Pratt v. Conway

• Decision Date: 21 February 1899
• Citation: 148 Mo. 291,49 S.W. 1028
• Parties: PRATT v. CONWAY.
• Court: Missouri Supreme Court

49 S.W. 1028

148 Mo. 291

PRATT v. CONWAY.

Supreme Court of Missouri, Division No. 2.

February 21, 1899.

MORTGAGES — CONVEYANCES — ASSUMPTION OF DEBT — EXTENSION OF PAYMENT — RELEASE OF MORTGAGOR — NOTICE — ADMISSION OF COUNSEL — APPEAL.

1. The assumption of a mortgage debt by a grantee constitutes him the principal debtor, and the mortgagor his surety, so that an extension by the mortgagee without consent of the mortgagor releases him.

2. Where such assumption is not expressed in the deed, the mortgagor, to avail himself of the release, must allege and prove that the extension was made with the knowledge of the fact of such suretyship by the mortgagee.

3. Courts are warranted in acting on an admission of counsel, as their admission is binding on their clients.

4. Where defendant's counsel admitted on the trial that plaintiff was the legal owner of the note sued on, the evidence showed an indorsement to him, and the answer alleged a delivery to him, that he had the legal title cannot be controverted on appeal.

Error to circuit court, Jackson county; C. L. Dobson, Judge.

Action by O. W. Pratt against Thomas Conway. There was a judgment for plaintiff. From an order granting defendant a new trial, plaintiff brings error. Reversed.

Lathrop, Morrow, Fox & Moore, for plaintiff in error. Teasdale, Ingraham & Cowherd, for defendant in error.

GANTT, P. J.

This is an action on a promissory note for $1,000. The cause has been certified to this court by the Kansas City court of appeals, because, in the opinion of that court, there is a conflict between its opinion and a prior decision of the St. Louis court of appeals. The action was against Thomas Conway and Bridget T. Conway, his wife. At the trial, plaintiff dismissed as to Mrs. Conway. Plaintiff recovered a verdict and judgment in the circuit court, but the court, on a motion for a new trial, set aside the verdict and granted a new trial, and this is assigned as error.

The facts are as follows: In 1887 Thomas Conway was the owner of certain property in Kansas City, Mo., and he, together with his wife, executed a deed of trust upon said property to secure the payment of the $1,000 note in controversy. He afterwards made a written contract of sale of said property with one Coburn, the consideration being $15,000. A few days after the said contract was signed, the said Coburn, in turn, effected a sale of the property to one W. B. Grimes, and the contract of sale was transferred to Mr. Grimes, and deed was made by Thomas Conway and wife to W. B. Grimes, in which no mention is made of the $1,000 note in controversy. It is claimed by the defendant that the contract of sale between defendant Conway and Mr. Coburn recited that the grantee assumed and agreed to pay the note in controversy. In the deed from Conway to Grimes, the grantee did not assume the $1,000 note in controversy. The evidence tended to show that, while Mr. Grimes was the owner of the property in controversy, he secured an extension of the note herein sued upon, by paying the holder of said note the sum of $20 commission. There is no testimony in the case that the holder of the note at the time the extension was made knew or had reason to believe that any person had assumed and agreed to pay the debt in controversy, or that there was any person obligated to pay said debt, other than the maker of the note, Mr. Conway. There is no allegation in the answer that the holder of the note, at the time the extension was made, knew or had reason to believe that any one except Mr. Conway was liable upon the note in controversy. It was claimed at the trial that the maker of the note, Mr. Conway, was released by the extension of the note sued upon, made at the time when Mr. Grimes was the owner of the property. This proposition is denied by the plaintiff, and the question before the court for determination is whether, under the pleadings in this case, and under the facts as developed at the trial, the extension of the note, made while Mr. Grimes was the owner of the property, had the effect of releasing the defendant Mr. Conway from his liability thereon. Plaintiff contends, under the undisputed facts in the case, there was no release of the defendant Conway, and that he remains liable upon the note sued upon. It was claimed by defendant that the plaintiff did not, at the trial, prove the ownership of the note to be in the plaintiff. Plaintiff insists that the ownership of the note by plaintiff was admitted by counsel for defendant, and was a conceded fact throughout the trial.

1. The doctrine that when mortgaged property is sold, and the vendee assumes the payment of the mortgage debt, the mortgagor's obligation as principal debtor is, as between him and such vendee, changed to that of surety, as asserted by defendant, is not controverted by plaintiff; but plaintiff vigorously attacks the position that the mortgagee is affected by such a change, unless he consents to accept the vendee as his principal debtor. The general rule of law is that a creditor cannot be compelled to accept any other person as his debtor than the one he chooses. In Shepherd v. May, 115 U. S. 505, 6 Sup. Ct. 119, the supreme court of the United States held that, where a vendee expressly promised to pay the mortgage debt, that alone, without the assent of the mortgagee, did not change the mortgagor into a surety merely. Cucullu v. Hernandez, 103 U. S. 105; Rey v. Simpson, 22 How. 341. That court reasserted this rule in Keller v. Ashford, 133 U. S. 610, 10 Sup. Ct. 494, saying: "Such an agreement [sale of mortgaged premises, and assumption of debt by vendee] does not, without the mortgagee's assent, put the grantee and the mortgagor in the relation of principal and surety towards the mortgagee, so that the latter, by giving time to the grantee, may discharge the mortgagor." These decisions were subsequently explained in Insurance Co. v. Hanford, 143 U. S. 187, 12 Sup. Ct. 437, where it was said that it is the settled law of that court that the grantee is not directly liable to the mortgagee, at law or in equity, and the mortgagee's only remedy was by bill in equity, in the right of the mortgagor to avail himself of the security. It was further held that whether the remedy of the mortgagee against the grantee is at law, and in his own right, or in equity, in right of the mortgagor, must be determined by the law of the place where the suit is brought. And as it appeared in that case that by the law of Illinois, where that case originated, as in other states, the mortgagee might sue at law the grantee who by absolute conveyance assumes the mortgage debt, it was held that, as soon as the mortgagee had notice of the agreement of the grantee, the grantee became directly and primarily liable to the mortgagee, and the relation of grantor and grantee was not only...