Calder v. Richardson

• Decision Date: 25 May 1935
• Docket Number: No. 3627.,3627.
• Parties: CALDER v. RICHARDSON.
• Court: U.S. District Court — Southern District of Florida

11 F. Supp. 948

CALDER v. RICHARDSON.

No. 3627.

District Court, S. D. Florida, Jacksonville Division.

May 25, 1935.

Kay, Adams, Ragland & Kurz, of Jacksonville, Fla., for plaintiff.

Crawford & May and Francis P. Conroy, all of Jacksonville, Fla., for defendant.

STRUM, District Judge.

The declaration herein alleges that on September 12, 1925, Bidwell Properties, Inc., was the owner of 900 acres of land encumbered by a pre-existing mortgage executed by W. P. McDonald, as mortgagor, to R. I. Harris. Bidwell Properties did not assume payment of the mortgage debt, and was in nowise personally liable therefor. Bidwell Properties thereafter conveyed 200 acres of said lands to Ruff Realty Company, the latter assuming and agreeing to pay two promissory notes of $10,000 each, secured by the mortgage aforesaid. Ruff Realty Company conveyed said 200 acres to the defendant Ernest S. Richardson, who also assumed and agreed to pay the two promissory notes just mentioned. Bidwell Properties conveyed the remaining 700 acres of the mortgaged lands to other persons, and warranted title to the same against the mortgage aforesaid, which covered the entire 900 acres. Bidwell Properties took from the purchasers of the 700 acres a purchase-money mortgage thereon in amount of $250,000. The latter mortgage was subordinate to the existing mortgage from McDonald to Harris. The defendant Richardson failed to pay the two $10,000 notes, by reason whereof, so it is alleged, said mortgage from McDonald to Harris was foreclosed, rendering Bidwell Properties liable to its grantee of the 700 acres under its warranty of title aforesaid, and Bidwell Properties has lost the value of its security under the junior mortgage executed to it as a part of the purchase price of said 700 acres.

Bidwell Properties assigned its claim against the defendant Richardson to plaintiff Louis Calder. Defendant demurs to plaintiff's declaration, insisting primarily that neither Bidwell Properties, nor its assignee Calder, can recover against Richardson, because Bidwell Properties was never personally liable for the mortgage debt assumed by Richardson.

In Florida a remote grantee is liable to the mortgagee upon the former's assumption of an agreement to pay the mortgage debt. Whitfield v. Webb, 100 Fla. 1619, 131 So. 786. This is upon the principle that the grantee's assumption of the mortgage debt is a contract made and intended by the formal parties thereto, not alone for their own benefit, but also for the direct benefit of a third party, the mortgagee, who may sue upon it at law as the real party in interest. That rule, as adopted in Florida, is binding upon this court. Duvall-Percival Trust Co. v. Jenkins (C. C. A.) 16 F.(2d) 223. The rule just stated was also adopted in Duvall-Percival Trust Co. v. Jenkins, supra, not only following the Illinois state rule, but as supported by the weight of authority. The same rule was followed in Bradbury v. Carter (C. C. A.) 291 F. 363.

Upon the making of such a contract, the law operating upon the acts of the parties creates the essential privity between the promisor and the third person beneficiary necessary to a binding legal obligation. McDonald v. Finseth, 32 N. D. 400, 155 N. W. 863, L. R. A. 1916D, 149; Corkrell v. Poe, 100 Wash. 625, 171 P. 522, 12 A. L. R. 1524, and note; Title Guaranty & Trust Co. v. Bushnell, 143 Tenn. 681, 228 S. W. 699, 12 A. L. R. 1512; Cobb v. Fishel, 15 Colo. App. 384, 62 P. 625; note, 21 A. L. R. 439, and statement of rule in note beginning 47 A. L. R. page 5; also cases cited in A. L. R. Blue Book of Supplemental Decisions, 1932, supplementing 12 A. L. R. 1528. See, also, the cases cited in Meyerson v. New Idea Hosiery Co., 217 Ala. 153, 115 So. 94, 55 A. L. R. 1231.

This is true even though the primary purpose of the contracting parties was to benefit themselves, and the third party beneficiary was unaware of the contract at the time of its execution. Ohio Casualty Co. v. Beckwith (C. C. A.) 74 F.(2d) 75.

A remote assuming grantee is liable to the mortgagee, even though the immediate grantor of such remote grantee is not personally liable for the mortgage debt, upon the principle, now well established, that one for whose benefit a promise between two parties is made may enforce the promise, although the beneficiary is a stranger both to the contract and to the...