113 N.Y.S. 420 | N.Y. App. Div. | 1908
Lead Opinion
The facts upon which this controversy arises have been so fully stated by Mr. Justice Ingraham that it will be unnecessary to restate them. The subordination clause in the agreement between Perl, man and Bernikow, and Bernheimer was absolute and uncondi
The agreement, in this regard, after providing for the purchase-money mortgages to be given to Bernheimer, proceeds as follows: “ Whereas the sellers (Perlman and Bernikow) contemplate obtaining building loans to be secured by mortgages on the various lots of land covered by.said purchase money mortgages, and it has been agreed between the parties that the said purchase money mortgages of $75,340.00 shall be subordinated to mortgages which the sellers may place upon said premises to secure payment of such building loans, the purchaser hereby agrees that at the time of the execution by the sellers of such building loans and building loan mortgages, that he, the purchaser, will upon request, execute and deliver to the sellers an instrument in writing subordinating said purchase money mortgages, to the lien of such building loan mortgage or mortgages.” There follows an alternative provision for the satisfaction of the purchase-money mortgages, and the re-execution of other mortgages of like terms and effect, but subsequent and subordinate to the building loan mortgages. It will be seen that this clause recites a present agreement for subordination, coupled with a promise, if requested, to execute a further subordination agreement by way of further assurance, which further agreement is to be made, not when the building loan agreement is negotiated, but at the time of the execution of the building loan mortgage. It is perfectly evident that the clause was inserted in the agreement for the express purpose of facilitating the efforts of Perlman and Bernikow to obtain a building loan, and it must, therefore, have been within the contemplation of the parties that the agreement should be exhibited to prospective lenders of the contemplated building loan. It was not necessary that the State Bank, or any other maker of a building loan, should be directly a party to the agreement to subordinate. (Rose v. Provident Loan Assn., 28 Ind. App. 25 ; Cummings v. Consolidated Mineral Water Co., 27 R. I. 195.) It is made perfectly clear by the evidence that the
Patterson, P. J., and Clarke, J., concurred; Ingraham and Laughlin, JJ., dissented.
Dissenting Opinion
This action was to foreclose a mortgage on real property made by the defendants Perlman and Bernikow to secure the payment of a bond by which the mortgagors were to pay the sum of §25,113.33 on the 1st day of June, 1905, with interest thereon. The defendant the State Bank was made a party defendant as claiming some interest or lien upon the premises covered by the said mortgage which accrued subsequent to the lien of the said mortgage, and was subject and subordinate thereto. The State Bank answered, alleging that a certain mortgage executed by the Portland Realty Company, to whom the mortgaged premises had been conveyed, dated April 12, 1906, to secure the payment of §88,000, was, by virtue of an agreement between Bernheimer and Perlman and Bernikow, the parties to the mortgage in suit, a prior lien to the plaintiff’s mortgage and the plaintiff’s mortgage subordinate thereto, and demanding judgment that the plaintiff be compelled to execute an agreement subordinating the lien of the mortgage in suit to the lien of the mortgage held by the defendant the State Bank, and have such other judgment or relief in the premises as may be proper. Tbe plaintiff replied to this counterclaim, and upon the trial the court found in favor of the defendant the State'Bank, and subordinated the plaintiff’s mortgage to the mortgage held by it; and from the judgment entered upon that decision the plaintiff appeals.
The facts upon which this controversy arose are as follows:
By a contract dated June 8,1905, Bernlieimer agreed to sell these three pieces of property to the defendants Perlman and Bernikow for $200,000. The property was to be conveyed subject to mortgages aggregating $114,660, $75,340 to be paid by the purchasers executing to Bernlieimer three separate purchase-money mortgages, each covering one of the parcels conveyed, each mortgage to be for $25,113.33, one of these mortgages being the mortgage sought to be foreclosed in this action, and covering the parcel of land on the northerly side of One Hundred and Seventy-seventh street, and the balance of the $200,000 was to be paid in cash at the time of the closing of the contract on June 20, 1905. On June 20,1905, Bern-h.eimer conveyed the property to Perlman and Bernikow and received back from them three mortgages provided for in the contract. The mortgage in suit was assigned by Bernlieimer to one Lilienthal on June 28, 1905, was reassigned by Lilienthal to Bernlieimer on November 14, 1905, and was assigned by Bernlieimer to the plaintiff on March 22, 1907. On the 8th of June, 1905, when the original contract for the sale of this property was made there was another contract entered into between Perlman and Bernikow and Bernlieimer, the grantor, by which it was agreed that Perlman and Bernikow should improve these three separate parcels of land by erecting thereon buildings thereinafter described, and that Bernkeimer should repurchase the said property so improved for $645,000, Perlman and Bernikow agreeing to erect upon the property on the northerly side of One Hundred and Seventy-sixth street four buildings particularly described, on the parcel fronting on the south side of One Hundred and -Seventy-seventh street four other similar buildings, and on the plot of ground on the northerly side of One Hundred and Seventy-seventh street four other buildings substantially of the same character. Bernlieimer agreed to pay for these premises by taking the property subject to a first mortgage of $420,000, second mortgages aggregating $60,000, the balance of the purchase price to be paid in cash. The contract further pro
The court found that it was understood between the Portland Realty Company and the State Bank that the lien of the building loan mortgage should be prior and paramount to the lien of the mortgage of the plaintiff, and that Perlman and Bernikow would procure the execution of any instruments or agreements necessary or proper to subordinate the said last-mentioned mortgage to the said building loan mortgage, and that the building loan agreement was made and said building loan bond and mortgage were accepted in reliance upon the said agreement between Bernheimer and Perl-man and Bernikow. The court also found that at or about the time of the execution of the building loan mortgage the Portland Realty Company and Perlman and Bernikow demanded of the said Bernheimer that he execute an agreement subordinating the said purchase-money mortgage to the building loan mortgage held by the State Bank, but that the said Bernheimer refused to execute such an instrument. There is nothing in the agreement between the
The agreement upon which the defendant the State Bank relies was one made between Bernheimer and Perlman and Bernikow. The State Bank was not a party to that agreement; had no contractual relation with Bernheimer, and there was no agreement that existed between the State Bank and Bernheimer as to this mortgage. The underlying principle upon which a subsequent mortgagee may enforce an agreement made between third parties for his benefit is that applied in Lawrence v. Fox (20 N. Y. 268). The application of that principle has been the subject of much discussion, and it has been limited to a strictly definite class of contracts for the benefit of third parties. Thus it is definitely settled that while the promise remains in force it must be in some way accepted by the person for whose benefit it is made. That acceptance is usually evidenced by bringing a suit upon the promise, thus adopting it and claiming its benefit. But although it is now settled that the actual commencement of an action to enforce it is not essential; still a formal acceptance and adoption of the promise by the person for whose benefit it is made during the time that the
The question is thus presented in two aspects : First, at the time this building loan mortgage to the State Bank was made had Perlman and Bernikow so far complied with the contract on their part that they would have been entitled to enforce this contract as against Bernheimer; and, second, if so, did the State Bank accept and adopt the agreement that the building loan mortgage should be prior lien to the purchase-money mortgage before the cancellation of the agreement by the new contract made between Bernheimer, the Portland Realty Company and Perlman and Bernikow ? I have serious doubts whether the first question could be answered in the affirmative. After the execution of the contract Perlman and Bernikow took possession of the premises conveyed to them and proceeded with the erection of buildings upon them. They obtained building loan mortgages upon two of the parcels, and applied for and obtained a subordination agreement as contemplated in the original contract from Bernheimer. Under their contract they were bound to convey these completed buildings, in the absence of delays caused by strikes or the elements, of which there is no claim, on or before the 1st of June, 1906, and it was to enable them to perform this contract that the subsidiary agreement for the subordination of Bernheimer’s mortgages was made. Perl-man and Bernikow had agreed to pay interest on these mortgages,
Assuming, however, that the situation was such as would have bound Bernheimer in April to execute a mortgage, the second question is then presented as to whether the State Bank ever accepted and adopted this agreement, that Bernheimer’s mortgages should be subordinated to the building loan mortgages which it gave. The only evidence we have is that when the application was made for the building loan mortgage the contract with Bernheimer was shown to the State Bank, and that the State Bank then said that a subordination agreement from Bernheimer would be required;
It seems to me clear that up to this time the State Bank, not having accepted and adopted the contract in relation to the subordination of Bernheimer’s mortgage to the building loan mortgages that were obtained upon the premises, the State Bank’s right to subsequently adopt and approve such contz’act was gone, and they must be held to the terms of their contract with the Portland Realty Coznpany, by which their znoz'tgage was to be subject and not superior to the prior liens aggregating $58,000 upon the property.
Laughlin, J., concurred.
Judgment affirmed, with costs.