107 N.E. 1027 | NY | 1915
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *28 Upon the trial of the action the court found as matters of fact that the agreement entered into between the plaintiff and the Westown Realty Company, March 15th, 1910, was made without the knowledge or consent of the defendants Nova Realty Company and Jumel Realty and Construction Company that the market value of the premises described in the mortgage from on or about March 15th, 1910, down to and including May 1st, 1910, was $58,650, exceeding the amount of the prior liens and mortgage debt by $8,150. The only question presented on this appeal is the personal liability of the Nova Realty Company upon the bond executed by it in view of the extension of the time of payment of the same without its knowledge or consent.
The plaintiff asserts that the clause in the agreement, "Nothing herein contained shall impair the security now held for said debt, or any condition or agreement contained *30 in said bond and mortgage, which bond and mortgage the party of the second part hereby ratifies and confirms as modified by this agreement," reserved to him unimpaired the liability of the Nova Realty Company upon the bond and mortgage executed by it as security for the debt which this action is brought to enforce.
On March 15th, 1910, the date of the agreement for the extension of time of payment of the bond and mortgage, the premises covered by the mortgage were owned by the Westown Realty Company, and as between the Nova Realty Company and the Westown Realty Company the land was the primary fund for the payment of the mortgage. The mortgage and bond accompanying the same were then owned by the plaintiff but the debt secured therein was not due until May 1st following that date. The Nova Realty Company was the obligor upon the bond, and having parted with its title to the mortgaged premises it had the right to pay the debt on May 1st, 1910, and be substituted to the mortgage security with the privilege of immediately proceeding by foreclosure against the land then owned by the Westown Realty Company, or call upon the mortgagee to foreclose the mortgage and have determined the amount, if any, of its liability upon the bond for the deficiency arising from the sale of the premises in foreclosure. In the enforcement of such right the Nova Realty Company was vested with all of the rights of a surety and the mortgagee was inhibited from dealing with the Westown Realty Company to the prejudice of the equitable rights of the Nova Realty Company, the surety.
We may inquire what was the situation of the parties on May 1st, 1910. The plaintiff had without the consent of the Nova Realty Company extended the time of payment of the principal sum secured by the bond and mortgage for a period of three years. He had thereby denied to himself the right to foreclose the mortgage immediately after May 1st, 1910, and the mortgage by reason *31 of the extension of time not being due the Nova Realty Company could not pay the debt to the plaintiff and become substituted to the mortgage security and proceed against the land by foreclosure. Had it paid the mortgage to the plaintiff and undertaken to foreclose the same it would be met by the defense that the mortgage debt was not due. If the Nova Realty Company demanded of the plaintiff that the mortgage be foreclosed, such demand would be futile; plaintiff had by the agreement to extend the time of payment created a condition which would estop him from maintaining such action.
We think it clear that by the action of the plaintiff, the mortgagee, he denied to the Nova Realty Company the equitable rights vested in it. If he could legally extend the time of payment for three years without the consent of the company, he could make a like extension for a period of ten years or even a greater number of years, and, upon his theory, continue the liability of the Nova Realty Company upon the bond.
The question as to whether or not any reservation could have been embodied in the extension agreement which would preserve the liability of the Nova Realty Company upon the bond is not in this case. The sole question is whether the clause quoted from the extension agreement had that effect. We are of opinion that it did not. The owner of the equity of redemption sought an extension of time. The mortgagee granted the extension and the mortgage was to stand unimpaired except as to the time of payment of the same. The owner of the equity of redemption did not consent or agree that the Nova Realty Company, the obligor of the bond, might assert its rights and foreclose the mortgage on May 1st, 1910, or at any time thereafter. Had it or the plaintiff intended to reserve to the surety all of its legal and equitable rights language more apt would have been used in the agreement, but the language contained therein is not susceptible of such a construction. The principles of law stated in (Calvo v.Davies *32
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WILLARD BARTLETT, Ch. J., HISCOCK, CHASE, COLLIN, MILLER and CARDOZO, JJ., concur.
Judgment affirmed.