Dieckman v. Walser

• Decision Date: 16 October 1933
• Docket Number: No. 165.,165.
• Citation: 168 A. 582
• Parties: DIECKMAN et al. v. WALSER et al.
• Court: New Jersey Supreme Court

168 A. 582

DIECKMAN et al.

v. WALSER et al.

No. 165.

Court of Errors and Appeals of New Jersey.

Oct. 16, 1933.

Appeal from Court of Chancery.

Suit by John Dieckman and others against William Walser and others, in which Charles W. Terhune, executor of the last will and testament of Clarence Linn, deceased, was substituted as complainant. From a decree (112 N. J. Eq. 46, 163 A. 284), complainant appeals.

Affirmed.

Alfred R. Becker, of Jersey City, for appellant Charles W. Terhune, executor.

Samuel Solomon, of Union City (Merritt Lane, of Newark, of counsel), for respondent Monitor Holding Co.

HEHER, Justice.

The mortgage foreclosed in this proceeding covered tracts numbered 2, 3, and 4. At the time of the conveyance of tracts 2 and 3 to 1231 Boulevard East Corporation, the amount due on the decree was $35,000, plus interest. Vice Chancellor Bigelow found that the grantee of lots 2 and 3 assumed the payment of the full sum due upon the decree, and gave effect to that undertaking. This finding of fact is amply supported by the proofs.

Respondent alleged an oral assumption agreement. The deed conveyed the lands "subject to mortgages and taxes." Complainant's mortgage, which had then become merged in the final decree, and a second mortgage, upon which there was due $13,750, were specified as the mortgage incumbrances. The consideration was stated to be "One dollar and other valuable considerations." There was no other written agreement between the parties. This conveyance of lots 2 and 3 was in satisfaction of what defendant Walser regarded as an obligation, legal or moral, to one Lauterbach, arising from a loss sustained by the latter in a business venture of the former.

There was testimony that the grantee, in consideration of the conveyance, assumed the payment of the two mortgages covering the three tracts, and all unpaid taxes thereon. The grantee subsequently recognized such an obligation, and undertook its performance. In order to procure a mortgage loan to finance the erection of an apartment house on lot No. 2, it paid to complainant $10,000 on account of the principal sum due on the decree, interest on the entire principal sum, and the arrears of taxes assessed on the three lots. It satisfied the mentioned second mortgage incumbrance covering the three lots. Although it is appellant's contention that the three lots are chargeable with their proportionate share of the amount due upon the decree, no demand for contribution, by reason of these payments, was made, then or subsequently, upon the owner of lot No. 4.

Moreover, on June 20, 1928, and again on October 9, 1928, counsel for the grantee corporation advised complainant's solicitor, by letter, that the entire balance remaining due on the decree would be paid by the grantee when the proceeds of the proposed mortgage on lot No. 2 were made available to it. And on October 3, 1928, the grantee corporation acknowledged, by letter written to one Nashel, who was about to take title to lot No. 4 from the Park Avenue Holding Company (the grantor), that, in consideration of the conveyance of lots Nos. 2 and 3, it had assumed the payment of "the entire mortgage" held by complainant in the sum of $35,000, and also a second mortgage held by one Rissick, "the total obligation not to exceed $54,000." Nashel was advised that the corporation was not then financially able to effect a release of the tract to be conveyed to him from the incumbrances in question, but assurances were given that not later than the middle of April, 1929, "we will be able to fulfill our promises so that you may have the property free and clear." Thus the asserted parol agreement to assume the payment of the full amount due upon complainant's decree was established.

But appellant insists that this assumption agreement cannot be established by parol proof in this proceeding, and invokes, in support of this contention, the rule laid down in Smith v. Colonial Woodworking Company, Incorporated, 110 N. J. Eq. 418, 160 A. 351, wherein it was held that there is no assumption of a mortgage unless appropriate language appears in the deed, or it is said therein that the mortgage is part of the consideration money; that the acceptance of a deed for land is to be deemed prima facie full execution of an executory agreement to convey, and thenceforth the agreement becomes void, and the rights of the parties are to be determined by the deed, and not by the agreement; and that the deed is conclusive evidence of the agreement, in the absence of fraud or reformation.

It is the general rule that the acceptance of a deed for land is to be deemed prima facie full execution of an executory agreement to convey, and thenceforth the agreement becomes void, and the rights of the parties are to be determined by the deed, not by the agreement. Until consummated, an executory contract is subject to modification. In all cases, the deed, when accepted, is presumed to express the ultimate intent of the parties with regard to so much of the contract as it purports to execute. The executed contract supersedes all prior negotiations and agreements, where the last contract covers the whole subject embraced in the prior one. But where the stipulation is to do a series of acts at successive periods, or distinct and separable acts to be performed simultaneously, the executory contract becomes extinct only as to such of its parts as are covered by the conveyance. Long v. Hartwell, 34 N. J. Law, 116. Covenants collateral to the deed are exceptions to this rule. And in Bull v. Willard, 9 Barb. (N. Y.) 641, it is said: "That the covenant, in order to be deemed collateral and independent, so as not to be destroyed by the execution of the deed, must not look to, or be connected with the title, possession, quantity or embiements of the land which is the subject of the contract."

But it is also a well-established rule that the true consideration of a deed may be shown by parol evidence, though it vary from that expressed therein, but not to vary or enlarge the grant. Morris Canal & Banking Company v. Ryerson, 27 N. J. Law, 457; Herbert v. Scofield, 9 N. J. Eq. 492; Speer v. Speer, 14 N. J. Eq. 240; Silvers v. Potter, 48 N. J. Eq. 539, 547, 22 A. 584; Hattersley v. Bissett, 51 N. J. Eq. 597, 29 A. 187, 40 Am. St. Rep. 532; Voigt v. Dowe, 74 N. J. Eq. 560, 70 A. 344; Wilson v. King, 23 N. J. Eq. 150; Bolles v. Beach, 22 N. J. Law, 680, 53 Am. Dec. 263; Birch v. Baker, 85 N. J. Law, 660, 90 A. 297, L. R. A. 1916D, 485. This is the prevailing rule. Cabrera v. American Colonial Bank, 214 U. S. 224, 29 S. Ct. 623, 53 L. Ed. 974; Mills v. Allen, 133 U. S. 423, 10 S. Ct. 413, 33 L. Ed. 717; Way v. Greer, 190 Mass. 237, 81 N. E. 1002; Blackwell v. Blackwell, 196 Mass. 186, 81 N. E. 910, 12 Ann. Cas. 1070; In re Edmundson's Estate, 259 Pa. 429, 103 A. 277, 2 A. L. R. 1150; Lowry v. Downey, 150 Ind. 364, 50 N. E. 79; Gage v. Cameron, 212 Ill. 146, 72 N. E. 204; 10 R. C. L. 1042, 1043; 22 C. J. 1157, 1161.

A parol agreement of the grantee, that he will assume the mortgage indebtedness upon the land conveyed as part of the consideration of the conveyance, is valid ami enforceable. Bolles v. Beach, supra; Huyler's Executors v. Atwood, 26 N. J. Eq. 504; Wilson v. King, supra; Ketcham v. Brooks, 27 N. J. Eq. 347; Herrin v. Abbe, 55 Fla 769, 46 So. 183, 18 L. R. A. (N. S.) 907; Pomeroy's Equity Jurisprudence, § 1206. Proof of the parol agreement must, however, be clear and convincing; but when the agreement is established it is as effective and binding as if it had been recited in the contract and conveyance. A covenant in the deed that the premises are free from incumbrances, or a recital that the consideration had been paid in full, does not estop either the grantor or the holder of the mortgage from proving such agreement and recovering upon it. The contract of assumption is independent of the deed. The verbal agreement is additional thereto, and in no respect contradictory, if the conveyance was in terms subject to the mortgage. It does not vary the terms of the contract, and is not merged therein. Jones on Mortgages (8th Ed.) § 937 et seq.; Bolles v. Beach, supra; Enos v. Anderson, 40 Colo. 395, 93 P. 475, 15 L R. A. (N. S.) 1087.

In Bolles v. Beach, supra, the deed acknowledged the receipt of the purchase money, and contained the usual form of acquittance. It also contained full covenants of title and against incumbrances. At the time of the execution and delivery of the deed, a part of the premises conveyed was incumbered by a mortgage, and it was alleged that the deed was given and accepted subject to the lien and incumbrance of the mortgage, and upon an express and verbal stipulation between the parties that the grantee, in consideration of the delivery of the deed, would assume the payment of the bond and mortgage, and would indemnify the plaintiff against them. The action was by the...