Roth v. Stein , 100 Conn. 668 ( 1924 )

Upon the foregoing facts the defendant assigned as error the following: (1) in holding that the security mortgage was foreclosable because of anything that happened in or about the Canton Street mortgage; (2) in holding that the security mortgage was foreclosable within a period of five years; (3) in holding that the guarantee contained in the security mortgage was assignable; (4) in not holding that any damage that accrued was only to Harry Roth and not to the plaintiffs; (5) in not holding that the defendant was not liable for any damage to Harry Roth on account of the Canton Street mortgage; (6) in holding that any liability because of the nonpayment of the Canton Street mortgage attached to defendant in the absence of notice of dishonor or protest of the note; (7) in holding that the existence of said ordinance did not excuse the building of the store; (8) in holding that the acceptance of payment on the prior mortgage held by the plaintiffs, after the period of six months during which the store was agreed to be built, did not estop plaintiffs from claiming any alleged breach of such agreement; (9) in not reforming the security mortgage according to the claim of defendant.

As regards the first reason of appeal, it appears from the condition in the Windsor Street mortgage — the security mortgage — that it was given for the purpose of securing the payment of the note secured by mortgage from Greenberg to Meyer Stein, which latter had been assigned by Stein to Benjamin Roth and William Katz, the plaintiffs, had been assigned by them to Harry Roth, and then again reassigned by the latter back to the plaintiffs. The original mortgage had been assigned and then, for further security, the mortgage sought to be foreclosed was given. The plaintiffs then had two items of security: the mortgage on the Canton Street property by absolute assignment, and a further security of the Greenberg mortgage note by the Windsor Street mortgage, the security mortgage. The condition of this last mortgage is twofold: providing in the usual way that the deed should become void in case the Canton Street mortgage note was paid according to its tenor, and also that it should become void in case the building spoken of should be erected in six months and the payment of $400 and interest be made to Esther Malley at the time stated in the condition, but if these two latter results did not occur, then the security mortgage should remain in full force for five years to secure the mortgagees for "the payments which they are to receive upon said above described Canton Street mortgage note."

The intent of the instrument and of the transaction is plain. The plaintiffs evidently desired security beyond that afforded by the assignment of the Canton Street mortgage, so they overlapped the security of the note thereby secured upon the Windsor Street property; but if the payment aforesaid was made to Esther Malley (and it was in fact made) and a house erected, then the equity in the Windsor Street property would be so enhanced that the additional security obtained by the mortgage would be less needed, and the security mortgage would terminate. Failing the erection of the building, the mortgage was to stand for five years as furnishing security for the Greenberg note in addition to the mortgage on the Canton Street property.

The building above referred to was not erected, so that after six months plaintiffs had the security of the Windsor Street mortgage for the payment of the Canton Street mortgage note. The principal sum of this note was payable in instalments extending over a period of eleven years from January 13th, 1921. For five years of that period the equity in the Windsor Street property stood as further security for the payment of this note. The interest due on the Greenberg note July 13th, 1922, was not paid, the condition of the security mortgage was therefore broken, as regards its concluding paragraph, and the plaintiffs therefore had the right to foreclose. In September, 1922, Louis Goldfield and Max Goldfield brought an action to foreclose a prior mortgage on the Canton Street property against Rose Greiner, the owner of the equity therein, and Harry Roth, the then owner of the security mortgage, and afterward obtained judgment of foreclosure. There was no equity in this property for any incumbrancer after the Goldfields. The reason of appeal in using the words "anything that happened in or about the Canton Street" property, is confusing and ambiguous, but we have treated the point sought to be made, as the same was discussed in the briefs and arguments of the parties. Strictly speaking, it was not something concerning the Canton Street property that made the security mortgage foreclosable, but the fact that default in payment of interest had been made on the Greenberg note, payment of which the security-mortgage secured.

In her second reason of appeal the defendant Ida Stein contends that in no event was the security mortgage foreclosable for a period of five years. The provision for the security-mortgage to remain as a lien on the Windsor Street property was evidently one for the benefit of the mortgagor to the extent that at the end of that period it would be no longer an incumbrance and the property would be freed therefrom. But the fact that it was given to secure "the grantees herein on the payments they are to receive upon said above described Canton Street mortgage note," clearly indicates that the remedy of foreclosure was available in case such payments were not made. To hold that it was intended, by the words above quoted, that the plaintiffs for a period of five years were to stand by and see repeated defaults in payments of interest and instalments upon a note that had eleven years from date to run, without a remedy, is plainly opposed to the language and intent of the condition, and would make it inefficacious and mere surplusage.

In the third reason of appeal it is claimed that the guaranty in the security-mortgage ran to plaintiffs only and was not assignable, and in the fourth reason, that any damage accruing accrued only to Harry Roth and not to the plaintiffs. These reasons raise practically the same question: the assignability of the security-mortgage, and its effect upon all of the securities attached to the Greenberg note. In the first place the Greenberg note and mortgage, as found by the court, was assigned to the plaintiffs, and was also endorsed by Meyer Stein to the plaintiffs and further secured by mortgage on the Windsor Street property. The assignment by the plaintiffs of the note and the Canton Street mortgage to Harry Roth, and the subsequent reassignment by Roth to the plaintiffs clearly carried along both the note and the security. But in any event the transfer of the note would have carried with it the full benefit of the security. Pettus v. Gault, 81 Conn. 415, 422, 71 A. 509;Waterbury Trust Co. v. Weisman, 94 Conn. 210, 218,108 A. 550. In such a case in equity regard is to be had to the whole transaction and its purpose. Bulkley v.Chapman, 9 Conn. 5, 9. In viewing the transaction generally from an equitable point of view, it is not to be forgotten that, by reassignment, the security mortgage became again vested in the plaintiffs, to whom it had originally been made.

The fourth reason of appeal contends that the damage accruing from the default in payment upon the Greenberg note and mortgage to Harry Roth, who held it and the security mortgage at the time of the Goldfield foreclosure upon the Canton Street property, cannot be imposed as a liability upon Ida Stein. No attempt is made in the present action to enforce such a liability, the action is brought merely to foreclose her equity of redemption in the Windsor Street property, by reason of a breach of the conditions of the security mortgage.

The sixth reason of appeal claims that since no notice of dishonor or protest of the Greenberg note was given to Ida Stein, she was released from liability. It is sufficient to say that no personal liability is sought to be imposed in this action. She was not an endorser upon the note, but had she been an endorser the only effect of want of notice or of protest would have been to relieve her of personal liability.

The seventh reason of appeal claims error in that the court erred in holding that the existence of the building ordinance of the city did not excuse defendant from building the store. This reason of appeal is futile, in that the court held as a matter of fact that the ordinance did not prevent the erection of the building.

The eighth reason of appeal insists that the court erred in not finding that the plaintiffs were estopped from claiming a foreclosure of the security mortgage, due to their acceptance of payments upon the prior mortgage after the time for building the store had expired. As we have observed, the part of the condition relating to the erection of the building is for the benefit of Stein. If he built the store the security-mortgage immediately became void, if not, it continued in force for five years. Nonperformance in this matter did not render the mortgage foreclosable, and it was optional with him whether or not he built the store. Payments by him, or by his grantee Ida Stein, on a prior mortgage which it was a duty to make, can have no effect upon the validity of the security-mortgage, which latter became foreclosable not on account of anything connected with the proposed building, but on account of the nonpayment of interest on the Greenberg or Canton Street mortgage note. The breach, as the trial judge terms it, of the condition as to building, merely places the mortgage on the footing of a continuing guaranty of the Greenberg mortgage for a period of five years.

The ninth reason of appeal relates to the refusal of the trial court to reform the condition of the security mortgage. This matter is set at rest by the finding of the trial court, that this mortgage and its wording was not procured through fraud, mistake or misrepresentation which justified its reformation. There is nothing in any subordinate facts found to invalidate this ultimate conclusion. It may also be inferred, from what has been before said in the opinion, that this condition required no reformation. While not a masterpiece of conveyancing, it is entirely intelligible taken in connection with the rest of the record.

There is no error.

In this opinion the other judges concurred.