Evans v. Sperry

• Decision Date: 19 April 1926
• Docket Number: No. 73-D.,73-D.
• Citation: 12 F.2d 438
• Parties: EVANS v. SPERRY.
• Court: U.S. District Court — Eastern District of Illinois

12 F.2d 438 (1926)

EVANS v. SPERRY.

No. 73-D.

District Court, E. D. Illinois.

April 19, 1926.

Craig & Craig, of Mattoon, Ill. (Craig Van Meter, of Mattoon, Ill., of counsel), for plaintiff.

Gunn, Penwell & Lindley, of Danville, Ill. (Walter T. Gunn, of Danville, Ill., of counsel), for defendant.

LINDLEY, District Judge.

Plaintiff, former owner of certain land in Mississippi, and mortgagor thereof in three certain mortgages, sold the land to one G. B. McLemore, who assumed and agreed to pay each of said mortgages. McLemore in turn conveyed the land to the present defendant, and by the terms of the latter deed the defendant assumed and agreed to pay the mortgages. Plaintiff now sues the defendant, alleging the said facts and seeking to recover a sum in excess of $10,000 alleged to have been paid by her upon said mortgage incumbrances upon demand of the mortgagees.

Defendant's special plea alleges that the conveyance from McLemore to him was made in pursuance of a contract for the exchange of lands under which he did not agree to assume or to pay the mortgage indebtedness as alleged, but by which he agreed to accept the property subject to the incumbrances; that he never knew until after the institution of this suit that the deed conveying said premises was not made in accordance with the said contract; that he accepted said deed, assuming and believing that it carried out the terms of the contract aforesaid; that the assumption clause therein contained was inserted without his knowledge, consent, approval, or ratification; that he disavows the same; that he relied upon the said McLemore to have said deed prepared in accordance with said contract, and believed it had been so prepared until he learned otherwise after the institution of the suit. Incorporated in the plea is a copy of the said contract, one paragraph of which recites that the said land has no other incumbrances other than the three certain mortgages, and that the land conveyed by defendant to McLemore in exchange for the same was subject only to one certain mortgage. The first mentioned recital concludes with this clause: "Said first party (McLemore) agreeing to adjust all incumbrances by paying to the said second party (defendant) in cash all difference, so that the total incumbrances so assumed by said second party shall amount to $49,478.53." One of the paragraphs of the contract reads as follows: "It is mutually agreed by the parties hereto that the party of the first part (McLemore) will convey to the party of the second part (Sperry) subject to the liens heretofore mentioned, the land above mentioned, and that the party of the second part (Sperry) will convey to the party of the first part (McLemore) subject to the existing incumbrance of the above-described property in Champaign, Illinois." The plea avers that Sperry did so convey the land in Champaign.

Plaintiff contends that the meaning of this contract is that defendant assumed and agreed to pay the mortgages on the Mississippi land. Defendant contends that the contract means that in the exchange of properties each party was to accept a deed subject to existing incumbrances, and that neither party was to assume or to agree to pay the respective incumbrances.

Under the law of Illinois, and in most jurisdictions where a person becomes the purchaser of real estate which is incumbered by mortgage and in the deed it is stipulated and agreed that the purchaser assumes and agrees to pay the mortgage debt, as a part of the consideration, the contract creates a personal liability on the purchaser, who accepts the deed, which may be enforced in an appropriate action. Thompson v. Dearborn, 107 Ill. 87; Dean v. Walker, 107 Ill. 540, 47 Am. Rep. 467. This holding is based upon the doctrine that, where one person enters into a contract with another, for the express benefit of the third person, such third person may maintain an action for the breach. Such a contract is not within the statute of frauds. The conveyance of the land is the consideration for the promise, and the fact that the consideration moves from the grantor is a matter of no moment. In such case the grantee becomes the principal debtor and the mortgagor a surety. Fish v. Glover, 154 Ill. 86, 39 N. E. 1081; Watts v. Killian, 300 Ill. 242, 133 N. E. 295. In such case the surety has a right to pay the debt and bring a suit at law against the principal for the same. Villars v. Palmer, 67 Ill. 204. However, the mere fact of the execution, acknowledgment, and recording of a deed for land by the grantor, with a clause therein that the grantee shall pay the mortgage indebtedness, is not sufficient to create a personal liability on the part of the grantee to pay such indebtedness. To bind him it must be further alleged and proved that he assented to such clause. The fact that the deed was delivered to and accepted by him will ordinarily raise an inference that he has assented to all it contains. However, this inference is a rebuttable presumption, and may be overcome by proof to the contrary. Thompson v. Dearborn, 107 Ill. 93. It follows that the defendant may properly plead that he never assented to the provision sued upon, even though he received the deed and it was recorded.

The difficulty of the situation, however, lies in the terminology of the contract relied upon by defendant. In discussing the questions arising out of that contract, it is necessary to observe certain other features of the liability of the defendant in a suit by the mortgagor which is based upon the doctrine that a third party may sue upon a contract made for his benefit. In Austin v. Seligman (C. C.) 18 F. 519, at page 522, it is said: "According to good sense and upon principle there is no reason why a person may not maintain an action upon a contract, although not a...