47 N.Y. 233, Garnsey v. Rogers

Citation47 N.Y. 233
Party NameLEWIS R. GARNSEY, Appellant, v. HARVEY J. ROGERS, impleaded, etc., Respondent.
Case DateJanuary 16, 1872
CourtNew York Court of Appeals

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47 N.Y. 233

LEWIS R. GARNSEY, Appellant,


HARVEY J. ROGERS, impleaded, etc., Respondent.

New York Court of Appeal

January 16, 1872

Argued Nov. 17th, 1871.

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W. F. Odell for appellant. Only the conclusions of law of the referee, from the facts found by him, can be reviewed (Frost v. Smith, 7 Bosworth, 108; Ferguson v. Hamilton, 35 Barb., 427; Bissell v. Pearse, 21 Howard, 134.) The referee's conclusions of law are correct. (Curtis v. Taylor, 9 Paige, 423; 3 R. S., 5th ed., 272; 2 Sandf. Ch., 480; Burr v. Beers, 24 N.Y. 178; 9 Paige, 446; 10 Paige, 595; 10 Paige, 465; Trotter v. Hughes, 2 Kern., 74; Vail v. Foster, 4 Com., 312; Ricard v. Sanderson, 2 Hand, 179.) The request of defendant, Rogers, was properly refused. He is estopped, and cannot deny ownership. (Dezell v. Odell, 3 Hill, 215. (Burr v. Beers, and the other cases above cited; Ricard v. Sanderson, 2 Hand, 179.)

E. Cowen for respondent. The covenant in question was void for want of consideration. (Van Epps v. McGill, Lalor's Sup. to Hill & Denio, 109; Blunt v. Boyd, 3 Barbour, 209; Fay v. James, 18 Barbour, 340.) The conveyance was an equitable mortgage. (Clark v. Henry, 2 Cowen, 324; Hodges v. Tenn. M. and F. Ins. Co., 8 N.Y. , 416; Dupard v. Walbridge, 15 N.Y. 374; Murray v. Walker, 31 N.Y. 399.) The giving of the mortgage was not a valid consideration. (Lawrence v. Fox, 20 N.Y. 268; Burr v. Beers, 24 N.Y. 187; Pratt v. Walrath, Lalor Sup. to Hill & Denio, 59, cited and approved in Keeler v. Salisbury, 33 N.Y. 648.) This case is not within rule laid down in Ricard v. Sanderson, 41 N.Y. 179.


The liability of a grantee, who accepts a conveyance by the terms of which he assumes the payment of an

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existing mortgage upon the land, to respond directly to the mortgagee for a deficiency, in case of a foreclosure and sale, was first adjudged in this State in the case of Halsey v. Reed (9 Paige, 445).That adjudication was followed in the cases of Marsh v. Pike (10 Paige, 597); Cornell v. Prescott (2 Barb., S. C., 16); Bhyr v. Monholland (2 Laws of Ch., 478), and other cases. In these cases, the sole ground upon which the liability of the grantee was placed, was that as between the grantor and the grantee, the grantee, by such an agreement, became the principal debtor of the mortgage debt, and the grantor stood in the situation of surety for him. That the agreement of the purchaser was given for the indemnity of the vendor, who thus stood in the relation of surety for him, and that the mortgage creditor was entitled to the benefit of such indemnity, upon the principle that where a surety or person standing in the situation of surety for the payment of a debt, receives a security for his indemnity and to discharge such indebtedness, the principal creditor is in equity entitled to the full benefit of that security, though he did not even know of its existence. (Curtis v. Tyler, 9 Paige, 432.)

In King v. Whatley (10 Paige, 465), this was declared to be the principle of all the cases in which it was held, that such a stipulation enured to the benefit of the mortgagee; and consequently it was held in that case, that when the grantor, in whose conveyance such a stipulation was contained, was not himself personally liable for the mortgage debt, the holder of the mortgage acquired no right to resort to the grantee for payment.

In the case last cited, the chancellor distinctly repudiates the idea of any right being acquired by the holder of the mortgage, in case of such an agreement, on the ground that it was a contract made between the grantor and the grantee, for the benefit of the mortgagee. And he refers to the older English cases which were cited in support of the doctrine, that if one person makes a promise to another, for the benefit of a third, that third person may maintain an action on the promise, and shows that that principle applies only to third

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persons for whose special benefit the promise was intended, and that they rest upon the ground that the person obtaining the promise, and from whom the consideration proceeded, intended it for the benefit of the third person.

The case of Russell v. Porter (3 Seld., 171), recognizes the ground of liability to be that stated by the chancellor, and in the case of Trotter v. Hughes (2 Ker., 74), the doctrine of King v. Whatley was adopted; and it was accordingly held, that although accepting a deed, containing such a stipulation, from a party personally liable to pay the mortgage, rendered the grantee liable to the mortgagee, yet the assumption of the mortgage, in a deed from a party not liable to pay it, did not make the grantee liable, inasmuch as the only ground of liability was that of equitable subrogation of the creditor to all securities held by the surety of the principal debtor; and the grantor, who was not personally liable for the mortgage debt, did not stand in the situation of surety.

Such was, in all the cases upon the subject, recognized as the sole ground of liability until the case of Burr v. Beers (24 N.Y. 178), which was an action at law, in which the mortgagee had recovered a personal judgment for the mortgage debt, against a grantee, who had accepted a deed containing the usual clause whereby he assumed the payment of a mortgage, which was a lien upon the premises. DENIO, J., in delivering the opinion of the court, after referring to the previous cases on the subject, agrees that they do not proceed upon the notion of a contract between the owner of the equity of redemption and the holder of the mortgage, but upon the principle that the undertaking of the grantee to pay off the incumbrance is a collateral security obtained by the mortgagor which inures, by an equitable subrogation, to the benefit of the mortgagee, and that the judgment under review could not be sustained on the doctrine of those cases, the action not being for a foreclosure of the mortgage, and the mortgagor not being a party. But upon the authority of Lawrence v. Fox (20 N.Y. 268), the judgment was sustained on the broad principle, that if one person make a promise to

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another for the benefit of a third person, that third person may maintain an action upon the promise.

The application of that principle made in the case of Lawrence v. Fox has been the subject of much discussion, which it is not...

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