Wagoner v. Brady

Cochrane, P. J. The appellant Brady, being the owner and mortgagor of certain real estate, conveyed the same to the defendant Van Wormer who assumed the payment of the mortgage. The present action was brought by plaintiff as mortgagee to foreclose the mortgage. Under the judgment of foreclosure and sale herein plaintiff became the purchaser of the property. She also recovered a judgment of deficiency herein against both Brady and Van Wormer. That was in the year 1918. In the year 1923 plaintiff conveyed the property back to said Van Wormer and without the consent of Brady executed to Van Wormer a release from said judgment of deficiency. More than five years having elapsed since the recovery of the judgment, plaintiff now moves for leave to issue execution thereon against the defendant Brady. It is well established in this State that when a mortgagor of real estate conveys it and his grantee assumes the payment of the mortgage the relationship of principal and surety is created between them, the grantee becoming the principal debtor and the grantor becoming surety for the payment of the mortgage indebtedness. (Hyde v. Miller, 45 App. Div. 396; Calvo v. Davies, 73 N. Y. 211; Paine v. Jones, 76 id. 274, 278; 20 Am. & Eng. Ency. of Law [2d ed.], 997, 998.) In Calvo v. Davies (73 N. Y. 211) the headnote correctly expresses the rule as follows: “ Where a deed contains a covenant, upon the part of the grantee, to pay a mortgage upon the premises, executed by the grantor, the relation of principal and surety is created between the parties, and an agreement by the holder of the mortgage with the grantee to extend the time of payment, made without the consent of the grantor, discharges the grantor.” By the creation of this relationship there was offered to the plaintiff the pecuniary responsibility of an additional debtor for the same indebtedness. Her acceptance of Van Wormer as her debtor did not of course affect the Lability of Brady to herself. That remained precisely the same after his conveyance to Van Wormer as before. Plaintiff might have entirely ignored Van Wormer. It was her right and privilege to pursue either or both of her debtors. But when she accepted Van Wormer as an additional debtor as she did when she procured a judgment against him she knew she was dealing with him as a principal and she could not deal with him in such a way as to impair or prejudice the rights of the surety Brady. In Grow v. Garlock (97 N. Y. 81) the headnote is as follows: [407] “ Where, as between themselves, two debtors stand toward each other in the relation of principal and surety, and this is known to the creditor, he is bound to respect such relationship, no matter how or when it arose, or whether he consented to it or not, and, although by the terms of the obligation held by him, the real surety occupies the position of principal.” The question has not become academic because the mortgage debt has been reduced to judgment. Plaintiff was entitled to judgment against both debtors and there was no occasion for Brady to raise the question until his rights were invaded. However, that the relationship survives the judgment and that the question may be raised thereafter seems to be settled by the authorities. (Bangs v. Strong, 4 N. Y. 315; Marsh v. Benedict, 14 Hun, 317, 320; Bostwick v. Scott, 40 id. 212, 214; Townsend v. Whitney, 75 N. Y. 425; S. C., 15 Hun, 93, where the case of mere joint debtors is distinguished.) When Brady pays this judgment he "is entitled to be subrogated to the rights of the plaintiff and to an assignment of the judgment and to enforce it against Van Wormer. (Ellsworth v. Lockwood, 42 N. Y. 89, 98; Townsend v. Whitney, 15 Hun, 93; affd., 75 N. Y. 425; Bostwick v. Scott, 40 Hun, 212, 214.) This right of subrogation plaintiff destroyed when she released Van Wormer. By that act Brady, as the-surety of Van Wormer, became discharged from liability on the judgment under well-established rules pertaining to the relationship of principal and surety. The order should be reversed. Van Kirk, McCann and Whitmyer, JJ., concur; Davis, J., dissents, with an opinion.