Bowne v. . Lynde

Andrews, Ch. J. Upon the sale of the Rossie farm by Lynde to Kelsey, the latter assumed to pay as part o,f the purchase-money, $2,500 of the mortgage to the Mutual Life Insurance Company, which covered the Rossie farm, and the Gro.uverneur farm also owned by Lynde. As the result of this arrangement, the Rossie farm, as between Lynde and Kelsey, was *96 primarily charged in equity with the payment of the mortgage debt assumed by Kelsey. For it is a plain rule of equity that where a purchaser of part of mortgaged premises assumes to pay the mortgage as part of the purchase-money the part of the premises so purchased becomes in equity the primary fund for the payment of the mortgage. (Russell v. Pistor, 7 N. Y. 171.) The'Gouverneur farm, the title to which was retained, and is still held by Lynde, was, as a consequence of the assumption by Kelsey, secondarily' liable for '$2,500 of the insurance company mortgage. The defendant Bowne toolc his mortgage from Kelsey, and is bound by the same equity. He knew of the existence of the mortgage to the Mutual Life Insurance Company and of Kelsey’s agreement with Lynde when his mortgage was executed. Leaving out of view the subsequent reconveyance by Kelsey to Lynde of the Kossie farm in 1879, it is plain that Lynde is entitled to call upon the court to enforce in this action the settled equity as between a grantor of part of mortgaged premises and a grantee who had assumed the payment of the mortgage as a part of the purchase-money, and to compel a sale of the granted premises in the first instance in exoneration of his remaining lands. The fact that the Bowne mortgage was given by Kelsey at the request of Lynde in part payment for the seventy-five acres of land purchased by Lynde from Bowne concurrently with the sale by Lynde to Kelsey of the Kossie farm, does not alter the situation or change the equitable rights of the parties. It was a condition of the purchase by Lynde from Bowne that the latter should accept the Kelsey bond and mortgage in payment pro tanto for his land. If the bargain has turned out to be a had one for Bowne, by reason of the depreciation in value of the Kossie farm, that risk was assumed by him when he accepted the bond and mortgage. Lynde did not join in the bond of Kelsey or become responsible in any way for the mortgage debt. It was doubtless supposed at the time by all the parties that the Kossie farm, for which (with a few articles of personal property) Kelsey agreed to pay to Lynde $6,400, was ample security for $2,500 of the insurance company mortgage *97 and the $2,200 mortgage from Kelsey to Bowne. • But if by reason of the depreciation in the value of the land it will not pay both liens, there is no equity in saddling the loss on Lynde, thereby depriving him of the benefit of his bargain with Bowne. This,'however, would be the consequence if, as the defendant Bowne insists, the Gouverneur farm shall be directed to be first sold. It would in effect be compelling Lynde to pay the Bowne mortgage out of his property. This he has never obligated himself to do. Nor were the equities of the parties changed by the reconveyance from Kelsey to Lynde of the Rossie farm. The consideration of the reconveyance was the discharge by Lynde of the bond and mortgage for $900, taken from Kelsey for part of the original purchase-money on the sale of the Rossie farm and the conveyance by Lynde to Kelsey’s wife of ten acres of the land, and his agreement to build a house thereon and to procure a release of the ten acres from the Bowne mortgage and to protect it against the lien of the insurance company mortgage. Lynde, in pursuance of his agreement with Kelsey, conveyed the ten acres to Mrs. Kelsey, and built a house thereon and procured Bowne to release it from his mortgage. The consideration of the release was the guaranty of Lynde to pay $250 and interest on the Kelsey bond and mortgage, There was no agreement between Kelsey and Lynde that the latter should assume the Bowne mortgage. On the contrary he expressly refused to do so. The only obligation he assumed in respect to it was upon his guaranty to Bowne, and this was limited to the amount stated. Lynde acquired by the reconveyance the equity of redemption only. The situation of Bowne was not changed His security was unaffected by the transaction. He had, as before, the mortgage and bond of Kelsey. Lynde was not bound to pay the insurance company mortgage for Bowne’s protection. It was at his option to pay the liens on the Rossie farm or to allow the land to be sold thereon; and if he elected not to redeem, the land stood charged with the payment of the insurance company mortgage assumed by Kelsey. Bowne acquired no equity to have the whole burden of that mortgage shifted on to the Gouverneur farm by the *98 reconveyance of the Rossie farm to Lynde. The original equities subsisted after as before that conveyance. It is claimed that by the reconveyance Lynde released Kelsey from his personal liability upon his contract of assumption. There was no express release of Kelsey, but if this was thé legal consequence of the transaction, no right of Bowne was affected. He was not privy to that contract and it did not inure to his benefit, and gave him no right of action in case of Kelsey’s default. The point that in the adjustment of the equities between -the parties notice should have been taken of the fact that Lynde was indebted to Bowne on his guaranty, is not well taken. That was an independent contract, not noticed in the pleadings, and not affected by the determination of the issue, and no equitable grounds appear for allowing this claim as an equitable set-off on defense. We think the judgment is right and that it should be affirmed. All Concur, except Rapadlo, J., absent. Judgment affirmed.