Summary
In Wilcox v. Campbell, 106 N.Y. 325, it was held that where the grantor assumed and agreed to pay a mortgage incumbering the premises granted and the grantee lost the land conveyed to him through the foreclosure of the mortgage, the latter was entitled to recover his actual damages, probably on the theory that the agreement to pay the mortgage was to be considered an agreement to indemnify.
Summary of this case from Matter of Julia BoylanOpinion
Argued June 16, 1887
Decided July 1, 1887
J.A. Stull for appellant. Mr. Quincy for respondent.
Prior to the 9th day of November, 1874, Barton J. Conklin owned a parcel of land in the city of Rochester, being 187 feet front on North St. Paul street and 420 feet deep; and he had executed a mortgage thereon to a savings bank to secure the payment of $3,000 and interest. On that day he conveyed the land to Jane E. Wilcox, subject to the mortgage to the savings bank, which she assumed and agreed to pay, and at the same time she executed to Conklin a mortgage for $2,000 upon the land to secure a part of the purchase-price. On the 12th day of February, 1877, Mrs. Wilcox executed to the defendant a deed of the northerly 107 feet of the land, she retaining the remaining eighty feet thereof. The deed was subject to the two mortgages which the defendant assumed and agreed to pay as part of the purchase-price. On the 26th day of August, 1878, Mrs. Wilcox by a quit-claim deed, making no mention of the mortgages and expressing a consideration of $1, conveyed the eighty feet of the land so retained by her to Lucius C. Bingham. Some time in 1878, the savings bank commenced a foreclosure of its mortgage for $3,000 upon the entire parcel of land, and on February 12, 1879, the foreclosure proceedings resulted in the sale of the whole parcel of land, including the eighty feet deeded to Bingham and the 107 feet deeded to the defendant, and the proceeds of the sale were all used to satisfy the mortgages. Thereafter Bingham, by a written instrument, for a valuable consideration, assigned to the plaintiff all his claim for damages and all his causes of action against the defendant by reason of his failure to pay the mortgages. This action was subsequently commenced by the plaintiff to recover damages against the defendant because his assignor's land was sold in consequence of the failure of the defendant to keep his covenant to pay the mortgages; and upon the trial judgment was given for the plaintiff which has been affirmed by the General Term.
After the conveyance by Mrs. Wilcox to the defendant, he became the principal debtor to the mortgagees and she remained simply surety for him, and every one having notice of the relation between them was bound to respect it. The parcel of land conveyed to the defendant was primarily liable for the payment of the two mortgages, and the parcel of eighty feet was secondarily liable and simply remained security for the payment of the defendant's obligations. ( Wadsworth v. Lyon, 93 N.Y. 201.) He, as principal debtor, was bound to protect both her and her land from any liability on account of his debts. After her conveyance of the parcel of land to Bingham, it was still simply security for the defendant's debts, and Bingham obtained the entire title thereto simply encumbered by a mortgage to secure obligations which the defendant was primarily liable to pay. The duty rested upon him, as principal debtor, to protect that land from sale, and when it was sold in consequence of his default, and its value applied in discharge of his obligations, he became liable to Bingham for the damages thus caused to him. That cause of action, by assignment, became vested in the plaintiff, and it does not depend upon any principle of subrogation. It was a direct liability to Bingham growing out of the defendant's default, and of a breach of duty which he owed. Bingham was brought into relations with the defendant by the conveyance to him and the ownership by him of the land bound as surety for the defendant.
Bingham, if aware of the foreclosure action, could have appeared therein and procured a sale of that portion of the land which was conveyed to the defendant first in discharge of the mortgages; and if that portion did not sell for enough, then he could have paid the balance due upon the mortgages to save his land; and the sum thus paid would have been the measure of his damages. Instead of paying such balance, he could have permitted his land to be sold, and certainly to the extent of its proceeds applied in discharge of the foreclosure judgment, he would have had a claim against the defendant.
But, under the circumstances of this case, both mortgages being liens upon the land, Bingham was not under any obligation to the defendant to take any steps in the foreclosure action; and if, by the default of the defendant, he was deprived of his land, the value of the land is the fair measure of his claim against the defendant. He must have been a party to the foreclosure action, and it was his duty to appear therein to protect his own interests as well as those of his surety.
The rule which requires a party exposed to injury or damage to make his loss as small as he reasonably can, did not impose upon Bingham the obligation to raise $5,000 for the payment of the two mortgages for the purpose of protecting himself and his land from the consequences of the defendant's default.
It does not appear whether these two parcels of land were sold in a body as described in the two mortgages, or whether they were sold separately, and that portion conveyed to the defendant sold first. Nor does it appear how much the parcel of land conveyed to Bingham brought upon the sale. No question was made upon the trial about the rule of damages, and, therefore, if an improper rule was adopted by the court, which is denied, it is not a subject of review here.
Upon the whole case we see no reason to doubt that the judgment is free from error and that it should be affirmed, with costs.
All concur.
Judgment affirmed.