Gifford v. . Corrigan

*225 Andrews, J. The defendant, McCloskey, in his verified answer denied that he entered into the covenant of assumption contained in the deed executed by McEvoy, and alleged that the deed was made and executed without his knowledge, and that it was never delivered to or accepted by him. The parties proceeded to trial upon the issue so presented, and the other issues in the case. The plaintiff put in evidence from the register’s office in Westchester county, the record of a deed dated May 8, 1878. recorded May 10, 1878, from McEvoy to the defendant, McCloskey, purporting to convey to “ John McCloskey, Archbishop of Mew York,” for the nominal consideration of one dollar, the mortgaged premises and a lot adjacent thereto, which deed contained a covenant on the part of the grantee to assume and pay the principal sum of $3,900 on the mortgage, with interest from January 9, 1869. The deed was executed by the grantor alone. The plaintiff rested his case against the defendant, McCloskey, solely upon the record. The case is bare of any evidence or circumstance showing or tending to show that the defendant, McCloskey, had any knowledge or information of the existen. of the deed, or indeed of the existence of the mortgaged property prior to the commencement of the action, or that he was ever in possession, or that he ever had any conversation or negotiation with any one in respect to the property. There is no evidence who put. the deed upon record, or how it came to be recorded. The hare fact of the record is all that appears connecting the defendant, McCloskey, with the transaction. The grantor, McEvoy, died before the commencement of the action, and the defendant, McCloskey, a few months after the trial. In determining the question whether the plaintiff made out a prima facie case of the delivery to and acceptance of the deed by the grantee, certain other facts need to be noticed. McEvoy was a Homan Catholic priest. He acquired title to the mortgaged property in 1870, from the trustees of “The Father Matthew’s Temperance Benefit Society of Tuckahoe,” a society incorporated under the act *226 of April 12, 1848, for the incorporation of “ Benevolent, Charitable, Scientific and Missionary Societies.” The conveyance of the property by the society to McEvoy was made under the order of the court, which authorized, the conveyance to be made to him “ for the use of the Roman Catholic church, or the people of Tuckahoe,” and the deed referred to the order as the authority under which it was executed. It appeared by the petition upon which the order was granted that the society was unable to pay the mortgage, and that the value of the premises did not exceed the amount due thereon. The plaintiff, to maintain his claim that the deed from McEvoy to McCloskey was delivered and accepted invokes the presumption that a party has accepted a benefit attempted to be conferred upon him, and that the record of a deed beneficial to the grantee, is prima facie evidence of its delivery. The property was conveyed to McEvoy for church purposes, and it cannot be doubted that in executing a deed to the defendant, McCloskey, it was his intention to vest the title in him, as archbishop, for the same purposes, whatever may be the legal effect of his convej'ance, and not to vest in his grantee a personal beneficial interest in the property. It is well known that the title to church property in the Roman Catholic church is frequently vested in the bishop. This tends to explain a transaction which would, otherwise, be peculiar, and how McEvoy may have executed a deed of the land to his ecclesiastical superior without his knowledge. The ground of the presumption from the bare record of a deed, that it has been delivered and accepted, wholly fails in this case. The deed was not beneficial to the grantee. The property was heavily incumbered, probably to its full value. As has been stated, there is no evidence of any possession under the deed, or of any prior contract or negotiation between the parties, or of any knowledge, in fact, on the part of the grantee of the existence of the conveyance. In most of the cases, where delivery of a deed has been sought to be established without proof of the actual fact, there are circuin *227 stances which, support the presumption of a delivery, in addition to the bare record of the deed. "We are of the opinion that under the circumstances of this case, a delivery cannot he presumed from the record alone, and that the conclusion of the General Term upon this point was correct. (See Jackson v. Phipps, 12 J. R. 418; Jackson v. Bodle, 20 id. 184; Church v. Gilman, 15 Wend. 656; Elsey v, Metcalf, 1 Den. 323.) Construing the exceptions in connection with the issue raised by the pleadings, we think they fairly presented the question whether the evidence justified a finding that the defendant, McCloskey, made the covenant upon which he is sought to be charged. But as the case on this point may be changed on a retrial, we think the court below should have ordered a new trial and that its order should be modified in this respect. There is another question argued by counsel of great interest which we do not deem it necessary to decide, as it may not again arise. The question relates to the effect of the release from the covenant of assumption executed by the executor of McEvoy to McCloskey, after the complaint in the action and the notice of his lis pendens had been filed, but before the actual service of process on the defendant. Is it competent for a grantor of mortgaged premises, whose conveyance was made subject to the mortgage and contains a covenant of assumption by the grantee, without the consent of the mortgagee, to release the grantee from the covenant so as to bar any remedy thereon against him by the mortgagee, and does it make any difference whether the release is executed before or after the mortgagee has notice of the covenant, or before or alter suit commenced by him thereon % This question has never been finally adjudicated in this court, although expressions of judges are to be found bearing upon it. (Hartley v. Harrison, 24 N. Y. 170; Garnsey v. Rogers, 47 id. 233 ; Dunning v. Leavitt, 85 id. 30 ; Knickerbocker L. Ins. Co. v Nelson, 78 id. 137, 150.) Prior to Burr v. Beers (24 N. Y. 178), as is shown by *228 Bapallo, J., in Garnsey v. Rogers, the right of a mortgagee to avail himself of the benefit of a covenant of payment made by a grantee of the mortgagor, was regarded as an equitable right only, and was founded on the theory that “ the undertaking of the grantee to pay off the incumbrance is a collateral security acquired by the mortgagor, which inures by an equitable subrogation to the benefit of the mortgagee.” (Denio J., Burr v. Beers, supra.) Assuming this to be the true foundation of the rule, the question arises, when does this equitable right of subrogation attach % It is clear that it cannot be enforced by the mortgagee until default of the covenantor to pay the mortgage according to the terms of his covenant. But does not the equitable right ot the creditor to ihe benefit of the covenant spring into existence contemporaneously with the covenant itself, although he cannot then avail himself of it, and although he may never be in a situation which renders a resort to it necessary. This right does not rest on privity uf contract between the covenantor and mortgagee. It is the application of an equitable principle long recognized, to work out the real justice of the transaction. If the right of the creditor to the collateral security springs into existence concurrently with the origin of the relation of principal and surety between the mortgagor and his grantee, ought the immediate parties to the covenant, by a mere release, to be permitted to change the situation of the mortgagee and deprive him of the security of the covenant ? It is true that there is no direct contract with the mortgagee, nor is there any consideration moving between the mortgagee and the covenantor. But does the absence of a consideration between these parties justify the mortgagor in canceling a security which he has taken for his own protection, and which at the same time operates also as a protection to his creditor, and especially when this is done for the mere purpose of defeating the remedy of the latter. The case of Burr v. Beers established the doctrine in this State that an action at law would lie in favor of the mortgagee against the grantee of the mortgagor, on the covenant of assumption. Would *229 the defense of a release he available when the action is in this form, assuming that it would not be available in the equitable action ? In truth, is the direct action on the covenant not an action founded upon the equity of the transaction, rather than upon the notion of a contract between the parties? We leave the question raised by the release in this case undecided. We prefer not to decide it until it is squarely and necessarily presented. The order and judgment of the General Term should be modified by directing a new trial, and as so modified, affirmed, with costs to abide the event. All concur, Danforth and Peokham, JJ. in result. Ordered accordingly.