285 Mass. 453 | Mass. | 1934
On May 4, 1923, the defendants gave to the plaintiff a witnessed promissory note, now overdue, with interest at nine per cent, secured by a second mortgage upon their land. On June 12, 1923, they conveyed the land to one Gracia, subject to the mortgages which Gracia assumed and agreed to pay. On November 25, 1923, Gracia “voluntarily” conveyed to her sister, one Moureira, subject to the mortgages which Moureira assumed and agreed to pay. Apparently Gracia continued to control the land, for her discussions with the plaintiff about her inability to make payments as required resulted in a taking of possession by the plaintiff, and later, in May, 1932, in a conveyance by Moureira “subject to said mortgages” to Ida Silverstein, a daughter of the plaintiff, who holds title for the plaintiff. It is to be noticed that Ida did not assume or agree to pay the mortgages. The purpose of the plaintiff in taking title in the name of Ida was to preserve the plaintiff’s rights on the mortgage note against the defendants, who had conveyed the land nine years before. The judge finds: “In the conferences between the plaintiff and Mrs. Gracia the plaintiff orally stated she would convey the property back at any time when times were better and payments could be continued.”
In this action upon the second mortgage note, the trial judge and the Appellate Division ruled that the plaintiff could not recover. The plaintiff appealed to this court.
The deeds to Gracia, to Moureira, and to Ida Silverstein all made the land, as compared with the personal liability of the defendants, the primary fund for the payment of the plaintiff’s second mortgage note. Pratt v. Buckley, 175 Mass. 115, 116. North End Savings Bank v. Snow, 197 Mass. 339, 341. That is true although the deeds to Gracia and Moureira (but not the deed to Ida Silverstein), in which Gracia and Moureira assumed and agreed to pay the plaintiff’s second mortgage, made their personal liability a still earlier fund until the deed to Ida Silverstein made the land the primary fund as compared with their
Whether a mortgagee is bound to recognize transactions by the mortgagor, subsequent to the mortgage but known to the mortgagee, as converting the mortgagor into a surety or as giving him the rights of a surety, has been disputed. In this Commonwealth, a mortgagee has no right to enforce directly the agreement of a subsequent grantee, made with the mortgagor, to assume and pay the mortgage. Creesy v. Willis, 159 Mass. 249, 251. Goodenough v. Labrie, 206 Mass. 599. Codman v. Deland, 231 Mass. 344, 347. Bloch v. Budish, 279 Mass. 102. There is authority for the proposition that a mortgagee may ignore subsequent dealings with the property, and need not treat the mortgagor as a surety, after the assumption of the mortgage by a grantee or a conveyance subject to the mortgage, unless he consents to do so. Shepherd v. May, 115 U. S. 505. Union Mutual Life Ins. Co. v. Hanford, 143 U. S. 187, 190. But other cases suggest, as in the partially analogous case of the assumption of partnership debts by a new firm or a continuing partner (Palmer v. Purdy, 83 N. Y. 144; Rouse v. Bradford Banking Co. Ltd. [1894] A. C. 586; 47 C. J. 1032, 1033), that notice to the mortgagee is enough to bind him to regard the equities resulting from the mortgagor’s subsequent transactions with third persons. George v. Wood, 9 Allen, 80, 82. Clark v. Fontain, 135 Mass. 464. Clarke v. Cowan, 206 Mass. 252, 255, 256. Sheldon, Subrogation, (2d ed.) § 81. In North End Savings Bank v. Snow, 197 Mass. 339, 341, Phillips v. Vorenberg, 259 Mass. 46, 69, Murray v. Marshall, 94 N. Y. 611, and Travers v. Dorr, 60 Minn. 173, this principle was apparently applied to a conveyance subject to the mortgage. See also Guild v. Butler, 127 Mass. 386; Williston, Contracts, § 386. Even when consent of the mortgagee to the new relationship has been treated as necessary to bind him to regard the mortgagor as a surety, it has been held sufficient to show con
Once the mortgagee is bound, as the mortgagee was in this case, to treat the mortgagor as a surety, many of the rules of suretyship apply for the protection of the right of the mortgagor to indemnity, contribution and subrogation. If the mortgagee releases the land, he discharges the mortgagor pro tanto from personal liability on the mortgage note. Worcester Mechanics’ Savings Bank v. Thayer, 136 Mass. 459. First National Bank & Trust Co. v. Strong, 112 Conn. 412. See also Wagoner v. Brady, 221 App. Div. (N. Y.) 405; 41 Am. L. R. 294, 306. If he gives to the grantee a valid arid enforceable extension of time, he usually releases the mortgagor from personal liability to the extent of the then value of the land. North End Savings Bank v. Snow, 197 Mass. 339. Phillips v. Vorenberg, 259 Mass. 46, 61, 62, 66, 70, 72, 73. Travers v. Dorr, 60 Minn. 173. Murray v. Marshall, 94 N. Y. 611. See also Franklin Savings Bank v. Cochrane, 182 Mass. 586; City Institution for Savings v. Kelil, 262 Mass. 302, 306; Starks v. O’Hara, 266 Mass. 310, 314; 41 Am. L. R. 282; Lincoln v. Finkelstein, 255 Mass. 486, 490, 492. In the present case, however, there was no extension of time. The owner of the equity of redemption conveyed it to the nominee of the mortgagee, and the mortgagee said that she “would convey the property back at any time when times were better and payments could be continued.” If there was any consideration for this promise, it amounted merely to an agreement to reconvey the equity of redemption. There was nothing in the transaction to impair the rights of the defendants as quasi sureties, for on payment of the mortgage debt they could still be subrogated to the mortgage and enforce the direct promise of Gracia to them to assume and pay the mortgage. Her
The ruling was right that the second mortgage standing in the name of the plaintiff did not merge with the equity of redemption standing in the name of Ida Silverstein. Tucker v. Crowley, 127 Mass. 400. Dillon v. Lange, 280 Mass. 427. See also Sullivan v. Neary, 186 Mass. 158. The case differs from Dickason v. Williams, 129 Mass. 182, where the terms of the deed of the equity of redemption given to the mortgagee showed payment of the mortgage.
Although the transactions already recited made the land the primary fund for the payment of the mortgage debt, and the defendants as mortgagors became quasi sureties, the plaintiff is entitled to enforce their personal obligation or the mortgage security or both. City Institution for Savings v. Kelil, 262 Mass. 302, 306, 307. Miller v. Levitt, 226 Mass. 330. Mercantile Guaranty Co. v. Hilton, 191 Mass. 141. Sheldon, Subrogation, (2d ed.) § 115. Williston, Contracts, § 1276. Exoneration and marshalling have not been applied to such a relation, so as to compel the mortgagee to resort first to the land. Marshall v. Davies, 78 N. Y. 414, 421, 422. 41 Am. L. R. 325. Compare Binns v. Baumgartner, 105 N. J. Eq. 58. Even if those principles could be applied, they could be applied only in a suit in equity. In an action at law such as the present, the court must give judgment on the mortgage note, and let the rights of the mortgagor against the land be protected by subrogation.
The plaintiff is entitled to recover the sum due on the note, $779.73, with interest from July 5, 1930, at the rate of nine per cent per annum, and costs. Union Institution for Savings v. Boston, 129 Mass. 82. Lamprey v. Mason, 148 Mass. 231. Kendall v. Equitable Life Assurance Society, 171 Mass. 568, 573, 574. The order of the Appellate Division is reversed, and judgment is to be entered for the plaintiff in accordance with this opinion. G. L. (Ter. Ed.) c. 231, § 124. Spevack v. Budish, 238 Mass. 215, 218.
So ordered.