgage to David H. Wortendyke, and also in consideration that said Jacob De Lazier had been the owner of said property and bad assumed and agreed to pay said mortgage, expressly covenanted that he would be responsible for said sum of money in consideration of said mortgage, and that he would pay any deficiency that might arise upon the foreclosure of said mortgage. The complainant conveyed to De Lazier on December 14, 1908, and De Lazier assumed the mortgage. De Lazier and wife conveyed to the Grease Cup Company subject to the mortgage, which the Grease Cup Company assumed and agreed to pay. David H. Wortendyke foreclosed the mortgage, and there was a deficiency of $1,300.96, with interest from January 13, 1914. Wortendyke sued the complainant in the Passaic circuit and obtained Judgment, and in consideration of paying the judgment, Wortendyke, in the language of the bill
"assigned in writing, in consideration of the sum of $1,314.89, to your orator, its successors and assigns, all the right, title, and interest under the said final decree and said judgment, and all the sum and sums of money that may be had or obtained on any proceedings to be had thereupon, and further constitutes the plaintiff, its successors and assigns, his lawful attorney to demand and receive, and to pursue any action at law or in equity for the recovery of the money due and to become due by reason of said assignment, and against any person or corporation as plaintiff may deem fit. Said assignment was duly executed and acknowledged by said David H. Wortendyke."
When De Lazier assumed the payment of the mortgage, as between the parties De Lazier became the principal debtor, and the liability of the complainant was that of surety only; and by a well-settled doctrine of equity, the mortgagee, as a creditor, may, by way of subrogation, have the benefit of all collateral obligations which the person standing in the situation of surety for another holds for his indemnity. And the remedy of the mortgagee is not affected by the Acts of 1880 or 1881. The remedy in equity is independent of the foreclosure suit. Green v. Stone, 54 N. J. Eq. 387, 390, 391, 34 Atl. 1099, 55 Am. St. Rep. 577. This conclusion was reached by the Court of Errors after a careful examination of the cases cited in the opinion, which are unnecessary to refer to here.
Therefore, when the complainant, as surety, paid the deficiency, it became subrogated to the rights of the mortgagee against De Lazier and the Grease Cup Company; and when the mortgagee assigned to the complainant, it became invested with all the rights which the mortgagee had to proceed against the defendants as principal debtors in the assumption of the debt One of these rights was to proceed against them in equity.
Touching the allegation in the bill that when Benson and De Lazier, as executors of Terhune, assigned the mortgage to Wortendyke, De Lazier, in view of the liability on his prior assumption of the mortgage, covenanted to pay any deficiency that might thereafter be made to appear, this seems to be an independent covenant for the breach of which a suit at law might be maintained. Bolles v. Beach, 22 N. J. Law, 680, 53 Am. Dec. 263. But as the demurrer is to the entire bill, and as the bill is sufficient upon its face without the subsequent covenants entered into between De Lazier and Wortendyke when the mortgage was assigned, the demurrer should be overruled, and a decree will be advised accordingly.