McLeod v. Building & Loan Ass'n of Jackson

• Decision Date: 20 November 1933
• Docket Number: 30798
• Citation: 151 So. 151,168 Miss. 457
• Parties: MCLEOD et al. v. BUILDING & LOAN ASS'N OF JACKSON
• Court: Mississippi Supreme Court

151 So. 151

168 Miss. 457

MCLEOD et al. v. BUILDING & LOAN ASS'N OF JACKSON

No. 30798

Supreme Court of Mississippi

November 20, 1933

Division A

APPEAL from circuit court of Forrest county HON. W. J. PACK, Judge.

Suit by the Building & Loan Association of Jackson against R. B McLeod, Hagerty, and others. From an adverse judgment, the named defendants appeal. Affirmed.

Affirmed.

Hannah & Simrall, of Hattiesburg, for appellants.

The rights of the Building & Loan Association can never rise any higher than the rights of Weston, and any defense that Hagerty and McLeod can make as against Weston, they can make as against the Building & Loan Association.

American Institute's Restatement of the Law of Contracts, pars. 5 and 140.

The Building & Loan Association cannot recover against Hagerty and McLeod, because the record does not show that it ever accepted Hagerty and McLeod as its debtors, and gave them notice of said acceptance.

Gilliam v. McLemore, 106 So. 99, 141 Miss. 252.

We contend that the trade between Weston and Hagerty and McLeod was not for the benefit of the Building & Loan Association but solely for the benefit of Weston and Hagerty and McLeod, and the Building & Loan Association could not claim the benefit of said contract.

Meech v. Ensign, 49 Conn. 191, 44 Am. Rep. 225.

Sullivan & Sullivan, of Hattiesburg, for appellee.

A purchaser who has assumed a mortgage is not entitled when sued upon his covenant by the holder of the mortgage to set up a counterclaim for debts due him by the mortgagor.

2 Jones on Mortgages, p. 289, sec. 930; Boyle v. Youmans, 9 N.Y.S. 14; 29 N.Y.S. 888.

To make the grantee personally liable to the mortgagee it is necessary that the former's assumption of mortgage should have been accepted or ratified by the latter. But such acceptance need not be formal or express, and it is sufficiently manifested by bringing a suit against the grantee or on a proceeding to foreclose in which a personal judgment against him is demanded or by accepting payment of interest and of principal from the grantee on account of the mortgage debt.

Gilliam v. McLemore, 106 So. 99, 141 Miss. 252; 41 C. J., p. 727, par. 772.

Accepting payments made by the purchaser on the mortgage debt may constitute an acceptance of the purchaser as the debtor.

2 Jones on Mortgages, p. 267; Smith v. Kibbe et al., 5 A. L. R., 483.

A foreclosure suit, in which the mortgagee seeks to recover judgment for any deficiency against an intermediate grantee who assumed the mortgage, sufficiently shows that plaintiff adopted and relied on the covenant of such exemption.

New York Life Insurance Company v. Aitkin, 26. N.E. 732.

We think that, clearly there can be no question of the acceptance and notice in the case at bar.

A grantee who as part of the consideration for a deed to him assumes the payment of the grantor's debt to his vendor becomes personally liable to the vendor, who may recover the amount of the debt.

Barnes v. Jones, 71. So. 573; Dodge v. Cutrer, 56 So. 455; Hodges v. Southern Building & Loan Association, 148 So. 223.

Argued orally by T. C. Hannah, for appellant, and by W. C. Sullivan, for appellee.

OPINION

Smith, C. J.

This is an appeal from a judgment for the appellee for the balance due it on a promissory note, secured by a deed of trust which was foreclosed and the proceeds of the trustee's sale applied to the payment of the note. The case was tried by the court without a jury.

The essential facts are, in substance, as follows: On June 5, 1928, Coburn L. Weston executed to the appellee a deed of trust on a house and lot owned by him in Hattiesburg, to secure an indebtedness of three thousand dollars, payable in monthly installments. On August 7, 1928, Weston conveyed the property to McLeod and Hagerty by a warranty deed, reciting a cash consideration of one thousand five hundred dollars and the assumption by McLeod and Hagerty of the indebtedness due by him to the appellee and secured by the deed of trust on the property. On September 28, 1928, Hagerty conveyed his interest in the property to McLeod by a deed, reciting a consideration of one dollar and the assumption by McLeod of the indebtedness due by Weston to the appellee, secured by the deed of trust on the property. On February 11, 1929, McLeod conveyed the property to R. B. McLeod, Incorporated, subject to the deed of trust thereon executed by Weston. On March 14, 1929, R. B. McLeod, Incorporated, conveyed the property to Rabby; part of the consideration therefor being the assumption by Rabby of the payment of the Weston debt to the appellee, secured by his deed of trust thereon. On September 20, 1932, the appellee foreclosed its deed of trust, purchased the property at the trustee's sale for one thousand five hundred dollars, and, on November 1, 1932, sued Weston, McLeod, Hagerty, and Rabby for the balance due on the Weston indebtedness to it after applying the one thousand five hundred dollars thereto. The appellee did not formally notify McLeod and Hagerty that it would look to them for the payment of Weston's indebtedness prior to the filing of the suit.

Weston made no defense; Rabby pleaded, and was allowed, a discharge in bankruptcy; and, from a judgment against Weston, McLeod, and Hagerty, the two latter have appealed.

Two of the appellants'...