McKay v. Ward

• Decision Date: 30 June 1899
• Citation: 57 P. 1024,20 Utah 149
• Court: Utah Supreme Court
• Parties: ISAAC McKAY, RESPONDENT v. WILLIAM H. WARD, ET AL., APPELLANTS

57 P. 1024

20 Utah 149

ISAAC McKAY, RESPONDENT v. WILLIAM H. WARD, ET AL., APPELLANTS

Supreme Court of Utah

June 30, 1899

Appeal from the Second District Court, Weber county, Hon. H. H Rolapp, Judge.

Action to foreclose a mortgage and for a deficiency judgment against B. who purchased the mortgaged property subject to the mortgage. From a judgment for plaintiff, B. appealed.

Affirmed.

Thomas Maloney, Esq., for appellant Belnap.

"The assumption of the payment of a mortgage by a grantee of the mortgaged premises does not bind him for a deficiency if his immediate grantor was not liable to the holder of the mortgage. King v. Sullivan, 31 A.D. [N.Y.] 549; 52 N.Y.S. 130.

"The liability of a grantee who assumes payment of a mortgage on land conveyed to him depends on the personal liability of his immediate grantor, so that, if the latter is not liable on the mortgage, he is not liable for any deficiency after foreclosure thereof." Morris v. Mix, 46 P. 58 and numerous authorities cited; New England Trust Co. v Nash, 46 P. 987; Norwood v. DeHart, 30 N.J. Eq. 412.

This principle is fully stated in Mr. Desty's elaborate note to the case of King v. Whitely, 10 Paige, 465 (4 Lawy. Ed. N.Y. Ch'y, p. 1052) and many leading authorities annotated.

Messrs. Maginnis & Halvorson, for respondent.

Even if Ward never knew of the existence of the contract of extension, something not warranted by the testimony, the only effect of the extension would be to release Ward from personal liability; the land would still be holden. McDonald took the land subject to the mortgage even if he did not assume it, and therefore, he could not question its validity, nor show that the debt was without consideration, or that the mortgage was defectively executed. Jones on Mort. sec. 744. Water Works Co. v. F. L. & T. Co., 73 F. 956; 15 Am. & Eng. Ency. 836-837.

The extension of time of payment of a mortgage debt does not impair the security as against a subsequent incumbrancer. 15 Am. & Eng. Ency. 872; Palmer v. Butler, 36 Iowa 581.

But the fact that the contract of assumption does not appear in McDonald's deed does not show he did not assume it. The assumption need not be contained in the deed. "It may be contained in the conveyance, or it may may be by a separate writing, or it may be by parol." Moore v. Booker, 62 N.W. 607 (N. D.); Jones on Mort. sec. 750; 15 Am. & Eng. Ency. 834, 836; Hyn v. Myreck, 62 N.W. 1125; Hale v. Murphy, 64 N.W. 211; Hopkins v. Warner, 41 P. 868.

When Belnap on the 12th day of April, 1892, accepted the conveyance from McDonald and assumed and agreed to pay the mortgage debt as part of the purchase price, he was estopped from disputing its validity, or that the debt was without consideration, or that there was any reason why he should escape the liability he has assumed, and the debt became his debt, due and payable according to the contract of the original parties.

Cases supra: Carnahan v. Lloyd 46 p. 324; Bruman v. Dowse, 12 Cush. 227; Furnas v. Durgin, 119 Mass. 500; Keasly v. Hopkin, 36 S.W. 506; Jones on Mort. 748.

MINER, J. BASKIN, J., concurs. BARTCH, C. J., dissenting.

OPINION

MINER, J.

This was an action to foreclose a mortgage given by defendant Ward and wife, and for a deficiency judgment against Belnap, who took a conveyance of the property, subject to the mortgage, and assumed and agreed to pay it. A deficiency judgment was given against Belnap from which judgment he appeals.

The court found, among other things, that Ward and wife, while owning the premises on the 13th day of August, 1890, gave the notes in question to the plaintiff, which notes were secured by a mortgage on the property in question, due one year after date; that on November 11, 1893, Ward sold and conveyed the mortgaged property by warranty deed to one McDonald, subject to said mortgage; that on November 12, 1891, plaintiff extended the payment of the notes to November 13, 1893, at the request of McDonald, but as the agent for, and upon consideration paid by defendant Ward; that McDonald was also interested in obtaining said extension. The record also shows that McDonald applied to the plaintiff for the extension on behalf of Ward; that McDonald borrowed the money from plaintiff for Ward (and that plaintiff understood that McDonald was the agent all the way through for Ward and Belnap); that said extension was in writing and recorded in the office of the recorder November 12, 1891; that on April 12, 1892, defendant Belnap purchased the property from McDonald and obtained a warranty deed therefor subject to said mortgage, and by written promise contained in the deed, agreed as follows:

"This conveys the premises on which Joseph Belnap now lives, and is given subject to a certain mortgage given to secure two promissory notes, one for one hundred dollars, and one for six hundred dollars, both drawing 12 per cent. interest per annum, made and executed by the aforesaid William H. Ward, and payable to Isaac McKay of Huntsville, which notes or incumbrance, the aforesaid Joseph Belnap by accepting this deed, assumes and agrees to pay."

The deed was accepted and recorded by Belnap. In April, 1894, Belnap had actual notice of said extension of time for payment and thereafter made payment on said mortgage, and paid both principal and interest on a note for $ 100, assumed at the same time and in the same deed, and secured by said mortgage; that on November 1, 1896, Belnap acknowledged said mortgage in writing and arranged to pay the same. The testimony was conflicting, but there was evidence tending to sustain the facts found by the court as above stated:

Upon this subject the transcript shows that Isaac McKay testified that his son, at his request, wrote to defendant Belnap in August, 1896, that he desired the mortgage paid; that soon thereafter he received a letter from Mr. Belnap, written on the back of the letter sent him, and signed by Belnap, wherein he wrote "that he would be back the first of November and that he would pay me." The original letter was burned by his wife, with some other papers, sometime before, through mistake.

Mrs. McKay testified that she saw the letter when it was written, and saw the reply written on the back of the letter and that Belnap wrote and signed the reply; that in the letter he said he would be in about the first of November, and see Mr. McKay and pay him.

Isaac W. McKay, son of the plaintiff, testified to the writing of the letter about October 1896, to Belnap for his father, asking payment of the mortgage; that Belnap wrote on the back of the letter and returned it saying that he would be in some time in November and settle with my father.

Joseph Belnap admitted writing a letter, but said he wrote that he would be in about the first of November and see Mr. McKay about the Ward note, and denied writing that he would pay it. Belnap further testified that he was not indebted to McKay on any other account than these two notes--the $ 100 note and the $ 600 note, and that he owed McKay no other than that secured to be paid by the mortgage; that he paid the $ 100 note and the interest on the $ 600 note. Belnap also relied upon a letter written to him by McKay wherein his statement is claimed to be corroborated.

The important question is as to the liability of Belnap, McDonald's grantee, for the deficiency judgment.

Appellant claims that as Ward gave the notes and mortgage to the plaintiff, and afterwards conveyed the mortgaged premises to McDonald, subject to the mortgage, but without assuming it in writing, and the fact that Belnap purchased the mortgaged premises from McDonald, and assumed and agreed to pay the mortgage, would not make him liable to pay the mortgage or upon any deficiency judgment obtained thereon, because McDonald was not personally liable to pay it, and no privity existed between the parties. The case therefore presents the question whether the obligation assumed by one who purchases the mortgaged premises, and agrees for a consideration to pay the mortgage debt, shall be held to be available to the mortgagee or his assignee in all cases, or only in cases where the purchaser's immediate grantor was personally liable for the payment of the debt.

There is much conflict in the authorities upon the subject. New York, New Jersey, and several other states hold that a grantee who has assumed to pay the mortgage as a part consideration of his purchase is not liable for a deficiency arising upon a foreclosure and sale in case his grantor was not personally liable for the payment of it; while Pennsylvania, Illinois, Nebraska, Wisconsin, Iowa, Ohio Missouri and Utah and possibly some other states, hold that a purchaser is liable on his assumption and agreement to pay the mortgage, although the agreement to assume and pay it be in a deed from a grantor who was under no personal liability to pay the mortgage. In these states it is held that the price of the land is a sufficient consideration for the agreement to pay the mortgage debt, and that where the amount of the mortgage is withheld for the purpose of satisfying the obligation, a vendor may rightfully direct how, when, and to whom the purchase price of property he sells may be paid; that he may rightfully receive it to himself, donate it to public charity, or make such other disposition of it as may best meet his views; that where a promise or contract has been made between two parties for the benefit of a third, action will lie thereon at the instance of the third party to be benefited, although the promise or contract was made without the knowledge of the third party, and without any consideration moving direct from him; that if the vendee agrees to pay in accordance with such directions of the vendor, he cannot set up...