Rice v. Sanders
| Decision Date | 16 July 1890 |
| Citation | 24 N.E. 1079,152 Mass. 108 |
| Parties | RICE v. SANDERS. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
July 16, 1890
HEADNOTES
S.F Field, for plaintiff.
Defendant pro se.
By accepting his deed from the plaintiff, the defendant assumed and agreed to pay two mortgages, of which one was then overdue, and the other was payable by installments to become due in the future. It was a single but divisible contract, containing a promise--First, to pay one mortgage immediately; and, secondly, to pay the other when it should become due. In proceedings to recover damages for a breach of the contract, each part of it should be considered separately. It is agreed that there has been no breach as to the second mortgage, and damages can be recovered in this action only for neglect to assume and pay the first mortgage. The plaintiff claims damages of two kinds: First, those resulting from the defendant's failure to relieve him from personal liability on the mortgage debt; and, secondly, those growing out of the defendant's neglect to obtain a discharge of the first mortgage, whereby the plaintiff has been deprived of a benefit which should have resulted to his security for the payment of the second mortgage. If he can recover only for the failure to relieve him from liability on the mortgage debt, the damage should be only nominal; for before the suit was brought the mortgage was foreclosed, and the debt was paid from the proceeds of the sale of the mortgaged property. If, on the other hand, he can recover on account of the defendant's neglect to do that which would have worked a discharge of the first mortgage, it does not appear that the assessment was erroneous. Our decision, therefore, must depend upon whether a grantee in a deed, who assumes and agrees to pay a mortgage on the property conveyed, undertakes thereby to terminate the vital existence of the mortgage, or only to cancel the mortgage debt so far as it is a claim against individuals, without discharging the mortgagee's lien upon the land.
One who assumes a mortgage in such an agreement takes upon himself the burden of the debt or claim secured by the mortgage, and there is no doubt that, as between him and his grantor, he becomes the principal, and the latter merely a surety for the payment of the debt. It is said in many cases that primarily the mortgage is a charge upon the land, but it would be more accurate to say that it is made primarily a charge upon the purchase money reserved by the grantee to pay it. Thayer v. Torrey, 37 N.J.Law, 339. The relation of the parties, and the nature of the contract, are the same as if the entire consideration had been paid to the grantor, and he had then taken a part of the money sufficient to pay the mortgage, and had intrusted it to the grantee upon his promise to carry it to the mortgagee, and pay it over in satisfaction of the mortgage. Performance of the promise would cancel the mortgage, and leave the estate discharged from the lien. If, as a part of the contract, another portion of the consideration had been paid, by giving a second mortgage on the property, the discharge of the first mortgage by payment of the money as agreed might be a very important part of the arrangement, without which the second mortgage would be valueless. In assuming the mortgage the grantee not only undertakes to relieve the mortgagor from personal liability for the debt, but from all liability under the mortgage. If the mortgagor were released from the debt, while the mortgage was allowed to remain a binding contract, enforceable against the land, he would still be liable on the covenants and agreements contained in the mortgage. The implied contract would not be performed so long as the mortgage was outstanding as a valid instrument, upon which the mortgagor could in any form be liable. None of the cases which have come to our attention imply that the payment to be made by a grantee in such a case is anything less than an ordinary payment, which works a complete discharge of the mortgage. The reasoning upon which it is held that the damage to be recovered for a breach of such a contract is the amount of the mortgage debt, if no part of it has been paid, and the authorities cited in support of that doctrine, rest upon the ground that an absolute payment should be made; and, where there is an express agreement to pay, the word "pay" is used in its usual sense. Braman v. Dowse, 12 Cush. 227; Furnas v. Durgin, 119 Mass. 500; Locke v. Homer, 131 Mass. 93, and cases cited. It follows that, in an ordinary case of this kind, if a grantee who has assumed a mortgage should procure from the mortgagee a discharge of the mortgagor from personal liability upon the debt, and leave the mortgage still in force, he could be sued by his grantor for a breach of his contract; and nominal damage could be recovered, if no actual damage was shown. If the grantor had such an interest in the property covered by the mortgage as to be actually damnified by the failure to remove the mortgage, he might recover his actual damages, notwithstanding that he had been relieved from personal liability upon the debt. In the case at bar the plaintiff suffered no actual damage by reason of his liability upon the debt, for that was paid by a sale of the mortgaged premises; but under the second mortgage, he had security on the property for his liability named in that, and he was interested in having the first mortgage satisfied and discharged for the improvement of his security. As a direct result of the breach of the contract, he was deprived of that security. The damage which he has suffered is not too remote, but must be presumed to have been contemplated by the parties when they made their contract.
The only remaining objection to his recovery of this damage is that it is uncertain whether he will ever be required to pay the debt covered by the second mortgage. But there is much authority for holding that this fact can make no difference in favor of one who has failed to perform his contract. The defendant should have paid a sum of money which would have given the plaintiff perfect security for the payment by the defendant of the debt upon which the plaintiff is liable. The plaintiff's cause of action for this breach has already accrued. There can be but one recovery upon it, and all his damages must be assessed now. He was entitled to a security which would have been perfect for the amount of the debt. Through the defendant's fault, he has no security. His damage is the value of the security which he should have had, up to, and not exceeding, the amount of the debt secured. Lethbridge v. Mytton, 2 Barn. & Adol. 772; Brown v. Howard, 2 Brod. & B. 73; Howell v. Young, 5 Barn. & C. 259; Loosemore v. Radford, 9 Mees. & W. 657; Lathrop v. Atwood, 21 Conn. 117; Port v. Jackson, 17 Johns. 239; Ex parte Negus, 7 Wend. 499; Crofoot v. Moore, 4 Vt. 204; Wilson v. Stillwell, 9 Ohio St. 467; Stout v. Folger, 34 Iowa, 71; Ham v. Hill, 29 Mo. 275; Locke v. Homer, 131 Mass. 93.
The principle involved is the same as that in Furnas v. Durgin, 119 Mass. 500, and other similar cases. In that case, it was uncertain whether the plaintiff would ever be called upon to pay any part of the money which he recovered, for the note might be paid by a sale of the land under the mortgage. We are of opinion, therefore, that the plaintiff was rightfully allowed to recover damages for the loss of his security, caused by the defendant's neglect to perform his contract.
The defendant cannot maintain his declaration in set-off. The action was brought to recover unliquidated damages for a breach of contract, and the claim sought to be set off is of the same kind, and is not within the statute. Pub.St. c. 168, §§ 3-7. Judgment affirmed.
It is conceded in the opinion of a majority of the court that the debt secured by the first mortgage had been fully paid before the suit was brought, out of the proceeds of the land which had been sold under the power contained in this mortgage, and that neither the interest, nor any part of the principal debt secured by the second mortgage, had, when the suit was brought, become payable. The contention is that the promise of the defendant to the plaintiff to assume and pay these mortgages, which is to be implied from the acceptance of the deed, was a promise to pay off immediately, on receiving the deed, the first mortgage, and to have it discharged, so that thereafter the...
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