Opinion
07-23-1895
GREEN v. STONE.
A. H. Swackhammer, for complainant. John J. Crandall, for defendant.
Bill by George G. Green against Edward B. Stone for a deficiency on foreclosure. Bill dismissed.
A. H. Swackhammer, for complainant.
John J. Crandall, for defendant.
BIRD, V. C. This is a bill for deficiency against a grantee, alleging his liability on the ground of his assumption of the mortgage debt. George S. Beckett was the owner of a large tract of land in Gloucester county. He had given to George G. Green a mortgage thereon for $15,000. Edward B. Stone, the defendant, was the owner of four houses and lots in Camden, which were subject to mortgages, the equity in the four being considered equal to $2,000. One McClung was desirous of becoming the owner of said farm, and not having the cash with which to make the purchase, and knowing that Beckett wanted to sell his farm, and that Stone was willing to dispose of his houses and lots, adopted the following scheme, with the view of ultimately securing the title in himself, and in so doing to limit the number of conveyances as much as possible: He procured the consent of Stone to make conveyance of his said four lots directly to Beckett, in consideration of Beckett's conveying the farm to Stone, instead of having the Stone conveyance first made to himself, and then conveying to Beckett, with the express agreement, as will hereafter be seen, that the said $2,000, at which the equity of redemption in the Stone lots was valued, should be paid to Stone by McClung, and that Stone should hold as security therefor the title to the said farm. The negotiations with Beckett were all carried on by McClung, they having several Interviews. McClung examined the Beckett farm; Stone never having seen it, and, so far as appears, made no inquiry respecting it. Beckett and McClung called upon Stone once, not for the purpose of negotiating with Stone, but for the purpose of examining the houses which McClung was offering to Beckett. On this occasion McClung asked Stone for his title deed, in order that he might have a conveyance made of the Stone lots to Beckett. McClung gave a receipt to Stone for this deed, in which receipt it was stated that four properties were to be deed to George Beckett "in consideration for deed of farm owned by the said George Beckett, said deed of farm to be transferred to whom T. K. McClung may designate, upon payment of $2,000.00 by him to Edward B. Stone." Beckett was to have the title, but McClung was to pay to Stone the $2,000, the value of the equity in the four lots. Beckett had a deed prepared, which he and his wife executed to Stone, for the farm. The parties then met, by appointment, in the office of Messrs. Bergen & Bergen. There were present Martin Bergen, of said firm, McClung, Beckett, and Stone, The object of the meeting was to exchange titles. When this was understood by Mr. Bergen, and after he had inspected the deeds so far as to see that they were both acknowledged, but not further, he passed the deed executed by Stone towards Beckett, and the deed executed by Beckett towards Stone. It then appeared that, so far as Stone was concerned, he was simply an instrument used by McClung to procure the passage of the title of the farm to himself ultimately. If Beckett had not been fully informed of this before, he was so informed at this time. This is established beyond question by all the testimony, independently of what took place in Mr. Bergen's office, but especially by what transpired there in the presence of Beckett; for then it was, in the presence of Beckett, that instructions were given to Bergen to prepare an agreement by which Stone bound himself to convey the said farm to McClung, or to any person whom he might name for that purpose, for the consideration of the sum of $2,000. The agreement was so written, and executed by Stone and McClung. This was executed in duplicate in Beckett's presence, each taking one
In the deed so delivered to Stone by Beckett there was an assumption of the amount due upon the Green mortgage. Since then the mortgage has been foreclosed, and a very large deficiency remains. Stone insists that it would be highly inequitable to enforce this claim for deficiency against him:
1. Because, while the title to the Beckett farm was conveyed to him, he had nothing whatever to do with the transaction, beyond consenting to the conveyance of his lots, at the price named, as so much of the consideration, upon the agreement between him and McClung that when McClung paid him the $2,000 the Beckett farm was to be conveyed to McClung, or to such other person as McClung might name. This can only derive force from the fact that Beckett was fully Informed of it; for the case might have a very different complexion, had Beckett honestly acted upon the conviction that Stone was the real actor, and that McClung was only his agent. This entitles it to great consideration. But, as already intimated, I think Beckett was fully apprised of the relations between McClung and Stone.
2. Because he never agreed to assume the payment of the said mortgage, nor did he have any knowledge whatsoever of the assumption clause contained in the deed. I am satisfied that, while he saw the deed at Bergen's office, he did not read it or open it, nor was it read to him. It was sent to the office, to be recorded by Bergen, and returned to Bergen by the clerk. Nor did Stone know of such assumption until after the foreclosure of the Green mortgage had been instituted. There is nothing to show any actual or implied agreement between Stone and Beckett personally, and consequently no right to indemnity upon the part of Beckett. If this be so as between Beckett and Stone, it is equally so as between Stone and Green, sincethey did not know each other in the transaction. Mr. Barker says that McClung knew of this assumption clause before the delivery of the deed, which is denied by McClung, but whether he did or not cannot affect the rights of Stone, under the circumstances of this case. This contention upon the part of the defendant is fully supported by authority, in Bull v. Titsworth, 29 N. J. Eq. 73, the chancellor declared: "A mortgagee can derive no advantage from a covenant of assumption in a deed, if the covenant be invalid between the parties to the deed; e. g. where there was no agreement of assumption, and though the deed contained the co> enant, and was delivered, the covenant escaped the notice of the grantee, it being inserted in an unusual place in the deed." This is in accord with the spirit of all the cases. Cordts v. Hargrave, Id. 446. Arnaud v. Grigg, Id. 482; Van Horn v. Powers, 26 N. J. Eq. 257; Randolph v. Wilson, 38 N. J. Eq. 28; Vreeland v. Van Blarcom, 35 N. J. Eq. 533; Harrison v. Guerin, 27 N. J. Eq. 219.
3. Because McClung was principal in the transaction, of which Beckett was fully apprised before and at the time of the consummation thereof, and which Green afterwards recognized. If there were nothing else in the case to give force to this insistment as to Beckett, the unmistakable meaning of the writing above referred to, by which Stone agreed to convey the Beckett farm to McClung, or to any other person whom he might name, is sufficient. That writing was prepared at the time of the delivery of the deeds, and in the presence of all the parties. As to Green, it is shown that he received all the interest which was paid after the conveyance, and before the foreclosure, from McClung, and that he looked to McClung for it, and not to Stone. I am satisfied that Green's agent and private secretary knew that McClung took possession of the farm, and had the control and management thereof, if Green himself had not such knowledge. To show that both Mr. Beckett and Mr. Livermore, the said agent and secretary, had such knowledge, a letter of which the following is a copy will suffice to establish: "Bridgeport, May 27th, 1893. Mr. Livermore—Dear Sir: I sold the farm to Edward Stone, but it is controlled by a company. T. K. McClung has control of it. I saw McClung to-day. He says the interest will be paid prompt on the 23rd of June. They are doing big improvement His office is 120 Bullet Building. He has the searches, and will send them to you. Yours, Resp., G. S. Beckett." The deeds were delivered on the 3d day of February, previous to the date of this letter.
4. If these considerations be insufficient to bar a decree for deficiency, it would be difficult to give any favor to the complainant, Green, if it still be contended that McClung was the agent of Stone, since it is evident that as such agent he had not the slightest authority to bind Stone to the assumption, and must have consented to it for his own benefit. This, I think, is unanswerable. In Vreeland v. Van Blarcom, 35 N. J. Eq. 533, the court of errors declared: "An agent cannot exact of his principal any advantage growing out of a contract made by the agent in his principal's name, unless the latter has expressly authorized or ratified it, with knowledge that such advantage would accrue." In that case one Geroe held a mortgage upon certain premises, which he was instrumental in having conveyed to one Brown, with the assumption of payment of the mortgage in the conveyance. Afterwards Brown conveyed the title to the defendant, Vreeland, with a like assumption. The administrators of Geroe filed their bill against Vreeland for deficiency. Geroe was present at the delivery of the deed, and the defendant had no knowledge of the assumption clause therein, and the mortgage was not, even so far as even the grantor, Brown, could recollect, a subject of conversation between either himself and Geroe, or himself and the defendant. These facts are strikingly like unto the ones in the case before me. In this case, if McClung had not procured the assumption clause to be inserted, it is claimed that he knew of it, although he denies such knowledge. I will advise that the bill be dismissed, with costs. I say with costs, because the testimony establishes the fact that the complainant had notice of the true relations of Stone to this transaction before he filed this bill.