Meyer v. Supinski

• Decision Date: 03 July 1939
• Citation: 7 A.2d 277,125 N.J.Eq. 584
• Parties: MEYER v. SUPINSKI et al.
• Court: New Jersey Court of Chancery

7 A.2d 277

125 N.J.Eq. 584

MEYER

v. SUPINSKI et al.

Court of Chancery of New Jersey.

July 3, 1939.

[Copyrighted material omitted.]

Syllabus by the Court.

1. A provision in a deed conveying mortgaged premises, that the grantee shall assume and pay the mortgage debt, is not only a contract for the grantor's indemnity but inures in equity for the benefit of the mortgagee.

2. The mortgagee may join in a single suit in equity, successive grantees who have assumed payment of the mortgage, to establish their liability to him in which suit the liability of the grantees as between themselves may be settled, or he may proceed against the last assuming grantee alone. The original obligor is not a necessary party to the suit.

3. If the grantor in a deed to a grantee who assumes payment of the mortgage debt is not liable to the mortgagee, the grantee incurs no liability by his assumption. If there is a break in the chain of liability, all subsequent promises are unenforceable.

4. The general rule that acceptance of a deed is prima facie full execution of a contract to convey does not apply to covenants collateral to the deed. A grantee who by his contract of purchase, agreed to assume payment of a mortgage as part of the purchase price, may be liable on such assumption although the deed to him does not contain an assumption agreement.

5. Where a mortgagee brought suit for deficiency against two successive grantees, each of whom had assumed payment of the mortgage debt, and thereafter discontinued the suit against the first grantee and the discontinuance operates as a release of the first grantee, the promise of the second grantee to indemnify the first grantee (his grantor), against liability, is at an end and the second grantee is no longer liable to the mortgagee.

6. Under R.S. 2:65-2, N.J.S.A. 2:65-2, a mortgagee's suit for deficiency against an assuming grantee must be commenced within three months from confirmation of foreclosure sale.

7. A suit for a mortgage deficiency against heirs and devisees of a deceased assuming grantee is cognizable in equity.

8. In a suit to recover a mortgage deficiency from devisees of a deceased assuming grantee, a special judgment may be recovered against the defendants to the extent of the devise to them, whatever such devise may be. Lands devised and subsequently involuntarily alienated by the devisees through foreclosure wherein nothing is realized above the mortgage debt, cannot be said to have had any value to devisees.

Suit by Evan Thoman Meyer against Paul C. Supinski and others, to recover amount of deficiency allegedly due complainant after foreclosure of a mortgage and sale of the mortgage premises. The action was discontinued as against the named defendant.

Decree for defendants.

George Rothstein, of Union City, for complainant.

Saul Nemser, of Jersey City, for defendants devisees of Minnie Rausch.

Joseph Moritz, of Jersey City, for executors of Minnie Rausch.

FIELDER, Vice Chancellor.

George B. Daetz and wife executed to John W. and Christine Meyer their bond for $8,000 and secured the same by their mortgage covering 58 Garrison Avenue, Jersey City. Subsequently a deed was given by Daetz and wife to the defendant Paul C. Supinski for the stated consideration of one dollar and other consideration, in which deed it is recited that the conveyance was subject to said mortgage. Thereafter Supinski conveyed to Herman Rausch and Minnie his wife by deed reciting that the conveyance is "subject to a mortgage in the sum of $8,000 now a lien on said property, which the parties of the second part assume and agree to pay." Herman Rausch died May 20, 1935, his wife surviving him and as a tenant by the entirety, she became the owner of the mortgaged property. She died August 4, 1937, leaving a will by which she devised premises 10 Wayne St. to her adult children Bennie, Victor and Elmer and her minor children Simon and Ruth as tenants in common (which premises were sold under foreclosure of another mortgage prior to the commencement of this suit) and she devised 150 Newark Avenue and 231 Bay Street to said minor children Simon and Ruth, as joint tenants (which premises said minors still own), and she devised the premises covered by the Meyer mortgage to her said five children as tenants in common.

Complainant became the owner of the Meyer bond and mortgage by mesne assignmerits and on February 8, 1938, filed his bill to foreclose, naming as defendants Paul C. Supinski, and Bennie, Victor, Elmer, Simon and Ruth Rausch as heirs and devisees under the will of Minnie Rausch, and the said Bennie and Elmer Rausch as executors and trustees under said will and as guardians of the person and property of said Simon and Ruth Rausch. In the foreclosure proceedings a final decree was entered and June 9, 1938, the mortgaged premises were sold to complainant for $100, leaving a deficiency due complainant of $10,130.16. The instant suit was brought by bill filed June 30, 1938, against Supinski; the said five children of Minnie Rausch as heirs and devisees under her will; her executors and trustees and the guardians of the person and property of her two minor children, to recover the amount of said deficiency.

1. A provision in a deed conveying mortgaged premises that the grantee shall assume and pay the mortgage debt, is a contract with the grantor for the latter's indemnity and the grantee's obligation inures in equity for the benefit of the mortgagee, who may enforce it against the grantee. Green v. Stone, 54 N.J.Eq. 387, 34 A. 1099, 55 Am.St.Rep. 577; Teitz v. Meano, 107 N.J.Eq. 210, 151 A. 729. The mortgagee may join successive grantees who have assumed payment of the mortgage, as defendants in one suit in equity to obtain a decree establishing their liability to him, which decree may also settle the liability of the grantees as between themselves. Such a suit is cognizable in equity in order to avoid circuity of actions (Holland Reform School Soc. v. De Lazier, 85 N.J. Eq. 497, 97 A. 253; Howell v. Baker, 106 N.J.Eq. 434, 151 A. 117; Feitlinger v. Heller, 112 N.J.Eq. 209, 164 A. 6), and the original obligor is not a necessary party to it (Pruden v. Williams, 26 N.J.Eq. 210; Green v. Stone, supra; Mann v. Bugbee, 113 N.J.Eq. 434, 167 A. 202; Fisk v. Wuensch, 115 N.J.Eq. 391, 171 A. 174). If defendant Supinski assumed and agreed to pay the mortgage debt (which is denied) and if the Rauschs likewise assumed payment of said debt (which is admitted) all grantees would be liable for complainant's deficiency, the primary liability being on the Rauschs and if Supinski were called on to satisfy the debt, he could by such decree be given recourse against the Rauschs.

It may simplify consideration of some of the defenses interposed here if we assume for the moment, that the Rauschs are alive and are defendants to this suit.

2. It is contended that complainant has failed to show that the defendant Supinski by the deed to him, assumed payment of the mortgage debt; that if he did not and therefore was under no liability to complainant, the Rauschs as assuming grantees of Supinski are not liable to complainant. Eakin v. Shultz, 61 N.J. Eq. 156, 47 A. 274; Feitlinger v. Heller, supra; Usbe B. & L. Ass'n v. Ocean Pier R. Co., 112 N.J.Eq. 580, 165 A. 580; Garfinkel v. Vinik, 115 N.J.Eq. 42, 169 A 527.

It is stipulated that Daetz and wife entered into a written contract with Supinski to sell him the mortgaged premises for $14,500 which Supinski thereby agreed to pay, in part, by assuming the obligation of the $8,000 mortgage in question and that thereafter a deed was accepted by him "subject to a mortgage in the sum of $8,000, now a lien on said property." There is no further evidence on the subject of his assumption other than the testimony of Mr. Schwartz, solicitor in this cause for Supinski, wherein he said that the contract shows that Supinski was to assume the mortgage "and then it was changed." Mr. Schwartz did not represent Supinski (who is a member of the bar) when the latter took title and it is apparent that Mr. Schwartz's testimony referred merely to the difference between the contract and the deed, in the words used referring to the mortgage.

The general rule that the acceptance of a deed is prima facie full execution of a contract to convey and supersedes all prior agreements between the parties, does not apply to covenants which are collateral to the deed. It being established that the grantee of real property agreed with his grantor to assume a mortgage indebtedness as part consideration for a conveyance, such contract is independent of the deed and in no way contradictory thereto, if the conveyance is in terms subject to the mortgage. Dieckman v. Walser, 114 N.J.Eq. 382, 168 A. 582. Supinski's contract for purchase of the property establishes prima facie an agreement by him with his grantors to assume payment of the mortgage and the burden to show that the grantors intended to and did by their deed, release Supinski from his contract of assumption, is on the defendants. There is no evidence by which that burden can be said to have been sustained, the recital in the deed not being sufficient for the purpose. I conclude on the evidence that Supinski agreed to and did assume payment of the mortgage debt and thereby became liable to his grantors and to complainant to discharge it.

3. About seven months after this suit was instituted, the solicitor for complainant and the solicitor for Supinski entered into a stipulation that this action be discontinued as against Supinski, which...