Olmstead v. Latimer

• Decision Date: 28 February 1899
• Parties: OLMSTEAD v. LATIMER et al.
• Court: New York Court of Appeals Court of Appeals

158 N.Y. 313

53 N.E. 5

OLMSTEAD

v.LATIMER et al.

Court of Appeals of New York.

Feb. 28, 1899.

Appeal from supreme court, appellate division, Second department.

Action by Dwight H. Olmstead, as trustee, against Brainard G. Latimer and others, to foreclose a mortgage. From a decree of the appellate division modifying and affirming the judgment of the trial court (41 N. Y. Supp. 44), plaintiff appeals. Modified.

In August, 1878, one John G. Latimer executed his bond with a mortgage on a lot and building on Atlantic street. Brooklyn, to secure the sum of $18,000, borrowed by him. The plaintiff subsequently acquired that bond and mortgage. In 1884 Latimer died intestate, seised of the mortgaged premises, leaving a widow and four brothers (the three defendants and one James D. Latimer) his only heirs at law. Letters of administration were issued on the estate of John G. Latimer, and upon settlement of the estate it appeared that the personal estate was exhausted by the payment of the debts and expenses of administration, leaving a deficiency in the amount due for administrator's fees. The deceased left real estate of considerable value, all of which was, prior to the commencement of this action, sold by the three defendants Latimer, as heirs at law, for the aggregate sum of $57,500, the value of the widow's dower in which was estimated at $8,426, leaving the net value of the lands sold in the hands of each of the defendants at the time of the trial at $12,268.50, outside of the mortgaged premises. The latter were conveyed, during the years 1888 and 1889, to Frederick B. Latimer, by bargain and sale deeds, each reciting the consideration of one dollar. After Frederick had acquired all the interest of his brothers in the mortgaged premises, he and the plaintiff executed the following agreement: ‘We agree that the time for the payment of the bond and mortgage for $18,000 on 201 and 203 Atlantic avenue, Brooklyn, made by John G. Latimer to the executors of Noah T. Pike, and recorded in the register's office of Kings county in Liber 1425 of Mortgages, page 17, August 24, 1878, being the date thereof, shall be, and hereby is, extended to May 1, 1895, subject to the same terms and conditions, including tax, insurance, and interest clauses, as at present. Dated New York, October 15, 1891. Dwight H. Olmstead, Executor and Trustee under Will of Noah T. Pike. F. B. Latimer.’ In April, 1892, a fire occurred in the buildings on the mortgaged premises, by which they were partially injured. In an attempt to restore the buildings they collapsed, and became a total loss. By this accident the value of the mortgaged premises fell below the amount of the mortgage. Thereafter the plaintiff instituted this action to foreclose the mortgage, and hold the defendants, as heirs at law of the original bondsmen and mortgagor, liable for any deficiency. The trial court held the defendant Frederick liable for 16/75 of any deficiency, and the other defendants not liable. From this decree the plaintiff and the defendant Frederick appealed to the appellate division; the former seeking to hold all the defendants, the later to be relieved from liability. The court modified the judgment by increasing the liability of the defendant Frederick to one-quarter of any deficiency that may arise on the foreclosure sale, and in all other respects affirmed the judgment.

Charles D. Ridgway, for appellant.

Francis L. Noble, for respondents.

PARKER, C. J. (after stating the facts).

The defendants Latimer, as heirs at law of the mortgagor, were respectively liable, under section 1843 of the Code, for the debts of the said mortgagor decedent to the extent of their interest in the real property that descended to them from him. The premises covered by the mortgage were primarily liable to pay the mortgage debt. As there was no personal estate, the defendants were secondarily liable, and they were properly made parties in the action of foreclosure by virtue of section 1627 of the Code, which provides that ‘any person who is liable to the plaintiff for the payment of the debt secured by the mortgage, may be made a defendant in the action; and if he has appeared, or has been personally served with the summons, the final judgment may award payment by him’ of any deficiency. The judgment, as it comes to us, decrees that the defendant Frederick B. Latimer shall pay one-quarter of the deficiency, but it has been held that the effect of the conveyance of the premises to the defendant Frederick by his brothers in the years 1888 and 1889, together with the fact that he informed the plaintiff of such conveyance, and thereafter made an agreement to extend the time of payment of the bond and mortgage, had the legal effect of making Frederick, the principal debtor, and his brothers, sureties, and hence that the effect of the agreement, extending the time of payment operated to release the sureties from all liability to the plaintiff on account of the indebtedness evidenced by the bond. Assuming, but not deciding, that the effect of the conveyance, and that which subsequently happened, was to change the obligation of the defendants other than Frederick towards the plaintiff from that of principals to that of sureties, we come to the question whether the agreement to extend the time of payment was invalid for want of consideration.

There are several decisions in this court in which the question has been considered, and they are in harmony with one another. In Kellogg v. Olmsted, 25 N. Y. 189, the action was on a promissory note by the transferee of the payee. The answer alleged that, after the note became due, it was mutually agreed between the holder thereof, the payee, and the defendants ‘that, in consideration that the defendants would keep the principal sum of the said note until the 1st day of April, 1857, and pay the same, with interest, on that day, he, the said payee, would extend the time of payment of the principal of said note until the 1st day of April, 1857; that the said defendants then and there assented to such proposition, and then and there agreed to and with said Covil to keep said principal sum of said note until the 1st day of April, 1857, and to pay the same with interest on that day.’ On the trial of the action the referee excluded evidence offered by the defendants to establish the defense so specially set up, and exceptions were taken thereto that presented the question to this court. It was held that an agreement by a creditor to postpone payment of a debt until a future day certain, without other or further consideration than the agreement of the debtor to pay the debt,...