Bracklein v. Realty Ins. Co.

• Decision Date: 24 June 1938
• Docket Number: 5942
• Citation: 95 Utah 490,80 P.2d 471
• Court: Utah Supreme Court
• Parties: BRACKLEIN v. REALTY INS. CO. et al

80 P.2d 471

95 Utah 490

BRACKLEIN v. REALTY INS. CO. et al

No. 5942

Supreme Court of Utah

June 24, 1938

Rehearing denied September 14, 1938.

For opinion on rehearing see 95 Utah 506, 82 P.2d 561.

Appeal from District Court, Second District, Weber County, L. A. Wade, Judge.

Suit by Leona Bracklein against the Realty Insurance Company and others, to foreclose mortgage. From a judgment and decree for plaintiff, defendant, the N. O. Nelson Manufacturing Company appeals.

MODIFIED, and as modified, affirmed.

Roberts & Roberts, of Salt Lake City, for appellant.

L. J Holther and L. V. Trueman, both of Ogden, for respondent Leona Bracklein.

Stuart P. Dobbs, of Ogden, for respondent Realty Ins. Co.

LARSON, Justice. FOLLAND, C. J., and HANSON, MOFFAT, and WOLFE, JJ., concur.

OPINION

LARSON, Justice.

The District Court of Weber County entered in favor of plaintiff and against defendants a judgment and decree foreclosing a real estate mortgage, ordering a sale of the property, and providing that if the property should not sell for the amount of the judgment and costs, a deficiency judgment for the difference be entered against defendants Realty Insurance Company and N. O. Nelson Manufacturing Company. The N. O. Nelson Company appeals and raises the following questions: (1) Must the holder of a real estate mortgage, in seeking to establish a personal liability against a purchaser from the mortgagor, allege facts showing a promise or agreement on the part of such purchaser to pay the note and mortgage? (2) Is the liability of the purchaser of mortgaged real estate, who by deed assumes and agrees to pay the mortgage indebtedness, a liability founded upon a written instrument? (3) When does the liability of such purchaser accrue so as to start the statute of limitations running?

The essential facts are as follows: The defendant Realty Insurance Company, a corporation, hereinafter called the Realty Company, in February, 1929, executed its note to plaintiff and secured the same by a mortgage on Ogden real estate. The due date of the note was February 23, 1932.

In August, 1930, the Realty Company conveyed the property by deed containing a mortgage assumption clause to the defendant N. O. Nelson Manufacturing Company, a corporation, hereinafter referred to as Nelson Company, which deed was recorded. In April, 1932, the Nelson Company quitclaimed the property to defendants Anderson, which deed was recorded. The note and mortgage were not paid and on March 21, 1936, foreclosure proceedings were instituted. Defendant Nelson Company demurred on the grounds that the complaint did not state a cause of action against it, that the action was barred by provisions of Sec. 104-2-23, as amended by Ch. 113, Laws of Utah 1935, and by Sec. 104-2-30, R. S. Utah 1933. Demurrer was overruled and therefrom spring the vital questions of this case. Defendant answered, denying liability, and for affirmative defense pleaded the statute of limitations.

The Realty Company filed a cross-complaint against the Nelson Company, asking that as between them the Nelson Company be adjudged the principal debtor and the Realty Company the surety. Upon trial the court gave judgment of foreclosure and directed a deficiency judgment against the Realty Company and the Nelson Company in the event the property should not sell for sufficient to pay the judgment and costs. The Nelson Company appeals from that part of the judgment providing for a possible deficiency judgment against it, presenting the three questions of law stated above. Any further factual matters will be noted as we proceed to answer in order the questions of law raised by the appeal.

(1) What then must a party plead in seeking a personal judgment against an owner of mortgaged real property, who did not sign the note or mortgage but whose liability is founded upon an assumption clause in the deed by which he obtains title to the property?

Plaintiff's complaint was in the usual form in foreclosure proceedings, except paragraph 9 under which she seeks to hold Nelson Company to a personal liability. That paragraph, as far as material, alleges: that at the time of the execution of said mortgage, the defendant Realty Company was the owner in fee simple of the lands; that afterwards, on August 9, 1930, the defendant Realty Company "as grantors, by warranty deed conveyed the said property to N. O. Nelson Manufacturing Company, a corporation, as shown by the deed of record * * * subject to the mortgage indebtedness on said property herein sought to be foreclosed; that in said deed it was provided that said grantee, the N. O. Nelson Manufacturing Company, a corporation, assumed and agreed to pay said indebtedness;" that by reason thereof the said Nelson Company is liable to plaintiff for the payment of the indebtedness.

That is the whole of the pleading. It is deficient in that it is not alleged that Nelson Company accepted the deed, recorded the deed, claimed anything under the deed, knew the assumption clause was in the deed, or had any connection with the property except that by quitclaim deed it conveyed the property to Anderson. The note not being originally a debt of the grantee in the deed, and the grantee not having signed the note or mortgage, he can only be liable therefor upon his promise or agreement to pay the same. The debt, being a contractual one, can only be enforced against a party who is under a promise or agreement, express or implied, to pay the same. The complaint shows Nelson Company did not execute the note or mortgage and was not a party to the debt contract, and fails to show any liability against it for the debt since no facts are alleged from which it can be implied, inferred or even assumed that it promised or agreed to pay the debt. Plaintiff argues that since it is alleged that the mortgagor conveyed the property by deed to appellant Nelson Company, and that the deed contained an assumption clause, it must be implied, inferred and held therefrom as against general demurrer that Nelson Company knew and agreed to the assumption clause in the deed, and that from the allegation that the deed was recorded the court must assume that Nelson recorded it and therefore must have had knowledge of its contents and accepted it accordingly. We have before us a question of pleading and not a question of proof. A demurrer admits the facts well pleaded but generally does not admit matters left to mere inferences or conclusions of the pleader.

Trial courts and counsel in the consideration of demurrers too often overlook the fact that the demurrer only admits, and therefore the court has before it only, the facts well pleaded. And a fact is well pleaded only when it is pleaded clearly, definitely, as an existent or once existent fact, or when it can properly be inferred by reasonable intendment from the matters which are set forth. The rule of liberal construction of pleadings means simply that if by a reasonable construction of the whole pleading, viewing each allegation in the light of all the others, and then taking the facts set forth in such relationships together with the inferences and intendments which fairly and reasonably follow therefrom, the essential elements of a cause of action are set forth, the pleading is good against a general demurrer. Where the insufficiency of the pleading is timely raised by demurrer, the pleader is not entitled to as liberal construction of his pleading as he is when the objection comes after issue joined or after judgment. We think that where a pleading can reasonably be clarified and improved by amendment and is timely attacked, the better practice is to require an amended pleading. It simplifies the trial of the action for both parties and the court, clarifies the matters to be submitted to the jury, and generally improves the quality, work and technique of the bar and the administration of justice.

How stands it with the instant case? The objection urged is that there is no allegation to show appellant was under any obligation or duty to pay anything to plaintiff. Respondent concedes as much, but argues that since the deed to appellant contains an assumption clause, and it is alleged that the Realty Company conveyed to appellant, the court should infer and assume that appellant knew the contents of the deed and accepted the same, thereby agreeing to its terms and promising to be bound thereby. Why should the court make such assumptions and inferences to supply a matter counsel could so easily and readily have set forth in the pleading? The allegation that property was conveyed to another is probably sufficient to justify an inference of acceptance of the title, but it does not justify inference of acceptance of extraneous recitals or terms in an instrument of conveyance. And the assumption clause is such an extraneous recital or term in the deed. The leading case is that of Thompson v. Dearborn, 107 Ill. 87, wherein Mr. Justice Craig succinctly states the rule as follows:

"In so far, then, as the liability is concerned, the law may be regarded as well settled; but the important inquiry is whether the averment in the bill establishes a contract which brings the case within the rule announced. Had the bill averred that Thompson had signed and sealed the deed, or that the deed had been delivered to him and he had accepted it the case would have been relieved of all difficulty; but such was not the averment. It may be that an averment that land had been sold and conveyed, is enough from which it may be implied that a deed was delivered, where no question is involved except the mere conveyance of land, as was held in Whitten v. Whitten, 36 N.H. 326, and other cases cited in the brief; but the question before us is of a different...