179 P. 261 | Or. | 1919
One of the principal questions to be determined is whether or not the defendants contracted to pay the mortgage and whether the mortgagee can maintain an action directly against them.
“Subject, however, to certain encumbrances now resting thereon, payment of which is assumed by said party of the second part.”
After foreclosing the mortgage and exhausting the personal assets of the mortgagor, the holder of the note secured by the junior mortgage brought her bill in equity to compel the grantee of the mortgagor to pay the deficiency. The trial court dismissed the bill, holding that Ashford had never accepted the deed to him and that the plaintiff’s remedy, if any, was at law. After disposing of the question about the acceptance of the deed by Ashford, adversely to him, the court said:
“The case, therefore, stands just as if Ashford had himself received a deed by which he in terms agreed to pay a mortgage made by the grantor. In such a case, according to the general, not to say uniform, current of American authority, as shown by the cases collected in the briefs of counsel, the mortgagee is entitled in some form to enforce the agreement against the grantee; and much of the argument at the bar was devoted to the question whether his remedy should be at law or in equity. Upon the question whether the mortgagee could sue at law there is no occasion to examine the conflicting decisions in the courts of the sev*434 eral States, because it is clearly settled in this court that he could not.”
The court there worked out the conclusion that the plaintiff was entitled to relief, requiring the grantee to pay the deficiency. We must remember that this was a case brought in the nisi prius courts of the District of Columbia, where the rule of; the United States courts prevails respecting remedies^
In later cases, notably Willard v. Wood, 135 U. S. 309 (34 L. Ed. 210, 10 Sup. Ct. Rep. 831), the principle was applied that the law of the forum governed the remedy and that as the litigation in that suit was commenced in the District of Columbia ithe remedy would be in equity, although in New York, Where the contract was made, an action at law would lie by the mortgagee against the grantee in such instances. Afterwards, in Union Life Ins. Co. v. Hanford, 143 U. S. 187, 190 (36 L. Ed. 118, 12 Sup. Ct. Rep. 437), the court recognized the condition that in various stktes the law based upon the decisions of the local courts, was that an action could be maintained under such circumstances and that it was hot necessary to resort to equity to enforce the right mentioned. It was applied to the contention there in the following manner: Under the law of Illinois, a mortgagee could sue the grantee directly at law. The corollary to this proposition was that the grantee became the principia! debtor and the mortgagor from whom he had received the title was the surety, so that when the mortgagee extended the time in which the grantee might pay the debt, it released the mortgagor, who stood as a surety only. We draw from these decisions, cited by the defendants here, this doctrine, that when the grantee of a mortgagor agrees to pay the mortgage a right at once arises in favor of the mortgagee, and that it is enforce
Oregon precedents are numerous to the effect that on a contract properly made for the benefit of a third person, he can bring an action directly against the promisor. The early case of Baker v. Eglin, 11 Or. 333 (8 Pac. 280), recognized the liability of the promisor to the third person, so as to exonerate the former from being held as a garnishee in the action of other creditors of the promisee. The case does not make any ruling upon the remedy by which the third person might enforce his interest in that contract, but in the following cases the doctrine is recognized that an action at law would lie: Hughes v. Oregon Ry. & Nav. Co., 11 Or. 437 (5 Pac. 206); Schneider v. White, 12 Or. 503 (8 Pac. 652); Chrisman v. State Ins. Co., 16 Or. 283 (18 Pac. 466); Washburn v. Interstate Investment Co., 26 Or. 436 (36 Pac. 533, 38 Pac. 620); Feldman v. McGuire, 34 Or. 309 (55 Pac. 872); Miles v. Bowers, 49 Or. 429, 434 (90 Pac. 905); Hoffman v. Habighorst, 49 Or. 379 (89 Pac. 952); Oregon Mill & Grain Co. v. Kirkpatrick, 66 Or. 21 (133 Pac. 69); Baker City Mercantile Co. v. Idaho Cement Pipe Co., 67 Or. 372 (136 Pac. 23).
It is said in 13 O. J. 705, Section 815:
“In most of the states the English doctrine that where a person makes a promise to another for the benefit of a third person the latter cannot maintain an action on it is not recognized to the full extent, but it is held, subject to the qualifications hereafter stated, that the action may be maintained. This is now the prevailing doctrine in the United States”; citing a wealth of authorities.
“The prevailing doctrine in this country undoubtedly is that, where' one person, as a consideration or part consideration, for an executed cjontract, promises another, for a consideration moving from him to pay or discharge some legal obligation or debt due from such other to a third person, the latter, although a stranger to the consideration, and not an immediate party to the contract, may maintain an action thereon, if it was made directly and primarily for his benefit.”
In Vrooman v. Turner, 69 N. Y. 280 (25 Am. Rep. 195), the following language was used, and approved in Kansas City Sewer Pipe Co. v. Thompson, 120 Mo. 218 (25 S. W. 522):
“To give a third party who may .derive a benefit from the performance of the promise, an action, there must be, first, an intent by the promisee to secure some benefit to the third party, and second, some privity between the two, the promisee and the party to be benefited, and some obligation .or duty owing from the former to the latter which would give him a legal or equitable claim to the benefit of the; promise, or an equivalent from him personally.” '
The defendants cite Parker v. Jeffery, 26 Or. 186 (37 Pac. 712); Washburn v. Interstate Investment Co., 26 Or. 436 (36 Pac. 533, 38 Pac. 620), and Brower Lumber Co. v. Miller, 28 Or. 565 (43 Pac. 659, 52 Am. St. Rep. 807). Parker v. Jeffery was a case in which a contractor had given a bond to the city of Portland to pay for all labor and materials used in the construction of a sewer. This occurred before our present statute on that subject was enacted. No particular claim of any individual was required to be paid. In Washburn v. Interstate Investment Co. the defendant had agreed to advance to a certain concern money to pay the latter’s debts without specifying them, and not to exceed a certain amount. Similar circumstances were present in Brower Lumber Co. v. Miller. In each of these cases nothing passed to the promisor from the promisee in which the third party had any interest or to which he had any claim. This element, which otherwise would furnish a common bond or quasi privity among the three parties, was absent. This circumstance differentiates these cases from the present contention and those like it. The mortgaged property, passing from the mortgagor to his grantee, in which the third party has an interest by virtue of his mortgage, puts the instant ease in the class recognized by the quoted language of this court in the Washburn case.
“No action shall abate by the death, marriage or other disability of a party, or by the transfer of any interest therein, if the cause of the Action survive or continue. In case of the death, marrjage or other disability of a party, the court may at any time within one year thereafter, on motion, allow the action to be continued by or against his personal representatives or successors in interest.”
The finding of the court was that the original mortgagor, by the terms of the mortgage, “covenanted and agreed to pay all sums of money, the principal and interest specified in said promissory note at the time therein designated.” We remember that in the deed from Jacobs to May the phrase was that:
“The grantee herein in part consideration for this conveyance assumes payment of the $40,000 unpaid balance of the first of said mortgages and the interest accrued and to accrue thereon.”
No allusion is made to the note or to any of its incidentals, The agreement is to pay the mortgage and
“If the mortgage contains a covenant to pay the debt secured, although there be no note, bond, or other separate evidence or acknowledgment of the debt, the mortgagor is personally liable, .andean action of debt will lie on the covenant”: 27 Cyc. 1081.
“The conclusion of law found by the court not being deducible from its findings of facts, the judgment based thereon cannot stand; but, the facts found being sufficient to support a judgment in plaintiff’s favor, it is the better practice for this court t!o correct the conclusions of- law by directing what judgment shall be entered: Coulter v. Portland Trust Co., 20 Or. 469 (26 Pac. 565, 27 Pac. 266); Pacific Lumber Co. v. Prescott, 40 Or. 374 (67 Pac. 207, 416).”
“Where an installment of interest on the note or bond secured by a mortgage falls due and remains unpaid, without precipitating a maturity of the entire debt, an action may be maintained to recover such installment, independently of the mortgage, unless such a course is forbidden by the statute”: 27 Cyc. 1277.
The result is that the judgment is modified by allowing the plaintiff to recover from the defendants the sum of $3,000, without any attorneys’ fees.
Modified.