Seward v. N.Y. Life Ins. Co

• Decision Date: 20 March 1930
• Citation: 152 S.E. 346
• Court: Virginia Supreme Court
• Parties: SEWARD . v. NEW YORK LIFE INS. CO.

152 S.E. 346

SEWARD .

v.NEW YORK LIFE INS. CO.

Supreme Court of Appeals of Virginia.

March 20, 1930.

Error to Circuit Court, Buckingham County.

Proceeding by attachment by the New York Life Insurance Company against J. M. Seward. To review a judgment for plaintiff, defendant brings error.

Reversed and rendered.

Claude R. Wood, of Dillwyn, and A. B. Dickinson, of Richmond, for plaintiff in error.

Fred Harper, of Lynchburg, for defendant in error.

EPES, J.

This is a proceeding by attachment filed November 14, 1927, by the New York Life Insurance Company against J. M. Seward, a nonresident, as principal defendant, and W. A. Llewellyn as codefendant, to recover from Seward $2,303.55, with interest from October 5, 1927, which is the balance due on certain notes, aggregating the principal sum of $8,500, drawn by Thos. M. Nunn payable to the order of the New York Life Insurance Company, which were secured by a first lien deed of trust on a tract of land in Buckingham county, Va., known as East View, containing 539 acres, the payment of which notes the New York Life Insurance Company alleged were assumed by Seward, who purchased the East View property at a sale made under a second deed of trust, by accepting from Andrews and Wood, the trustees in the second deed of trust, a deed to the East View tract, wherein it is recited that Seward assumes the payment of said $8,500 debt secured by the first deed of trust.

Seward in effect pleads the general issue in assumpsit. The case was tried before the court without a jury. The court entered a personal judgment against Seward in favor of the New York Life Insurance Company for the amount sued for, to which judgment Seward assigns error.

The first assignment of error is that the court erred in entering judgment against Seward because the alleged promise of assumption, if in fact made by Seward, was without consideration and therefore unenforceable.

The only evidence introduced before the court was the notes sued on, the three deeds below mentioned, and a very brief and incomplete stipulation of facts.

The three deeds introduced in evidence, which are designated as Exhibits 1, 2, and 3, all convey identically the same property, a tract of land in Buckingham county, Va., containing 539 acres, known as East View.

Exhibit 1 is a deed of trust dated July 16, 1923, recorded July 31, 1923, from Thos. M. Nunn and wife to Andrew L. Todd, trustee, conveying the East View tract in trust to secure the payment of the principal sum of $8,500, repayable in annual installments extending over a period of thirty-live years, evidenced by notes of Thos. M. Nunn payable to the order of the New York Life Insurance Company. The deed provides that, if default be made in the payment of any note, the entire principal amount secured by the deed, with accrued interest, shall become due and matured.

Exhibit 2 is a second deed of trust dated and recorded July 31, 1923, from Thos. M. Nunn and wife to J. P. Andrews and Claude R. Wood, trustees, conveying with general warranty the East View tract to said trustees to secure a debt of $2,925 due by Nunn to Seward. This deed recites the prior deed of trust for $8,500, and provides that "this lien Is intended to be a second lien on the property." The only provision as to sale contained in this deed of trust is the following incomplete sentence: "In the event that default shall be made in the payment of any one or more of the aforementioned notes when and as the same shall become due and payable then the trustees or either of them shall whenever required hereunder to sell the property conveyed hereunder to satisfy the debt herein secured." There is no provision as to the disposition of the proceeds of sale.

Exhibit 3 is a deed from J. P. Andrews and Claude R. Wood, trustees, to J. M. Seward, dated and acknowledged November 10, 1924, recorded January 9, 1925, conveying with special warranty the East View tract of land. This deed, after reciting the said deed of trust from Nunn and wife to Andrews and Wood, trustees (Exhibit 2), and the default thereunder, in so far as material, reads as follows:

"Whereas * * * the said J. P. Andrews and Claude R. Wood, in execution of the said trust therein declared, did on the 30th day of October 1924, * * * expose to sale the tract or parcel of land aforesaid, at public auction to the highest bidder for cash, according to the terms of the aforesaid deed of trust; at which sale the said J. M. Seward became the purchaser thereof, being the highest bidder;

"Now, Therefore, for and in consideration of the promise, and for the further consideration of $10,000.00, $1,500.00 of which is paid in cash to the said J. P. Andrews and Claude R. Wood by the said J. M. Seward and $8,500.00 the remainder thereof which is due to the New York Life Insurance Company of New York, it holding the first deed of trust on the said tract or parcel of land, is assumed by the said J. M. Seward at and before the sealing and delivery of this deed, the receipt of all of which is hereby acknowledged, the said J. P. Andrews and Claude R. Wood, trustees as aforesaid in the said deed of trust doth grant, " etc.

This deed (Exhibit 3) is signed by Andrews and Wood, trustees, but not by Seward.

The stipulation of facts reads as follows:

"1. It is agreed that Seward is a non-resident of Va.

"2. That Mr. Llewellyn has property in his hands belonging to Seward shown in his answer, and

"3. The amount sued for is the correct balance due the plaintiff.

"4. Copy of the first deed of trust, Ex. 1 and second deed of trust Ex. 2.

"5. That property was put up by trustees under the second deed of trust and sold to J. M. Seward subject to the first deed of trust, and was so knocked out to him and the trustees executed to him the deed Ex. 3.

"6. Property was subsequently sold by the trustee under the first deed of trust, Ex. 1, and the sale resulted in the deficit sued for.

"7. Notes secured under first deed of trust exhibited in evidence."

The record is a very unsatisfactory record upon which to make an adjudication of the rights of the parties. It leaves to inference what there seems no reason for not having either stipulated with certainty, or presented the testimony with reference to which, for instance, the amount bid by Seward at the sale at public auction; and it therefore becomes necessary to state what we deem to be the facts proven in, and the inferences properly to be drawn from, the record.

Andrews and Wood, trustees, in making sale under the second deed of trust, did not offer the East View tract for sale subject to the first deed of trust, the same to be assumed and paid off by the purchaser, nor did they offer it for sale free and clear of the lien of the first deed of trust, the same to be paid off out of the purchase money or assumed by the purchaser as a part of the purchase price; and we are not here concerned either with the right and authority of the trustees to have so offered the property for sale or what would be the rights of the parties had it been so offered for sale and purchased by Seward.

The trustees under the second deed of trust offered the East View tract for sale merely subject to the first deed of trust; that is, they offered for sale only the equity of redemption of Thos. M. Nunn therein. The terms of the sale were for cash. Seward bid a cash sum for the equity of redemption, and the equity of redemption was sold to him by the trustees at that bid. The recital in the deed from Andrews and Wood, trustees, that Seward assumed the payment of the first deed of trust, was not inserted therein in pursuance of any of the terms of sale upon which the equity of redemption was sold to Seward at the public auction.

That these are correct inferences from the record seems to be conceded by counsel for both sides.

The amount bid by Seward for the equity of redemption is not recited in the deed from Andrews and Wood, trustees, to him, nor is it anywhere stated in the record. Seward contends that the correct inference from the record is that it was $1,500. The New York Life Insurance Company contend that the correct inference from the record is that it was $10,000. We are of opinion that the inference that Seward bid $1,500 for the equity of redemption is the better supported by the record and the more probable inference and adopt it as the correct inference.

The deed recites that it is made "in consideration of the premises and the further consideration of $10,000.00, $1,500.00 of which is paid in cash, " and $8,500 whereof is paid by Seward's assumption of the prior deed of trust. But it goes further and states why Seward's assumption of the prior deed of trust debt for $8,500 is accepted in payment of $8,500 of the $10,000 which it recites is the consideration upon which the conveyance is made. It gives as this reason that $8,500 of the recited consideration of $10,000 was due to the New York Life Insurance Company as the holder of the first deed of trust. So far as the record discloses, this could not have been true nor the trustees justified in accepting the assumption of the first deed of trust in payment of $8,500 of the $10,000 recited in the deed as the consideration upon which it is made, if Seward's bid for the equity of redemption was $10,000 cash.

What. Seward bid for and what was sold him was the equity of redemption. Upon such a sale the land in the hands of Seward became, as between Seward and Nunn, primarily liable for the payment of the first deed of trust debt. If, in pursuance of his personal liability therein, Nunn should have been thereafter required to pay the debt, he would have been entitled to have the land in Seward's hands subjected to the reimbursement of himself pro tanto. Hence no part of the purchase money could have been due to the New York Life Insurance Company as the holder of the first deed of trust.

Where the owner of land mortgages it by mortgage or deed of trust to secure a debt, and subsequently sells the equity of...