Silverstein v. Saster

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: LUMMUS
• Citation: 285 Mass. 453,189 N.E. 540
• Parties: SILVERSTEIN v. SASTER et al.
• Decision Date: 26 February 1934

285 Mass. 453
189 N.E. 540

SILVERSTEIN
v.
SASTER et al.

Supreme Judicial Court of Massachusetts, Bristol.

Feb. 26, 1934.

Appeal from Appellate Division of District Court, Third District; F. A. Milliken, Judge.

Action by Fannie Silverstein against Nathan Saster and others. From an adverse judgment, plaintiff appeals.

Reversed and rendered.

[285 Mass. 455]F. Vera and W. S. Downey, both of New Bedford, for appellant.

S. Barnet & P. Barnet, both of New Bedford, for appellees.

LUMMUS, Justice.

On May 4, 1923, the defendants gave to the plaintiff a witnessed promissory note, payable on demand, with interest at 9 per cent., secured by a second mortgage upon their

[189 N.E. 541]

land. On June 12, 1923, they conveyed the land to one Gracia, subject to the mortgages which Gracia assumed and agreed to pay. On November 25, 1923, Gracia ‘voluntarily’ conveyed to her sister, one Moureira, subject to the mortgages which Moureira assumed and agreed to pay. Apparently Gracia continued to control the land, for her discussions with the plaintiff about her inability to make payments as required resulted in a taking of possession by the plaintiff, and later, in May, 1932, in a conveyance by Moureira ‘subject to said mortgages' to Ida Silverstein, a daughter of the plaintiff, who holds title for the plaintiff. It is to be noticed that Ida did not assume or agree to pay the mortgages. The purpose of the plaintiff in taking title in the name of Ida was to preserve the plaintiff's rights on the mortgage note against the defendants, who had conveyed the land nine years before. The judge finds: ‘In the conferences between the plaintiff and Mrs. Gracia the plaintiff orally stated she would convey the property back at any time when times were better and payments could be continued.’

In this action upon the second mortgage note, the trial judge and the Appellate Division ruled that the plaintiff could not recover. The plaintiff appealed to this court.

The deeds to Gracia, to Moureira, and to Ida Silverstein all made the land, as compared with the personal liability of the defendants, the primary fund for the payment of the plaintiff's second mortgage note. Pratt v. Buckley, 175 Mass. 115, 116, 55 N. E. 889,North End Savings Bank v. Snow, 197 Mass. 339, 341, 83 N. E. 1099,125 Am. St. Rep. 368. That is true although the deeds to Gracia and Moureira (but not the deed to Ida Silverstein), in which Gracia and Moureira assumed and agreed to pay the plaintiff's second mortgage, made their personal liability a still earlier fund until the deed to Ida Silverstein made the land the primary fund as compared with their [285 Mass. 456]personal liability. See Rice v. Sanders, 152 Mass. 108, 110, 24 N. E. 1079,8 L. R. A. 315, 23 Am. St. Rep. 804;Bock v. Gallagher, 114 Mass. 28;Costa v. Sardinha, 265 Mass. 319, 321, 163 N. E. 887. As to the parties subsequent to the plaintiff mortgagee, the land became the principal debtor and the defendants became sureties.

Whether a mortgagee is bound to recognize transactions by the mortgagor, subsequent to the mortgage but known to the mortgagee, as converting the mortgagor into a surety or as giving him the rights of a surety, has been disputed. In this Commonwealth, a mortgagee has no right to enforce the agreement of a subsequent grantee, made with the mortgagor, to assume and pay the mortgage. Creesy v. Willis, 159 Mass. 249, 251, 34 N. E. 265;Goodenough v. Labrie, 206 Mass. 599, 92 N. E. 807,138 Am. St. Rep. 411;Codman v. Deland, 231 Mass. 344, 347, 121 N. E. 14;Bloch v. Budish, 279 Mass. 102, 180 N. E. 729. There is authority for the proposition that a mortgagee may ignore subsequent dealings with the property, and need not treat the mortgagor as a surety, after the assumption of the mortgage by a grantee or a conveyance subject to the mortgage, unless he consents to do so. Shepherd v. May, 115 U. S. 505, 6 S. Ct. 119, 29 L. Ed. 456;Union Life Ins. Co. v. Hanford, 143 U. S. 187, 190, 12 S. Ct. 437, 36 L. Ed. 118. But other cases suggest, as in the partially analogous case of the assumption of partnership debts by a new firm or a continuing partner (Palmer v. Purdy, 83 N. Y. 144; Rouse v. Bradford Banking Co., Ltd., [1894] A. C. 586; 47 C. J. 1032, 1033), that notice to the mortgagee is enough to bind him to regard the equities resulting from the mortgagor's subsequent transactions with third persons. George v. Wood, 9 Allen, 80, 82, 85 Am. Dec. 741;Clark v. Fontain, 135 Mass. 464;Clarke v. Cowan, 206 Mass. 252, 255, 256, 92 N. E. 474,138 Am. St. Rep. 388; Sheldon, Subrogation (2d Ed.) § 81. In North End Savings Bank v. Snow, 197 Mass. 339, 341, 83 N. E. 1099,125 Am. St. Rep. 368,Phillips v. Vorenberg, 259 Mass. 46, 69, 156 N. E. 61,Murray v. Marshall, 94 N. Y. 611, and Travers v. Dorr, 60 Minn. 173, 62 N. W. 269, this principle was apparently applied to a conveyance subject to the mortgage. See, also, Guild v. Butler, 127 Mass. 386; Williston, Contracts, § 386. Even when consent of the mortgagee to the new relationship has been treated as necessary to bind him to regard the mortgagor as a surety, it has been held sufficient to show consent[285 Mass. 457]that the mortgagee has entered into a contract with the grantee, such as an agreement for an extension of the mortgage. Codman v. Deland, 231 Mass. 344, 121 N. E. 14. In the present case, there is an express finding that the mortgagee looked to the grantee of the mortgagor to pay the mortgage debt, and recognized that the defendants were really only sureties.

Once the mortgagee is bound as the mortgagee was in this case, to treat the mortgagor as a surety, many of the rules of suretyship apply...