Stewart v. Worden

• Decision Date: 29 November 1879
• Citation: 42 Mich. 154,3 N.W. 876
• Court: Michigan Supreme Court
• Parties: WILKES I. STEWART v. WILSON M. WORDEN.

3 N.W. 876

42 Mich. 154

WILKES I. STEWART v. WILSON M. WORDEN.

Supreme Court of Michigan

November 29, 1879

S owning certain property valued at $9,000, exchanged the same with W. for property valued at $10,000, subject to a mortgage encumbrance, then existing and due, of $3,000, no personal liability for which attached to W. To equalize the exchange W. gave S. a mortgage back on the property received from him for $2,000, conditioned for the payment in due season of all moneys due on the $3,000 mortgage except $1,000 and interest thereon. At the time of the exchange W. represented and S seemed to have understood that an extension of time had been secured on the $3,000 mortgage. In fact no such extension was ever granted. S. afterwards quitclaimed the property received by him to a third person, subject to the $3,000 mortgage, his grantee assuming it, as to him, as part of the purchase price. W. never paid any part of the $3,000 mortgage. Held that the $2,000 mortgage became immediately due at the election of S.; that it called for payment and not merely indemnity, and that S. might proceed to foreclose the same although he had paid no portion of the $3,000 encumbrance.

Appeal from Newaygo.

Fuller & Standish, for complainant.

E.L. Luton, for defendant.

GRAVES J.

October 30, 1872, complainant owned in fee and free from encumbrance, a hotel property in the village of Newaygo, and twenty acres of land near there.

At the same time the defendant Worden owned a farm near the village of Lowell. On that day they agreed upon an exchange.

Complainant's property was valued at $9,000, and Worden's farm was estimated at $10,000; but the farm was encumbered, and Worden's interest was an equity of redemption and nothing more.

Certain former owners had mortgaged it January 1, 1857, to David Dows, of New York, for $5,000, with semi-annual interest at 7 per cent., and $3,000 was yet unpaid, though already due and payable by the terms of the mortgage, together with interest from July 1, 1872. Worden was not personally liable for the encumbrance, but its existence qualified and reduced his interest in the place.

It seems to have been understood by Stuart that an agreement had been made with Dows to extend the time, and the papers are clear that Worden so represented, but in fact no such agreement had been made then or has been made since. The exchange was effected on these terms: Stuart conveyed his property at the price of $9,000, and Worden deeded the farm upon the understanding that if the whole interest were included it would be worth $10,000; but as his interest actually amounted to only $7,000, it was agreed that he should bring his interest in the equity of redemption up to $9,000, (the amount received from Stuart,) by paying off $2,000 of the Dows mortgage, Stuart being left to take care of the other $1,000 still behind on that mortgage. The deed of Worden embraced the usual covenants, but following the covenant against the encumbrances the qualifying expression "except as above stated" was inserted. In the body of the instrument and preceding the covenants a special provision was inserted relative to the Dows mortgage, which will be again noticed further on.

As part of the transaction, and in order to secure Stuart for the difference of $2,000 between what he transferred to Worden and what Worden transferred to him, and to equalize the exchange and support the covenants of title in the deed, Worden gave back a mortgage on the property he received from Stuart.

It recited the transfer from Worden to Stuart, and the encumbrance, and that Stuart assumed $6,000, and that it was obligatory on Worden to pay the remainder as specified in the agreement embodied in Worden's deed to Stuart; and it further recited, among other things, that Worden claimed that there was a binding agreement extending the time of payment of the mortgage to the ninth of April, 1875. It then set forth that Worden, in consideration of one dollar paid by Stuart, "and in order to secure the said Wilkes L. Stuart, his heirs and assigns, against loss or damage by reason of the failure of said Wilson M. Worden to pay the amount remaining unpaid on the mortgage hereinbefore specified, excepting the part thereof assumed by said Wilkes L. Stuart, and to secure the due performance of the covenants herein before particularly mentioned, do by these presents," etc.

The condition was written in these terms. "Provided always, and these presents are upon the express condition, that if the said party of the first part shall, will and truly pay or cause to be paid in due season all sums of money now remaining unpaid upon the said mortgage herein before specified, excepting the sum of one thousand dollars and interest thereon, the payment of which is and has been assumed by said Stuart, and shall save said party of the second part harmless from loss or damage by reason of the failure of the title to the lands conveyed to said party of the second part by said party of the first part, as herein before particularly set forth as represented and covenanted in said deed, it being understood that said Worden is at liberty to obtain further extension of the time of payment of said mortgage debt, and that at any time when he shall perfect the record title of the lands this day conveyed by him to said Stuart, and herein before particularly specified, so as to show a complete and perfect chain of title thereto down to him at this date, then this mortgage, so far as the same relates to the title to the said land, shall cease and be null and void, and shall, on such payment as aforesaid, entirely cease and be null and void; but in case of non-payment of the said sum of money above specified, or of a failure of the title to the lands herein before particularly described as covenanted by him in said deed herein before referred to, to be vested in him, the said Wilson M. Worden, at said date, then," etc; there being the usual conclusion, with the addition of a clause for an attorney's fee in case of proceedings to foreclosure.

The agreement in Worden's deed, to which reference is made, is as follows:

"It is understood and agreed by and between the parties to this instrument that the lands herein before described are conveyed subject to a certain mortgage thereon executed by W.P. Collins and A.O. Harron and wives, January 1, A.D.1857, to David Dows, for the sum of $5,000, and recorded in the office of the register of deeds of Kent county, Michigan, in liber "N" of mortgages, on page 171, on which mortgage there is claimed to be unpaid the sum of $3,000 of principal, at this date, by the said Wilson M. Worden, and interest thereon at seven per cent. per annum, from July 1, 1872, of said sum of $3,000. The said Wilkes L. Stuart assumed the payment of $1,000 and interest thereon, agreeable to the terms of said mortgage; the remaining sum of $2,000 and interest, as aforesaid, to be paid by said Wilson M. Worden, reference being had to a mortgage of even date herewith executed by said Worden to said Stuart, conditioned for such payment, which mortgage is of record in the office of the register of deeds of Newaygo county, Michigan."

These instruments were placed on record about the time they were made.

February 12, 1873, complainant, at the request of Worden, who still held the property which had been so conveyed to him, released the 20-acre parcel from the mortgage.

June 20, 1873, Worden deeded the residence, being the village property, to Francis King, who...