Binsse v. Paige

By the Court. Balcom, J. John La Farge executed the mortgages to Morris in 1831, and also bonds for the payment of the money for which they were taken. Ho person ever agreed with him to pay or discharge the mortgages. He was a defendant in the suits for their foreclosure, and was properly adjudged liable to pay any deficiencies there might remain due upon them, after applying thereon the net proceeds of the sale ol" the mortgaged premises. The correctness of the decrees, when made, is not disputed by the appellants’ counsel. But he contends that the purchase of the decrees by Paige, in trust for the Schenectady Bank and Mrs. Peek, and the sale of the equity of redemption in the mortgaged premises from time to time until the same was pur [142] chased by Samuel Jones Mumford, subject to the mortgages, and his grant of the same to Paige in trust for the bank and Mrs. Peek, with a general covenant of warranty, before the sale of the premises under the decrees, shifted the primary liability to pay the balances that remained due on the mortgages and decrees after the sale, from La Farge to Mumford, and entitled the former to require the defendants to apply the avails of all collateral securities they or either of them took of Mumford. for the payment of the decrees, in discharge of the balances due thereon, before the could call upon La Farge to pay the same. This position is untenable. For La Farge only conveyed the premises subject to the mortgages; and his grantee did not, nor did any subsequent grantee down to Mumford, agree with his grantor to pay the same. The fact that the premises were conveyed subject to the mortgages did not make the grantees liable to pay the same. Trotter v. Hughes, 12 N. Y. 74. If the several conveyances had contained words showing that the grantees had agreed to pay the mortgages, the acceptance of such conveyances by them would have bound them to pay the same. But they did not contain words of that import. The decision in Trotter v. Hughes not only establishes this, but also shows that the agreement of Mumford with Paige to pay the decrees did not release La Farge from his primary liability to pay any deficiencies thereon. The decrees were not merged by the purchase of them by Paige, though he then was the owner of the equity of redemption in .the premises described in them. Paige acted as trustee for the Schenectady Bank and Mrs. Peek; and the instrument that conveyed the premises to him contained a provision that the same was not intended by either party to operate as a merger of the interest he would acquire by taking an assignment of the decrees. Hence there was no merger. 2 Cow. 246; Hadley v. Chapin, 11 Paige, 245. The declaration of trust, made by Paige, dated July 15, 1839, in which he stated the purposes for which he took mortgages from Mumford upon the lot fronting on the Bowery in New York city, andón certain real estate situated in Elizabeth-port, Hew Jersey, and for which he took the conveyance from [143] Mumford of the equity of redemption in the mortgaged premises, did not affect the rights of La Farge; and he could not avail himself of it, or use it against the defendants or either of them; for he was not a party to it, and no consideration therefor moved from him. Besides, it did not profess to relieve him from his primary liability to pay the decrees, though the fair inference from it is that the author supposed, when he executed it, that the mortgaged premises would sell for enough to satisfy the decrees. The decrees were entered in April, 1839. ¡Nothing was done toward enforcing them until September 25, 1844, when La Farge gave Paige a stipulation that the latter might sell the mortgaged premises under them, and if the premises should not sell for a sufficient sum to pay the decrees, that payment of the deficiency might be enforced against the former, personally, by executions, as directed in the decrees, without making any previous application to the court for that purpase. The stipulation contained a provision for the application of the rents and profits of the mortgaged premises to the p ayment of any balance that might remain due on the decrees after the sale, similar to that in the bond to -which I shall presently refer. Paige received the rents and profits of the premises as trustee for the Schenectady Bank and Mrs. Peek, while he held the decrees and owned the equity of redemption in the premises prior to the sale; and after the sale, at the request of La Farge, he vacated the docket of the decrees, and La Farge then gave him a bond by which he bound himself to Paige to pay the balance which should remain due on the decrees after deducting therefrom the net proceeds of the sale, and the balance of the rents /md profits of the premises received by, or which had come to, the Schenectady Bank or their solicitors, agents or attorneys, or of any person or persons by or on their behalf, or with their permission or assent, &c., after deducting from such rents all legal and just charges and allowances, such balance to be liquidated by a reference to the master in chancery who sold the premises, if the same should not be liquidated by the parties or court of chancery, in case exceptions were taken to the report of the master. [144] The position of Paige in respect to the title to the decrees and the ownership of the equity of redemption in the premises, and his acceptance and use of the stipulation, and his talcing the bond, bound him, and the other defendants for whom he acted, to allow La Farge, toward the payment of the balance due upon the decrees, the net rents and profits of the premises received by Paige for the defendants, after deducting therefrom all legal and just charges and allowances. The fact that the stipulation and bond provided that the amount of such net rents and profits should be liquidated by a reference to a master in chancery, and that Paige offered to have the same ascertained in that manner, prior to the commencement of this suit, did not deprive La Farge of the right to have the amount of such net rents and profits ascertained and so applied in this suit. The right to have the same so applied was secured to him by the stipulation and bond, and by Paige’s acceptance of them, and his acting upon the former; and Paige could have proceeded with the reference on giving-notice thereof to La Farge, and his neglect so to do balanced the neglect of La Farge respecting the reference. It seems that a clause in a contract, providing that in case any dispute should arise in regard to the same, it should be settled by arbitrators, is no bar to an action upon the contract. Haggart v. Morgan,* 5 N. Y. 422. Thjs principle is applicable to this case, and shows that the provision in the stipulation and bond for a reference to a master in chancery, to ascertain the net amount of the rents and profits of the premises, is no obstacle to the allowance of the same to La Farge in this suit. The referee erred in allowing the defendants to retain five hundred dollars out of the net amount of the rents and profits, as a reasonable counsel fee to the defendants. That was not a legal or just charge, or a legal or just allowance as against La Farge. * Paige had already been allowed his actual expenses paid out in leasing and talcing care of and looking after the premises, besides fees for particular services and a commission [145] of five per cent, out of the rents received; and he could not charge a counsel fee, as trustee, in addition thereto, simply because he was a lawyer. Chancellor Kent held, in Green v. Winter (1 Johns. Ch. 22), that where a trustee, who was a connselor-at-law, was to be allowed for “ all his advances and responsibilities,” though he was entitled to a liberal indemnity for his expenses and responsibilities incurred in the due and faithful execution of his trust, yet he was not entitled to a counsel fee as a general retainer, nor for any thing more than what is understood, in the language of a court of equity, to be “just allowances.” He rejected, in that case, a charge of five hundred dollars for “ a counsel fee as a general retainer.” The principle established in that case is applicable to this; and the charge of five hundred dolíais, as a reasonable counsel fee for the services of Paige, in leasing and taking care of and looking after the mortgaged premises, should have been disallowed. On what principle Paige was allowed one hundred and sixty-five dollars and fifty-seven cents commissions for receiving the net proceeds of the sale of the mortgaged premises, from the master in chancery who made the sale, and paying the same over to his co-defendants, is more than I have been able to discover According to the bond which Paige took from' La Farge, as well as upon principle, the entire net proceeds of the sale of the premises were to be deducted from the sum due upon the decrees, in ascertaining the amount of the deficiency. It seems to me to be very clear that this charge of one hundred and sixty-five • dollars and fifty-seven cents should have been rejected, on the ground that it was not a legal or just charge, or a legal or just allowance. I am of the opinion that for the error of the referee in allowing the defendants the two charges of one hundred and sixty-five dollars and fifty-seven cents and five hundred dollars, the judgment of the supreme court should be modified (or reversed and a new trial granted), without costs to either party in this court or at the general term of the supreme court. All the judges concurred. Judgment modified accordingly, and affirmed without costs. Footnotes [*] See also Hurst v. Litchfield, 39 N. Y. 377; Smith v. Compton, 20 Barb. 262; Hart v. Lauman, 29 Id. 410 ; Sinclair v. Tallmadge, 35 Id. 602; Heath v. Gold Exchange, 7 Abb. Pr. N. S. 251; S. C. 38 How. Pr. 168.