Connecticut Mut. Life Ins. Co. v. Mayer

• Decision Date: 11 November 1879
• Citation: 8 Mo.App. 18
• Parties: CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Respondent, v. SIMON MAYER, Appellant.
• Court: Missouri Court of Appeals

8 Mo.App. 18

CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, Respondent, v. SIMON MAYER, Appellant.

Court of Appeals of Missouri, St. Louis.

November 11, 1879

1. Where the grantee of mortgaged premises assumes the payment of the debt, the mortgagee is not bound by the relation of principal and surety thus established as between the mortgageor and his grantee; and where the mortgageor is sued for a balance due on the secured note, after foreclosure, he cannot defend on the ground that his grantee had been permitted by the mortgagee to remove certain personalty included in the mortgage.

2. The mortgageor's consent will not authorize waste by the mortgageor's grantee; and where, by the grantee's act, the security is diminished, the mortgageor's remedy is against his grantee.

APPEAL from the St. Louis Circuit Court.

Affirmed.

E. T ALLEN, for the appellant: Respondent, as cestui que trust, occupies the position of a mortgagee.-- Shillaber v. Robinson, 97 U.S. 68, and cases cited bottom p. 72 et seq. If facts alleged in answer would have supported a bill for relief, they are available as a defence.--Bliss on Code Pl., sect. 347, citing Dobson v. Pearce, 12 N.Y. 150. Where a mortgageor sells land to a purchaser, who assumes to pay the mortgage debt as a part of the consideration, " the land is the primary fund for the payment of the debt," and, " as between the parties, the grantee is the principal debtor, and the grantor the surety." -- Marsh v. Pike, 10 Paige 597; Cornell v. Prescott, 2 Barb. 18; Hoy v Bramhall, 4 C. E. Green, 563; Huyler v. Atwood, 26 N.J.Eq. 504; Johnson v. Zink, 51 N.Y. 333. A promise to one, for a valuable consideration moving from the promisee, to pay a sum of money to a third person will support an action by the latter.-- Holt v Dollarhide, 61 Mo. 433; Creas v. Blodgett, 64 Mo. 449; Heim v. Vogel (April term), 8 Reporter 435; Beardslee v. Morgner, 4 Mo.App. 139; Barbaro v. Occidental Grove, 4 Mo.App. 429; Fitzgerald v. Barker, 4 Mo.App. 107. The doctrine of subrogation does not depend upon privity, nor is it confined to cases of strict suretyship. -- McCormick v. Irwin, 11 Casey 111; 1 White & Tudor's Ld. Cas. (4th ed.) 148; 2 Id. 282 et seq. The act of respondent was a fraud upon appellant's right of subrogation.-- Taylor v. Maris, 5 Rawle 51; Taylor v. Short, 27 Iowa 361; Welsh v. Beers, 8 Allen 151; Klaproth v. Dressler, 2 Beas. 62.

B. D. LEE, for the respondent, cited: Hill v. Gwin, 51 Cal. 47; Crawford v. Edwards, 33 Mich. 354; Corbett v. Waterman, 11 Iowa 86; Thompson v. Bertram, 14 Iowa 476; Curtis v. Taylor, 9 Paige 435; Halsey v. Reed, 9 Paige 457.

OPINION

LEWIS P. J.

The defendant executed and delivered to the plaintiff a promissory note for $14,000, with a deed of trust securing it on certain real estate, together with a lot of machinery, fixtures, and other articles of value then on the premises. This suit is to recover a balance of about $700 remaining unpaid on the note. The defendant admits the execution of the note, but claims that he is released from all liability thereon by reason of the following facts, that is to say: After the execution of the note and mortgage, defendant sold and conveyed the mortgaged property to Bevis & Fraser, subject to the encumbrance, which those purchasers undertook and assumed to pay off as part of the consideration. The plaintiff, with full knowledge of this transaction and the covenants it involved, before the maturity of the note, and without the knowledge or consent of the defendant, " consented and permitted that said Bevis & Fraser should remove from said premises, and said Bevis & Fraser, pursuant to said consent and permission, did remove from said premises and dispose of the same," the said machinery, fixtures, etc., being of the value of $10,000. Bevis & Fraser were insolvent at that time, and have so continued to be. They failed to pay the note at its maturity, and the plaintiff thereupon " caused said premises, so despoiled of said machinery and fixtures, etc., to be sold at public auction," and plaintiff became the purchaser. By reason of the said removal, the property remaining as security for the note was greatly reduced in value, and failed to realize at the sale as much as it would otherwise have brought, whereby a balance was left unpaid on the note, and defendant was injured. The answer was demurred to, as not stating facts sufficient to constitute a defence, and the demurrer was sustained.

For the defendant it is contended, that the effect of the transfer to Bevis & Fraser was to make the transferees the principal debtors to the plaintiff, and the defendant thenceforth only a surety, the mortgaged property being the primary fund for the liquidation of the debt; that hence, by the well-settled law of principal and surety, the plaintiff creditor, in permitting Bevis & Fraser to dispose of part of the property which was the defendant's security against a personal liability for the debt, released the defendant to the extent of the value of the property so disposed of.

For the plaintiff it is argued that the relations existing between the original debtor and creditor could not be changed by any transaction between the debtor and his grantees, to which the plaintiff was not a party; that there was no privity between the plaintiff and Bevis & Fraser as to the transfer, and the plaintiff never surrendered its right to treat the defendant as its principal debtor. There is, therefore, no ground upon which defendant can claim a release.

There is abundant authority for the position that when a mortgageor conveys the mortgaged property, his grantee assuming to pay the mortgage debt, the grantee becomes, as between these parties, the principal debtor, and the grantor the surety. But the...