Lloyd v. Lowe

• Decision Date: 04 June 1917
• Docket Number: 8839.
• Citation: 63 Colo. 288,165 P. 609
• Parties: LLOYD et al. v. LOWE.
• Court: Colorado Supreme Court

165 P. 609

63 Colo. 288

LLOYD et al. v. LOWE.

No. 8839.

Supreme Court of Colorado

June 4, 1917

Error to District Court, Mesa County; Charles Cavender, Judge.

Action by W. H. Lloyd and another against E. E. Lowe. There was a judgment for defendant, and plaintiffs bring error. Affirmed.

McMullin & Sternberg, of Grand Junction, for plaintiffs in error.

J. E Simonson and W. G. Simonson, both of Denver, for defendant in error.

ALLEN J.

This was an action upon a promissory note brought by plaintiffs in error, plaintiffs below, as the owners, holders, and payees of the note. The makers of the note, to secure the same, had given a trust deed upon certain land then owned by them. Subsequently they conveyed the land to the defendant in error, defendant below, by a deed which contained, after the usual covenants of title and against incumbrances, the following assumption clause:

'Except * * * a certain trust deed to the amount of $1,000, which party of the second part assumes and agrees to pay.'

This action was brought to enforce against the defendant below a personal liability upon the note on account of the foregoing assumption clause. The trial court gave judgment for the defendant.

The trial court found and the evidence established, that the assumption clause was inserted in the deed contrary to the agreement between defendant and his grantors, by mistake of the scrivener, and that defendant was not present when the deed was prepared. The evidence further discloses, and it is not disputed, that the defendant purchased the land upon a contract in writing between himself and his grantors. The contract, introduced in evidence, does not contain any agreement with reference to the assumption of the trust deed by the purchaser, the defendant, but the trust deed is not mentioned in the written agreement otherwise than in and by a recital therein that the land is 'subject to a mortgage of $1,000 now of record.' The undisputed evidence was that defendant never assumed nor agreed to pay the trust deed nor the note secured thereby, and that he first saw the clause in the deed, in which it was recited that he assumed and agreed to pay the trust deed, after this action was commenced.

The fact that the defendant agreed to purchase land 'subject to a mortgage' raises no presumption that there was an agreement to assume and pay the incumbrance.

'An agreement merely to take land, subject to a specified incumbrance, is not an agreement to assume and pay the incumbrance. The grantee of an equity of redemption, without words in the grant importing in some form that he assumes the payment of a mortgage, does not bind himself personally to pay the debt. There must be words importing that he will pay the debt, to make him personally liable.' Elliott v Sackett, 108 U.S. 132, 2 S.Ct. 375, 27 L.Ed. 678.

In this connection we may add, in the language of the opinion in the case of Demaris v. Rodgers, 110 Minn. 49, 124 N.W. 457, that:

'There can be no question that if defendant accepted the deed containing the assumption clause with knowledge of its presence, and without protest or objection, it would be binding upon him, even though he had not previously agreed to pay the outstanding debt.'

The defendant in this case denies that he accepted the deed at all. But, assuming that the evidence clearly shows that he did accept the deed, it also shows that he accepted it without knowledge of the assumption clause, and therefore cannot be bound under the rule stated in Demaris v. Rodgers, supra. The fact that he did not read the deed had no bearing either upon his liability or his defense. It does not charge him with negligence. In Elliott v. Sackett, supra, the court said:

'Elliott had a right to presume that the deed would conform to the written agreement, and was not guilty of such negligence or laches, in not observing the provisions of the deed, as should preclude him from relief.'

Under the facts of this case, as thus far noted, the defendant is relieved from liability under the general rule thus stated in section 1075, Devlin on Deeds (2d Ed.):

'If the scrivener by mistake inserts a clause in the deed binding the grantee to assume a mortgage, where neither of the parties intended to palce this liability upon the grantee, and did not know of the insertion of the clause, the mortgagee cannot avail himself of it.'

The rule above stated has been frequently followed and applied. Had the evidence in this case clearly and indisputably disclosed that the defendant had no knowledge or notice of the assumption clause in his deed until after this action was commenced, he would be relieved of liability, and the judgment in his favor would have been unmistakably correct. Stead v. Sampson (Iowa) 155 N.W. 978; Haskins v. Young, 89 Conn. 66, 92 A. 877; Bradshaw v. Provident Trust Co., 81 Or. 55, 158 P. 275; Parker v. Jenks, 36 N.J.Eq. 398; Stevens' Institute v. Sheridan, 30 N.J.Eq. 23.

There was evidence in the case, however, that the defendant three months before suit was brought was apprised of facts from which he might be charged with notice of the assumption clause, and that he did nothing to repudiate or disaffirm the contract imposed upon him by the assumption clause in the deed. Upon the proposition that it is the duty of a grantee to disaffirm the contract promptly, and that he is liable to the mortgagee under these circumstances if he does not disaffirm the deed or contract, the plaintiffs in error cite the case of Sutter v. Rose, 64 Ill.App. 263, affirmed in 169 Ill. 66, 48 N.E. 411. It may be conceded that the case cited supports their contention, but it appears to us that a better rule is followed in a later and very recent case, that of Johnson v. Maier (Mo. App.) 187 S.W. 143. The syllabus, in accord with the opinion, contains the following paragraph:

'Where plaintiffs, who held a note secured by a deed of trust on land which was afterwards conveyed to defendant, were not misled because the deed contained a fraudulent covenant obligating defendant to pay off the deed of trust, such covenant is not, being without consideration, binding on defendant, though he retained the deed after learning of its fraudulent insertion and subsequently conveyed the land.'

The court in the opinion there said:

'The argument in behalf of plaintiffs is that, if the defendants conveyed the land after they discovered the clause was therein, such...