29 N.J. Eq. 257 | New York Court of Chancery | 1878
This is an ordinary foreclosure suit. The point chiefly contested on the hearing was whether the complainant was entitled to a decree for deficiency against the defendant, Levi A. Fuller. His liability grows out of a covenant contained in a deed made to him for the mortgaged premises by Daniel Fuller. No question was raised as to the sufficiency of his covenant, nor was it disputed that he accepted the deed with full knowledge of its presence. He says there was no previous agreement that he should assume the payment of the mortgage, but he admits he read the covenant when the deed was presented for delivery, and accepted it without objection. This amounted to an express assent. On the papers his liability is indisputable. His defence embraces two grounds : First, that he was inveigled into the purchase by fraud; and, second, that his covenant was made to a person not personally liable for the mortgage debt. The last is not set up in his answer, but, inasmuch as it is presented by a deed put in evidence by the complainant, and which was an indispensable part of his proof, it is impossible to determine whether or not the complainant is entitled to the relief he seeks, without passing upon it.
The mortgage in suit was made May 1st, 1872, by Charles Wise to the complainant, to secure the payment of $8,000 on the 1st day of February, 1875, with interest, payable semi-annually. On the same day Charles Wise, the mort
The last deed, it is alleged, so far as its terms attempt to create a liability against the defendant, is rendered nugatory by the fraud of the grantor. The grantor and grantee are brothers. The defendant is a member of the New York bar, and Daniel, at the time of this transaction, was a real estate broker. The defendant charges that he was entrapped into making this covenant by a course of deceitful representations extending over a period of three months. He says, Daniel and he were in the habit of mutually assisting each other, and dealing on a basis of the most perfect confidence; that in all real estate transactions he trusted Daniel’s judgment implicitly, and this Daniel knew; that immediately after Daniel got title to this property he commenced extolling it, stating that it was much better than he supposed it was when he purchased; that it was the best property he had; that in ordinary times its rental value would be $2,000 a year, and it had so many substantial merits that he wanted to leave it, when he died, for the support of his family, as it could be depended upon to produce an income of $2,000 a year. He further says, Daniel told him, in July, 1873, he had had an offer of $1,500 a year rent for it, but considered it no price, and expressed fear if he let it for that sum its market value would be injured. He also says, Daniel stated to him, at this time, that he did not feel at liberty to refuse this offer without first consulting him, as he owed him so much money; and that he replied, he must exercise his own judgment in the matter, and thereupon Daniel said he would decline the offer. He further says, Daniel afterwards came to him and stated he was compelled to raise some money by the sale of something, and then
At this time Daniel was deeply in«debt, one or more suits were pending against him, and he shortly after became insolvent. The.defendant’s entire payment consisted in the surrender of notes he held against Daniel. No money passed. The defendant was present when Daniel purchased the mortgaged premises; he knew what they were valued at then, and what Daniel gave in exchange for them. He exhibited the property Daniel exchanged for them, and drew the contract between the parties. In this exchange they were valued at $20,000. Shortly after Daniel got title, in consequence of his being too sick to go himself, he sent his brother, Dr. Austin B. Fuller, and Mr. John S. De Hart, to Elizabeth, where the property is located, to examine it and ascertain its value. Austin swears, after the examination had been completed, and during the summer of 1873, he told the defendant that Mr. De Hart and he were pleased with the property, and considered it richly worth all Daniel had paid for it. Mr. De Hart says, he obtained the judgment of two or three persons residing in Elizabeth upon its value, and reported to Daniel, but not to the defendant. Mr. Jesse D. Price, a real estate broker, who had charge of the property for Daniel after his purchase, says the defendant, prior to his purchase, applied to him two or three times for an opinion upon its value, but he refused to give it, say
The defendant swears, in December, 1873, be offered to reeonvey tbe property to Daniel and lose tbe consideration be bad surrendered, but bis offer was declined. Tbe defendant paid tbe interest on tbe mortgage falling due February 1st, 1874, although be says be was then somewhat disquieted about tbe transaction. He says, be first suspected be bad been defrauded in June, 1874, and in the following August be notified tbe complainant of his determination to repudiate the contract. Before this time he had been negotiating with tbe complainant to accept a less-sum than tbe principal in payment of tbe mortgage. Daniel has contradicted most of tbe material facts swbrn to by tbe defendant, but tbe force of bis evidence is greatly impaired by bis hatred of bis brother, which be endeavored to make painfully conspicuous during his examination. There can be no doubt, in view of the evidence upon tbe subject of value, that both tbe defendant and Daniel paid much more for tbe property than it was intrinsically worth, but it is equally clear that the reports made to Daniel by his brother and Mr. De Hart fully justified bim in believing it was worth all be bad given for it.
Tbe complainant is seeking to enforce a purely derivative or substituted right. He stands here merely in tbe right of bis debtor, and unless bis debtor could enforce this covenant, be cannot. If Daniel could not bold tbe defendant, bad be paid tbe complainant’s debt and were here seeking a decree, tbe complainant cannot. Klapworth v. Dressier, 2 Beas. 62; Crowell v. Currier, 12 C. E. Gr. 152; S. C. on appeal, lb. 650. Tbe question, therefore, on this branch of tbe case is, Does tbe proof show that tbe defendant’s covenant, was procured by fraud ? On tbe papers tbe complainant has a perfect ease, and, unless their force as tbe mutual repository of tbe intention of tbe parties has been overcome by convincing proof, they must stand as tbe infallible arbiter of their rights and liabilities.
Tested by these rules, I think the defence is narrowed down to this question: Did Daniel, with a view of enticing the defendant to purchase, falsely represent that he had had an offer of $1,500 a year for this property? The other statements attributed to him, even if they were couched in language as strong as that in which they have been put before the court, related entirely to the prospective • value and merits of the property, and could only have been regarded as the extravagant praise of a loquacious boaster. They were not the sort of representations that would be likely to influence the judgment of a man of mature age, whose active years had been spent in the courts of a great city; who was necessarily a man of affairs, and knew thoroughly the man who uttered them. Besides, it is impossible to say Daniel did not honestly entertain the opinion he expressed. He had sent his brother and Mr. De Hart to ascertain the truth about the property, and he had a right to rely upon what they said. Their information was communicated to the defendant as well as to Daniel. It is not pretended that Daniel made a representation which was at variance with the facts as they were reported to him. Nor have I been able to discover any motive for the fraudulent purpose imputed to Daniel.
At the time these conversations occurred, the relations existing between the parties were kind and affectionate; the
But did Daniel, with design to influence the defendant to purchase, falsely represent that he had had an
The other defence raises simply a question of construction. Charles "Wise conveyed the mortgaged premises to James C. Freeman, subject to complainant’s mortgage and certain assessments for local improvements. After referring to a prior conveyance, the deed says: The premises “ are hereby conveyed subject to a mortgage from Charles Wise to Anna Wise, for $8,000, and subject also to all city assessments now existing thereon, which the said party of the second part hereby assumes to pay, except the assessment for the Reid street sewer.”
The defendant contends that the relative or representative in this sentence refers to the last antecedent only, and that by the proper construction of the stipulation, the covenantor bound himself simply to pay the assessments and not the mortgage. There can be no doubt, if this reading be the true one, the promise of the defendant is without legal force, for it is well settled, to make a promise of this nature effective, it must be made to a person personally liable, legally or equitably, for the mortgage debt, and if there is a break anywhere in the chain of liability, all the subsequent promises are without obligation. King v. Whitely, 10 Paige 465; Trotter v. Hughes, 12 N. Y. 74; Crowell v. Currier, 12 C. E. Gr. 152, 155; S. C. on appeal, lb. 650. But this construction cannot prevail. It does not read the sentence correctly. It requires it to be read in a restricted
This result renders unnecessary discussion of the question whether the complainant’s mortgage or the taxes and assessments paid by Mr. John S. Be Hart are entitled to priority in payment. It is admitted the taxes and assessments were paid by Mr. Be Hart as the agent of Mr. Fuller, with his money and for his benefit. The right and interest transferred by the city to Mr. Be Hart is held by him in trust for Mr. Fuller. Mr. Fuller bound himself to pay the taxes and-assessments. His covenant embraced them. As between his covenantee and those standing in his rights, and his trustee or himself, the taxes and assessments must be considered paid. This would be so, even at law. Allaire v. Hartshorne, 1 Zab. 665, 670. Equity looks at things as they are, and deals with them regardless of mere forms or appearances. The complainant’s lien stands first in order of priority.