Blank v. German

The opinion of the Court was delivered by Gibson, C. J. Had the defendants below purchased the property subject to the mortgage debt, the case would have been within the principle of Campbell v. Shrum, because the price would have been estimated at the clear value less the mortgage debt, and it may be said that so much of the price would have been virtually retained to answer it; so that the plaintiff would have lost that much, had he been compelled to pay with other funds than those set apart for the purpose in the defendants’ hands. As it would have been a fraud in them to retain his money and let him be pursued for it on his bond, they would have been held liable on an implied promise to apply it to the purpose intended; and it may be said in every such case, that he who purchases expressly subject to an encumbrance, as between the vendor and himself, makes the debt his own—which is the principle of Campbell v. Shrum. But what deduction or reservation of purchase-money was there in the contemplation of the parties before us? There was no express promise to pay a farthing either to the plaintiff or the mortgagees; nor is there anything in the nature or circumstances of the transaction from which a promise can be implied, further than as regards an application of the fund to the debts. It does not appear that the object of the defendants was profit on a resale, or to take the property as their own, or that there was any sale to them at all. The plaintiff proposed to convey to them his house and lot subject to a mortgage to the Society of United Brethren, who were not party to the arrangement, in consideration of receiving a release of their debts. He could not have conveyed an unencumbered title; and perhaps no more was intended to be expressed than that he did not undertake to do so. The defendants agreed at the foot of a consolidated statement of his liabilities, to release their claims and take a conveyance to two of their number as trustees, “ for the use of the above debt;” and he conveyed accordingly. Was that a sale, or was it an ordinary assignment to trustees for distribution among creditors ? There is not a word in the agreement about purchase-money, or a reservation of anything ; nor is there an engagement to pay to any one but themselves and the mortgagees, nor to the latter beyond the proceeds of the property: neither is there a guaranty that the proceeds will be sufficient to discharge the mortgage debt. Had there been a surplus after payment of all the debts, the plaintiff would have been entitled to it; and why should he be allowed to call on the defendants to make up any deficiency ? The price obtained for [43] the property was applied by the trustees to the mortgage, but did not discharge it; and the plaintiff calls for indemnification from his creditors for the residue of it recovered from him on the bond which accompanied the mortgage, though they released him without having received a farthing from the fund. Such a claim is palpably unjust, and would require very positive expressions to give it effect. The agreement, however, imports distinctly that the property was to be conveyed to trustees for payment of debts, and not merely to be sold for the defendants’ advantage beyond satisfaction of their demands. What else can be drawn from the clumsy expression, “ for the use of the above debt 1” The defendants cannot be said to have been purchasers even in a technical sense; for the property was conveyed only to two of them, who executed a declaration of trust that they were to-apply it to the plaintiff’s debts, and return the surplus to him, should there be any. If, as seems to have been supposed below, the debts were the measure of the price fixed upon the property by the parties as the value of it, and constituted the consideration of the grant, it is difficult to account for the insertion of this clause for a return of surplus. If the defendants bought the property and paid for it with the debts, they, and not the plaintiff, would be entitled to the profits on a resale; yet the plaintiff undoubtedly retained a contingent interest in the property beyond its application to the mortgage, and one which is inconsistent with the notion that he sold it. The defendants, therefore, were not purchasers. Peter Knepply, who is sued as one of them, did not even sign the agreement; and they who did, were to get no more for it than the desperate chance of receiving something from an insolvent fund. For that consideration, they gave up their recourse to the plaintiff’s person and future earnings; and it would be a violation of the letter as well as the spirit of the agreement, to subject them to the loss of anything else. Judgment reversed and a venire de novo awarded.