McDonald v. Finseth

Citation155 N.W. 863,32 N.D. 400
Decision Date14 December 1915
CourtUnited States State Supreme Court of North Dakota

Rehearing denied January 8, 1916.

Appeal from the District Court of Burleigh County, Nuessle, J Action to foreclose a mortgage and for a deficiency decree. Judgment for plaintiff. Defendant appeals.

Affirmed.

S. E. Ellsworth and F. H. Register, for appellant.

"An express exception contained only in the covenant against encumbrances, in a deed to real property, of a mortgage upon the land, in the absence of qualifying words making the grant of the deed subject to such encumbrance, or making the restriction upon the covenant against encumbrance apply also to the covenant of warranty, or generally to all the covenants of the deed, does not except such mortgage from the covenant of warranty." Smith v. Gaub, 19 N.D. 337, 123 N.W. 827; Fry v. Ausman, 29 S.D. 30, 39 L.R.A.(N.S.) 150, 135 N.W. 708, Ann. Cas. 1914C, 842.

"A contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it." Comp. Laws 1913, § 5841; King v. Whitely, 10 Paige, 465; Cashman v. Henry, 55 How. Pr. 234; Garnsey v. Rogers, 47 N.Y. 233, 7 Am. Rep. 440; Wilbur v. Warren, 104 N.Y. 192, 10 N.E. 263; Lorillard v. Clyde, 122 N.Y. 498, 10 L.R.A. 113, 25 N.E. 917; Wager v. Link, 134 N.Y. 122, 31 N.E. 213; Durnherr v. Rau, 135 N.Y. 219, 32 N.E. 49; King v. Sullivan, 31 A.D. 549, 52 N.Y.S. 130; Trotter v. Hughes, 12 N.Y. 74, 62 Am. Dec. 137; Pardee v. Treat, 82 N.Y. 385; Wager v. Link, 150 N.Y. 549, 44 N.E. 1103; Vrooman v. Turner, 69 N.Y. 280, 25 Am. Rep. 195.

"A party suing must show that a contract to which he is not a party has been made for his benefit, in order to maintain his action." Parlin v. Hall, 2 N.D. 473, 52 N.W. 405; Chung Kee v. Davidson, 73 Cal. 522, 15 P. 100; Biddel v. Brizzolara, 64 Cal. 354, 30 P. 609; Fry v. Ausman, 29 S.D. 30, 39 L.R.A.(N.S.) 150, 135 N.W. 710, Ann. Cas. 1914C, 842; Vrooman v. Turner, 69 N.Y. 284, 25 Am. Rep. 195; King v. Whitely, 10 Paige, 465; Brown v. Stillman, 43 Minn. 126, 45 N.W. 2; Nelson v. Rogers, 47 Minn. 103, 49 N.W. 526; Jefferson v. Asch, 53 Minn. 446, 25 L.R.A. 257, 39 Am. St. Rep. 618, 55 N.W. 605; Clement v. Willett, 105 Minn. 267, 17 L.R.A.(N.S.) 1094, 127 Am. St. Rep. 562, 117 N.W. 491, 15 Ann. Cas. 1053; Kramer v. Gardner, 104 Minn. 370, 22 L.R.A.(N.S.) 492, 116 N.W. 925; Wood v. Johnson, 117 Minn. 267, 135 N.W. 747.

The liability of a grantee who assumes the payment of a mortgage depends upon the personal liability of his immediate grantor. If the grantor is not liable, the mortgagee cannot claim any deficiency from such grantee. Morris v. Mix, 4 Kan.App. 654, 46 P. 58; New England Trust Co. v. Nash, 5 Kan.App. 739, 46 P. 987; Skinner v. Mitchell, 5 Kan.App. 366, 48 P. 450; Ward v. De Oca, 120 Cal. 102, 52 P. 130; Biddel v. Brizzolara, 64 Cal. 354, 30 P. 609; Y. M. C. A. v. Croft, 34 Ore. 106, 75 Am. St. Rep. 568, 55 P. 439; Eakin v. Schultz, 61 N.J.Eq. 156, 47 A. 274; Norwood v. De Hart, 30 N.J.Eq. 412; Wise v. Fuller, 29 N.J.Eq. 257; Crone v. Stinde, 156 Mo. 262, 55 S.W. 863, 56 S.W. 907; Goodenough v. Labrie, 206 Mass. 599, 138 Am. St. Rep. 411, 92 N.E. 807; Willard v. Wood, 135 U.S. 309, 34 L. ed. 210, 10 S.Ct. 831; 27 Cyc. 1355, 1356; Wiltsie, Mortg. Foreclosure, § 227; 9 Enc. Pl. & Pr. 469.

M. C. Freerks, for respondent.

"The contract by which a grantee assumes the payment of existing encumbrances is separate from the conveyance. It may be, and often is, embodied in the deed; but it may be by separate writing, or may rest entirely in parol." Moore v. Booker, 4 N.D. 549, 62 N.W. 607; Wright v. Briggs, 99 Ind. 563; Merrman v. Moore, 90 Pa. 78; Lamb v. Tucker, 42 Iowa 118; Winans v. Wilkie, 41 Mich. 264, 1 N.W. 1049; Wilson v. King, 23 N.J.Eq. 150; Johnson v. Harder, 45 Iowa 677; Ross v. Kennison, 38 Iowa 396; Thompson v. Bertram, 14 Iowa 476; Vrooman v. Turner, 69 N.Y. 280, 25 Am. Rep. 195; Douglass v. Wells, 18 Hun, 88; Crowell v. Hospital of St. Barnabas, 27 N.J.Eq. 650; Conover v. Brown, 29 N.J.Eq. 510; Jones, Mortg. 758, cases cited in notes; McArthur v. Dryden, 6 N.D. 438, 71 N.W. 125; Williams v. Naftzger, 103 Cal. 438, 37 P. 411; Alvord v. Spring Valley Gold Co. 106 Cal. 547, 40 P. 27; Laderoute v. Chale, 9 N.D. 336, 83 N.W. 218; Watts v. Welman, 2 N.H. 458; Allen v. Lee, 1 Ind. 58, 48 Am. Dec. 352; Medler v. Hiatt, 8 Ind. 171; Pitman v. Conner, 27 Ind. 337; Fitzer v. Fitzer, 29 Ind. 468; Blood v. Wilkins, 43 Iowa 567; Wachendorf v. Lancaster, 66 Iowa 458, 23 N.W. 922; Becker v. Knudson, 86 Wis. 14, 56 N.W. 192; Burbank v. Gould, 15 Me. 118; Laudman v. Ingram, 49 Mo. 212; Preble v. Baldwin, 6 Cush. 549; Brackett v. Evans, 1 Cush. 79; Sidders v. Riley, 22 Ill. 110; Corbett v. Wrenn, 25 Ore. 305, 35 P. 658.

The liability of a grantee who assumes prior encumbrances depends upon his contract, rather than upon the liability of his grantor. Harberg v. Arnold, 78 Mo.App. 237; Heim v. Vogel, 69 Mo. 529; Birke v. Abbott, 103 Ind. 1, 53 Am. Rep. 474, 1 N.E. 485; Hare v. Murphy, 45 Neb. 809, 29 L.R.A. 851, 64 N.W. 211; Little v. Thoman, 4 Ohio Dec. Reprint, 513; McKay v. Ward, 20 Utah 149, 46 L.R.A. 623, 57 P. 1024; Cobb v. Fishel, 15 Colo.App. 384, 62 P. 625; Merriman v. Moore, 90 Pa. 78; Enos v. Sanger, 96 Wis. 150, 37 L.R.A. 862, 65 Am. St. Rep. 38, 70 N.W. 1069; Dean v. Walker, 107 Ill. 540, 47 Am. Rep. 467; Bay v. Williams, 112 Ill. 91, 54 Am. Rep. 209, 1 N.E. 340; Hare v. Murphy, 45 Neb. 809, 29 L.R.A. 851, 64 N.W. 211; Shuler v. Hardin, 25 Ind. 386; Atherton v. Toney, 43 Ind. 211; Maher v. Lanfrom, 86 Ill. 513; Freeman v. Auld, 44 N.Y. 50; Hardin v. Hyde, 40 Barb. 435; Green v. Turner, 38 Iowa 112; Greither v. Alexander, 15 Iowa 470.

Such grantee so assuming or taking subject to a mortgage cannot be heard to dispute the amount and validity of the mortgage; nor can he set up duress, illegality of consideration, or coverture of one of the mortgagees. Foy v. Armstrong, 113 Iowa 629, 85 N.W. 753; Willis v. Terry, 15 Ky. L. Rep. 753, 24 S.W. 621; Johnson v. Thompson, 129 Mass. 398; McNaughton v. Burke, 63 Neb. 704, 89 N.W. 274; Arlington Mill & Elevator Co. v. Yates, 57 Neb. 286, 77 N.W. 677; Pass v. Lynch, 117 N.C. 453, 23 S.E. 357; Mott v. Maris, Tex. Civ. App. , 29 S.W. 825; Washington, O. & W. R. Co. v. Cazenove, 83 Va. 744, 3 S.E. 433; First Nat. Bank v. Honeyman, 6 Dak. 275, 42 N.W. 771; Gage v. Cameron, 212 Ill. 146, 72 N.E. 204; Jehle v. Brooks, 112 Mich. 131, 70 N.W. 440; Strong v. Converse, 8 Allen, 557, 85 Am. Dec. 732; Drury v. Tremont Improv. Co. 13 Allen, 168; Weed Sewing Mach. Co. v. Emerson, 115 Mass. 554; Schley v. Fryer, 110 N.Y. 71, 2 N.E. 280; Corning v. Burton, 102 Mich. 86, 62 N.W. 1040; Hendricks v. Brooks, 80 Kan. 1, 133 Am. St. Rep. 186, 101 P. 622; Frick Co. v. Hoff, 26 S.D. 360, 128 N.W. 495; Kimm v. Wolters, 28 S.D. 255, 133 N.W. 277; Peasley v. McFadden, 68 Cal. 611, 10 P. 179.

BRUCE, J. EDWARD T. BURKE, concurring in the affirmance.

OPINION

Statement of facts by

BRUCE J.

This is an action for the foreclosure of a mortgage and for a deficiency decree, and comes before us for a trial de novo after judgment being rendered in the trial court in favor of the plaintiff. The question at issue is whether the defendant M. B. Finseth assumed the mortgage, and, even if he did, whether the present plaintiff, Walter A. McDonald, can hold him personally liable for the deficiency decreed against him. The mortgage which the plaintiff seeks to foreclose was executed on January 31, 1910, by one Charles H. Woodbury and wife and was given to secure a note of the face value of $ 2,000. It appears, however, that the amount which was actually paid to the Woodburys was only $ 1,400, the explanation for this transaction being that at the time of the loan McDonald did not have the full $ 2,000, and paid the Woodburys only $ 1,400; that shortly thereafter and on March 4, 1911, and before the payment of the balance, the Woodburys transferred the property to one Ernest Engel and that it was therefore agreed that McDonald should collect the whole $ 2,000, and after he had collected the same should pay the $ 600 to them, the plaintiff testifying that he had executed an obligation which bound him to pay this balance and to collect the amount. This deed from the Woodburys to Ernest Engel was for a recited consideration of $ 10,525. There was in it no mention of the plaintiff's mortgage except a covenant that "the premises are free from all encumbrances excepting a mortgage of $ 2,000 to Walter A. McDonald." There was no specific agreement to pay the mortgage on the part of the grantee, and there were the usual covenants of title and of quiet possession. No parol evidence was introduced on the trial to show any oral or collateral agreement to pay this mortgage, or to show that its payment constituted part of the purchase price. Later, and on March 27, 1911, Engel and his wife executed a deed of the premises for the alleged consideration of $ 10,500 to C. H. Langley and E. J. Langley. This deed contained the provision that "the premises are free from all encumbrances except a mortgage for $ 2,000 which second parties (the Langleys) assume and agree to pay with accrued interest from February 1, 1911." Later and on June 1, 1911, the Langleys executed a warranty deed of the premises for the recited consideration of $ 10,500 to the defendant and appellant, M B. Finseth, and to H. A. Hallum. This deed contained in the covenant against encumbrances the following clause: "that the premises are free from all encumbrances except a mortgage for $ 2,000 which second? parties (Finseth and Hallum) agree to pay with accrued interest from February 1, 1911." It appears that this...

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