Coffin v. Lockhart , 71 Hun 262 ( 1893 )

MAYHAM, P. J.

This is an appeal from a judgment entered upon the decision of the court at special term in an action to foreclose a mortgage. On the 1st of January, 1880, the plaintiff executed his bond conditioned for the payment of $1,500 to Charles Parsons, and, as collateral thereto, executed and delivered to Parsons a mortgage on certain real estate belonging to the plaintiff, to secure the payment of the aforesaid sum. On the 9th of October, 1884, the plaintiff and wife, by warranty deed, conveyed the mortgaged premises to William Lockhart, this defendant, for the consideration of $2,500, $1,000 of which was paid at the time, and the remaining $1,500 the defendant Lockhart, in and by the deed received by him, agreed to assume and pay, in the payment of the $1,500 and interest on the Parsons mortgage. The language in said deed by which the defendant assumed this payment is as follows:

“This conveyance is given subject to a mortgage of $1,500 and interest from October 1st, 1884, which the party of the second part hereby asumes and agrees to pay as a part of the purchase price.”

On the 10th day of December, 1889, the defendant Lockhart executed and delivered to the plaintiff his bond with the penalty of $3,000, containing the following condition:

“The condition of this obligation is such that if the above-bounden heirs, executors, or administrators shall well and truly pay, or cause to be paid, unto the above-named Martin Coffin, or his certain attorney, executors, administrators, or assigns, the just and full sum of $1,500, with interest according to the conditions of a bond executed by Martin Coffin to Charles Parsons, dated January 1st, 1880, to secure the payment of the sum of $1,500, with interest. This bond is given to secure said Martin Coffin and save him harmless of and from all liability upon, or by virtue of, the said bond so by him given to the said Charles Parsons; the premises described in the mortgage given by said Coffin to said Parsons to secure the aforesaid bond having been conveyed to the party of the first part, and he having assumed and agreed to pay said bond and mortgage as a part of the purchase price for said premises.”

As collateral to this bond, the defendant at the same time executed and delivered to said Coffin a mortgage upon the premises conveyed to him by the plaintiff in and by the deed above referred to, which mortgage, among other things, contained the following:

“Provided, always, and these presents are on the expressed condition, that if the said William Lockhart, or his heirs, executors, or administrators shall well and truly pay or cause to be paid to the party of the second part, executors, administrators, or assigns, the sum of $1,500, with interest, according to the conditions of a certain bond or writing obligatory, bearing even date herewith, executed by the said Lockhart to the said Coffin to said party of the second part, which sum the said William Lockhart hereby covenants to pay, then these presents shall cease and be void.”

The mortgage also contained the usual condition in case of default by the defendant in paying according to the terms of the bonds.

On the 27th day of July, 1891, an action was commenced by Charles Parsons against the plaintiff and defendant to foreclose the mortgage of $1,500 given by the defendant to Parsons, the payment of which had been assumed by the defendant Lockhart in the deed of conveyance to him, and such proceedings were thereon had that judgment of foreclosure and sale was entered in said action in September, 1891, and on the 31st day of December, 1891, a judgment for deficiency on said foreclosure and sale was entered and docketed in the proper county against this plaintiff for $803.69. About the 26th of November, 1890, this plaintiff commenced an action against this defendant and one Walter Lockhart, setting up the conveyance of these premises by the plaintiff to the defendant and the condition in the deed, by which this defendant assumed and agreed to pay the Parsons mortgage, and praying that a specific performance of that agreement be decreed against this defendant, and such proceedings were thereupon had that on the 17th day of August, 1891, a judgment was recovered against this defendant in favor of the plaintiff in that action for the sum of $1,626.67 damages, and $43.18 costs, being the amount claimed to be due and unpaid on the $1,500 Parsons mortgage. This judgment contained this recital:

“In case the defendant William Lockhart pays or satisfies the said bond and mortgage described in the complaint and in the report of the said referee before the sum of $1,626.67 be collected upon execution, then there shall be credited upon any execution issued or to be issued for the collection of this judgment the sum of $1,626.67, with interest thereon, but this provision shall not in any manner affect the execution issued or to be issued for the collection of costs in this action.”

On this judgment execution was issued to the sheriff of the proper county on the 18th of August, 1891, and also an execution on the same judgment on the 12th of December, 1891, which first-mentioned execution was indorsed ‘(Received August 8th, 1891,” and returned nulla bona the 5th of August, 1891, by the sheriff of Warren county. On the 19th of November, 1891. this action was commenced for the foreclosure of the mortgage executed by defendant to plaintiff, dated December 10, 1889. The complaint in this action was in the usual form of a complaint in foreclosure, but recited that said bond and mortgage was upon condition that the defendant should save the plaintiff “harmless of and from all liability” upon and by virtue of a certain bond executed by Martin Coffin to Charles Parsons, dated January 1,1880, which bond was conditioned for the payment of $1,500. The answer set up substantially the transactions between the plaintiff and defendant, the prosecution of the equitable action for a specific performance, and that no effort had been made at the time of the commencement of this action for the collection of the judgment recovered in that equitable action; that that action resulted in the recovery of the amount claimed to be due on this mortgage; that the defendant, at the time of the commencement of this action, was the owner of the premises described in the mortgage; that the plaintiff still owns and holds the judgment in the action for specific performance; and that there is no valid consideration for the mortgage on which this action is brought. The trial judge found as a conclusion of law that there was due upon the bond and mortgage in suit in this action the sum of $803.68, and directed judgment of foreclosure and sale of the mortgaged premises to satisfy that amount, and judgment against the defendant for any deficiency that might arise on said sale. Upon this judgment was entered, and from that judgment plaintiff appealed.

The defendant, on purchasing the premises in question, became liable to pay as a part of the consideration the sum of $1,500 to satisfy a mortgage then upon the premises. That sum he failed to pay, and the plaintiff, who was primarily liable upon the bond to which that mortgage was collateral, was compelled to and did pay the sum which is found due in this action.

The appellant’s contention is that the bond and mortgage in suit in this action was void for want of consideration. If this bond and mortgage was an original undertaking between the parties to it, with no other consideration than that which the defendant agreed by accepting the deed to perform, then it would seem that the defendant’s contention is sound, as in that case there would be no new consideration for the giving of the same, the defendant having already contracted to pay the $1,500 by his acceptance of the deed containing that agreement, and the plaintiff at that time having accepted that agreement, without exacting any security as collateral to the same. There could not therefore be any consideration of benefits to the mortgagor to support this bond and mortgage, or of harm to the mortgagee, by not reserving such collateral, as the rights of the parties, so far as the payment of this $1,500 is concerned, were fixed by the agreement in the deed, and there is nothing in the case from which any new consideration can be found. This would seem to bring the case within the decision of Vanderbilt v. Schreyer, 91 N. Y. 392. That was an action to charge a guarantor with the payment of a mortgage guarantied by him. The plaintiff in that action undertook to build a house, and was by the contract to be paid in part by the assignment of the $5,000 mortgage. At the time fixed in the contract for making the assignment, the defendant tendered the mortgage, duly assigned, without guaranty. The plaintiff insisted upon the defendant guarantying the same, and he accordingly, without any new consideration moving to him for such guaranty, yielded to the plaintiff’s request, and guarantied the mortgage. In an action upon such guaranty it was held that the same was without consideration, and void as to the guarantor; and Ruger, J., in discussing that question, says:

“It being clear that Vanderbilt had' no legal right to require as a condition to the fulfillment of his contract the performance qf any act not required by the contract, it is difficult to see what benefit he nos bestowed or inconvenience he has suffered in return for the undertaking assumed by the defendant. He promised to do only that which he was before legally bound to perform. Even though it were in his power to refuse to perform his contract, he could do this only upon paying the other party the damages occasioned by his nonperformance, and that, in contemplation of law, would be equivalent to performance. He had no legal or moral right to perform the obligation of the contract into which he had, upon a good consideration, sufficiently entered. There is no evidence in support of the claim that this guaranty was given as a compromise of any dispute arising with reference to the obligation of the plaintiff under his contract with Gebhart and Ritchie. The ca'se is not therefore brought within the cases in which a performance has been upheld, on the theory that it was made under settlement of con-. . troversy over disputed claims. The authorities seem quite uniformly to show the inadequacy of the consideration alleged in the guaranty.”

And the learned judge also says:

“The incorporation of this guaranty into the assignment, for which there was no consideration, does not affect the q vffion. It was not essential to the assignment, and was, so far as its legal effect was concerned, a separate instrument, and must be supported upon a sufficient consideration, or treated as a nudum pactum. It is quite clear that the' plaintiff had no right to demand the guaranty by the terms of the original contract.”

It seems to us that the same may be said in reference to the right of the plaintiff to demand the execution and delivery of the mortgage of December 10th as a guaranty for the performance by the defendant of his implied agreement in the acceptance of the deed. The rule seems well settled that the past transaction, complete in itself, ■ by which the rights and obligations of the' parties became fixed, furnishes no good consideration to support a subsequent agreement by which, one party to the contract assumes new and increased obligation, without any new consideration. In the case at bar the contract- between the plaintiff and defendant was complete in itself when plaintiff conveyed his farm to the defendant, and received $1,000 of the consideration, and accepted the defendant’s agreement in the deed to pay the balance of $1,500 consideration upon the outstanding mortgage. That agreement being complete in itself, it did not lie with the plaintiff subsequently to demand of the defendant collateral security for the performance of that agreement, and any collateral security given 3 without new and adequate consideration moving from the plaintiff to the defendant would be a nudum pactum so long as the original contract remained in full force, unchanged and unaffected by the new agreement.

It is quite true, as contended by the learned counsel for the respondent, that the defendant, by taldng a conveyance of the land, which by its terms subjected him to the payment of the mortgage, and which he assumed and agreed to pay, became bound to indemnify his guarantor against liability for the mortgage debt. Comstock v. Drohan, 71 N. Y. 9. But it is equally true that that obligation to indemnify grew out of, and the obligation of the defendant was created by, his original agreement to assume and pay the mortgage debt; and, when that contract was consummated, any additional agreement subsequently made to secure the plaintiff against his liability, to be binding, must be upon a new and sufficient consideration. If we are right in this conclusion, the other questions raised by the appellant on this appeal need not be examined. Judgment reversed, and a new trial ordered, costs to abide the event.

HERRICK, J. I concur in result.