Howell v. Baker

• Decision Date: 14 July 1930
• Citation: 151 A. 117
• Parties: HOWELL v. BAKER et al.
• Court: New Jersey Court of Chancery

151 A. 117

HOWELL

v. BAKER et al.

Court of Chancery of New Jersey.

July 14, 1930.

Syllabus by the Court.

The Court of Chancery has jurisdiction to settle in a single suit the diverse rights and liabilities of several successive grantees of mortgaged premises, where each successive deed contained a covenant of assumption and payment of the mortgage. The primary object of the exercise of such jurisdiction is to avoid circuity of action.

Syllabus by the Court.

A court of equity is the only forum in which such rights and liabilities can be adjudicated in a single suit.

Syllabus by the Court.

A deed containing a covenant for assumption and payment of a mortgage by the grantee is in effect a mutual deed of the parties thereto, and by its acceptance the grantee is bound by the covenant.

Syllabus by the Court.

Where such a covenant is inserted in a deed by mutual mistake, a court of equity may relieve a grantee of the effect thereof by reforming the deed; but, to warrant such reformation in the absence of fraud, the covenant must have" resulted from mutual mistake.

Syllabus by the Court.

In granting relief on the ground of mistake, there is a distinction between the rescission and the reformation of a written instrument. A court of equity may rescind a written contract for a mistake which is unilateral; that is, a mistake on the part of one of the parties only. But there can be no rescission unless the parties can be restored to their original positions.

Syllabus by the Court.

After foreclosure of a mortgage, the payment of which has been assumed by a grantee by the acceptance of a deed containing a covenant of assumption, it is too late to rescind the contract on the ground of a unilateral mistake resulting in the insertion of the covenant in the deed.

Syllabus by the Court.

An intermediate grantee of mortgaged premises who has assumed the payment of the mortgage is a proper but not a necessary party to a suit to foreclose that mortgage.

Syllabus by the Court.

A grantee of lands who covenants to assume and pay a mortgage thereon is, in equity, as between himself and his grantor, the principal debtor, and the liability of the grantor, as between the parties, is that of a surety. Syllabus by the Court.

The omission of such an intermediate grantee as a party defendant in a suit to foreclose the mortgage, the payment of which he has assumed, does not preclude a recovery against him by the mortgagee in a subsequent suit for deficiency arising from a foreclosure sale of the mortgaged premises. This right of the mortgagee extends also to and against any subsequent grantee who has assumed the mortgage.

Syllabus by the Court.

As among several grantee defendants in a suit by the mortgagee to recover for a deficiency on foreclosure, each of whom has successively assumed the payment of a mortgage, the last grantee is the principal debtor, and the prior grantees are sureties only.

Syllabus by the Court.

A mortgagor, or a grantor of mortgaged premises who has assumed the payment of the mortgage, who pays a judgment for deficiency arising on foreclosure, has a right of action over against all subsequent grantees who have assumed such payment by the acceptance of a deed containing a covenant for such assumption.

Syllabus by the Court.

In a suit by such a mortgagor or grantee against several such subsequent grantees to fix and determine the respective rights and liabilities of the several parties for such deficiency judgment, the liability will be fixed and the defendants decreed to pay such deficiency in the inverse order of their respective titles.

Syllabus by the Court.

Where the allowance of a counsel fee by a court of a foreign jurisdiction rests in the discretion of that court, the courts of this state have no right to modify or set aside that allowance, even though, without such allowance, a deficiency judgment on foreclosure, the payment of which by a citizen of this state is sought to be enforced in our courts, would not have occurred.

Suit by Benjamin F. Howell against John L. Baker and others.

Decree in accordance with opinion.

McDermott, Finegold & Hartshorne, of Freehold (Holmes V. M. Dennis, of New Brunswick, of counsel), for complainant.

Clifford I. Voorhees, of New Brunswick, for defendants John L. Baker and Louise M. Baker.

BERRY, Vice Chancellor.

This bill seeks to restrain the prosecution of a suit at law brought by the defendant John L. Baker against the complainant to recover the sum of $2,253.35, representing a deficiency judgment entered against Baker in a foreclosure suit in Florida and for which he alleges the complainant is liable; and also to fix and determine the rights and liabilities of the complainant and of all the parties defendant to this suit with respect to such deficiency judgment. This controversy arises out of the following state of facts:

In January, 1925, the defendant John L. Baker with two associates purchased from Joseph Jackson a lot of land in the city of Miami, Fla., and as a part of the purchase price executed and delivered to said Jackson a purchase-money mortgage in the sum of $24,000. In the latter part of February, 1925, the complainant purchased this property from Baker and his associates, and the deed of conveyance to the complainant contained a clause providing for the assumption and payment of the $24,000 mortgage by the grantee. The deed was dated February 27, 1925, but settlement was not made until on or about March 12, 1925, and the deed was subsequently, on March 16, 1925, recorded through the office of Tatum Bros., who acted as agents for Baker and his associates in the deal. On March 18, 1925, the complainant resold the property to the defendant J. E. Lind, who in turn sold a half interest to the defendant Theckla Koops Lind, and the Linds in turn sold the premises to the defendant Samuel B. Finkelstein. Each deed of conveyance succeeding that to the complainant contained the same provision for assumption and payment of the mortgage by the grantee. In March, 1926, Jackson, the mortgagee, foreclosed his mortgage, and all grantees of the premises from Baker and his associates to Finkelstein, with the exception of the complainant, were made parties defendant to that action. In fact, the complainant and Mrs. Howell were originally named as defendants, but were not brought into court, and the suit was subsequently discontinued as to them. The foreclosure suit resulted in a decree and the sale of the premises for $27,000. The deficiency judgment resulted from the allowance of a $2,500 counsel fee and costs to the attorney of the complainant in the foreclosure action. This judgment was entered against the Baker defendants alone, and was subsequently paid by Baker. The complainant had no notice of the foreclosure proceedings or of the deficiency judgment until October, 1927, when Baker's attorney communicated with him and demanded payment by the complainant on the ground of his covenant of assumption in his deed. Payment was refused, and in October, 1928, the suit at law, restraint of which is here sought, was begun by Baker against the complainant. Thereupon this bill was filed against Baker, and all subsequent grantees of the property were made defendants, and an adjudication of the rights of the several parties with respect to said deficiency judgment is sought.

That this court has jurisdiction to settle all controversies between the parties arising from the state of facts above recited, see Holland Reform School Society v. De Eazier, 85 N. J. Eq. 497, 97 A. 253. None of the defendants, with the exception of the Bakers, although duly served, have answered the bill. The defendants Baker have answered and filed a counterclaim seeking a decree against the complainant directing the payment of the deficiency judgment, with interest and costs.

The complainant denies liability on the ground that he never accepted the deed of conveyance containing the assumption clause, that it was not the intention of the parties that he should assume and agree to pay that mortgage, and that the assumption clause was inserted in the deed without his knowledge or consent.

It is unnecessary to review in detail the evidence submitted in this cause, but I think it clearly shows that, so far as the complainant was concerned, there was never any Intention on his part to assume or become personally liable...