Whicker v. Hushaw

• Decision Date: 04 June 1902
• Docket Number: 19,861
• Citation: 64 N.E. 460,159 Ind. 1
• Parties: Whicker v. Hushaw et al
• Court: Indiana Supreme Court

64 N.E. 460

159 Ind. 1

Whicker v. Hushaw et al

No. 19,861

Supreme Court of Indiana

June 4, 1902

From Fountain Circuit Court; J. M. Rabb, Judge.

Action by Jacob Hushaw and Margaret A. Hopton against J. Wesley Whicker to enforce the payment of a mortgage alleged to have been assumed by defendant. From a judgment for plaintiffs defendant appeals. Transferred from Appellate Court, under § 1337u Burns 1901.

Reversed.

L Nebeker, J. W. Whicker and C. E. Bryant, for appellant.

I. E Schoonover, for appellees.

OPINION

Gillett, J.

On the 5th day of October, 1899, appellant and appellee Margaret A. Hopton entered into an executory contract in writing, by the terms of which the latter bound herself to sell and convey to appellant, "by good and sufficient warranty deed," a certain tract of real estate. The obligation of appellant was expressed in said contract as follows: "Said J. Wesley Whicker, party of the second part, to pay cash in hand, on the delivery of the deed, the sum of $ 1,752.50, and assume all unpaid taxes and mortgages shown of record and all other liens on said lands, including an attachment proceeding now pending." This contract was consummated, upon the part of said Margaret, on the same day, by the execution of a warranty deed to appellant. At the time of making said contract there was an unrecorded mortgage against said land, made by appellee Margaret and held by appellee Jacob Hushaw, that had been long overdue, and appellant had full knowledge of its existence at the time he entered into said contract. The endeavor of appellees in this action was to hold appellant personally responsible for the amount of said mortgage, as upon a debt assumed. The evidence is not in the record. The complaint does not allege, and the special findings that were filed in the case do not show, any further extrinsic facts that might aid in determining the intent of the parties to the contract, such as the value of the land, whether there were liens against it, aside from those mentioned, and whether the parties to the contract had knowledge of the fact that the mortgage was not of record.

The cases are many in this State that recognize the right of the holder of a mortgage to avail himself of an existing agreement between the mortgagor and his vendee, by which the latter assumes the payment of the mortgage debt. These cases have not dealt with the philosophy of such a ruling, but in other states various reasons have been assigned in support of the right of the holder of such mortgage to sue upon the contract, such as a trust relationship, the equitable right of subrogation, agency, privity of contract by substitution, and the broad equity of the transaction. See note to Baxter v. Camp, as reported in 71 Am. St. 169, 176.

Although the point has not been urged upon our consideration by counsel, we approached the question as to the appellant's liability in this case with a doubt that was due to the fact that the contract sued on was executory, and had been consummated on the part of appellee Margaret by the execution of a deed. In a case where a corporation, by resolution, agreed to assume the bonded indebtedness of another corporation, which agreement was accepted by the latter corporation, the Supreme Court of the United States held that the bondholders could not avail themselves of the arrangement, because it constituted at most only an executory agreement inter partes. Second Nat. Bank v. Grand Lodge, etc., 98 U.S. 123, 25 L.Ed. 75. But in the case of an executory contract, in writing, for the sale of real property, the person agreeing to purchase has not merely a chose in action, but in the eye of a court of equity he has an enforceable right to the land, and, on the other hand, the vendor can compel performance. For this reason we think that a promise to pay a mortgage that is a part of an executory contract to sell real estate is to be regarded as of such ultimate character that, upon performance by the vendor, an obligation in favor of the holder of the mortgage may attach. But for its evidentiary force, there would be no occasion for the vendor, upon executing a deed, to take a new obligation, for the promise to pay the encumbrance could be shown even as against the vendor's general warranty. As said by Mr. Jones in his work on mortgages (5th ed.), at § 750: "Even a verbal promise by a purchaser to assume and pay a mortgage may be valid, and may be enforced in equity not only by the grantor but by the holder of the mortgage. * * * A covenant in the deed that the premises are free from encumbrances, or a recital that the consideration had been paid in full, does not estop either the grantor or the holder of the mortgage from proving such agreement and recovering upon it." And see, also, Wilson v. King, 23 N.J. Eq. 150; Merriman v. Moore, 90 Pa. 78; Remington v. Palmer, 62 N.Y. 31; Taintor v. Hemmingway, 18 Hun 458; Bolles v. Beach, 22 N.J.L. 680, 53 Am. Dec. 263; Carver v. Louthain, 38 Ind. 530; Gavin v. Buckles, 41 Ind. 528; Bever v. Bever, 144 Ind. 157, 41 N.E. 944; Boruff v. Hudson, 138 Ind. 280, 37 N.E. 786. The execution of a deed poll may therefore be regarded as performance on the part of the vendor, leaving the matter of performance upon the part of the vendee dependent upon his prior agreement. Barker v. Bradley, 42 N.Y. 316, 1 Am. Rep. 521. From these considerations, we have concluded that the mere fact that the assumption of a mortgage indebtedness is in an executory contract will not prevent the person holding the mortgage from availing himself of it while it yet remains the agreement of the vendor and the vendee. See Berkshire Life Ins. Co. v. Hutchings, 100 Ind. 496; Romaine v. Judson, 128 Ind. 403, 26 N.E. 563; Judson v. Romaine, 8 Ind.App. 390, 35 N.E. 912. If before acceptance of the benefit by the creditor, a deed was made containing contractual provisions that changed the rights of the parties, it would be for the vendee to show the fact; otherwise, we think that he is bound according to the breadth of his prior assumption.

Without the light of further extrinsic circumstances than the special findings disclose, the task of interpreting or construing the covenant of appellant is not without difficulty. The precise question is whether he is to be charged with the assumption of a mortgage lien not of record because of the words in the contract, "all other liens," in view of the fact that in that immediate connection he has assumed all "mortgages shown of record," and in view of the character of the deed that he was to receive from the vendor. Our conclusion is that, as the case...