Feitlinger v. Heller

• Decision Date: 23 January 1933
• Docket Number: No. 144.,144.
• Citation: 164 A. 6
• Parties: FEITLINGER et al. v. HELLER et al.
• Court: New Jersey Supreme Court

164 A. 6

FEITLINGER et al.

v. HELLER et al.

No. 144.

Court of Errors and Appeals of New Jersey.

Jan. 23, 1933.

Suit by Isadore Feitlinger and another against Morris Heller and others. From an order denying complainants' motion to strike the answer, complainants appeal.

Affirmed.

On appeal from an order of the Court of Chancery advised by Vice Chancellor Backes, who delivered the following opinion:

"The complainants foreclosed their mortgage resulting in a deficiency of $20,000 and upwards, which they seek to recover from the grantee of the mortgagor and two consecutive owners, each of whom, in turn, assumed and agreed to pay the mortgage debt. The mortgage was given by David S. Form an to secure an $18,000 bond, given by him and Harry Forman. Forman conveyed the mortgaged premises to the defendant, Shapiro, who conveyed to the defendant, New Gretna Realty Company, which conveyed to the defendant, Towne Holding Company. An assumption clause is in each conveyance. After the foreclosure, the complainants for $5,000, 'remised and released and forever discharged' the Formans 'from all obligation and liability and covenants upon their part contained in the aforesaid bond and mortgage and/or by reason of the deficiency established through and by the aforesaid foreclosure proceedings.' The defendants, Shapiro and New Gretna Realty Company pleaded the release, and the motion is to strike the answer as insufficient and as untrue. The answer is informal, but there is no criticism on that score.

"The complainants take the position that the assumptions by the defendants, to pay the mortgage debt, were contracts made for the benefit of the complainants, and hence the release of the bondsmen did not discharge the defendants of their distinct obligations; and that section 28 of the Practice Act (3 Comp. St. 1010, p. 4059) modifies the common-law rule and permits a suit on such a contract under seal to be brought by the party for whose benefit it is made. All that need be said in answer is that if the proposition be sound, the complainants have a perfect remedy at law, and this court is without jurisdiction. How the law courts may treat the undertakings is not our concern. The complainants having come here seeking equitable relief and the bill must be so regarded; it is so framed.

"Equity regards a grantee's assumption of a mortgage debt as a covenant to indemnify his grantor; as between themselves the grantee is held to be the debtor and the mortgagor the surety; the covenant inures to the mortgagee on the equitable principle that the surety's security is appropriable to the payment of the debt; the liability of the grantee is enforced in equity to avoid circuity of actions, if the grantor be not personally liable at the time of assumption, the covenant is a nullity; if his liability be released and nothing remains to be indemnified against, the covenant is exhausted. These equitable doctrines are so familiar that w...