Russell v. Weinberg

Defense in Foreclosure of Mortgage.—Evidence of Notice to Foreclose.—Principal and Surety. Where a mortgagor, having sold the mortgaged premises to one who has assumed the payment of the mortgage, requests the mortgagee, after the mortgage is due, to foreclose immediately lest the premises become insufficient to pay the mortgage, the latter must do so, or the former will be discharged from liability on the bond if the property afterwards becomes insufficient. Where a mortgagor, having conveyed the mortgaged premises to one who assumed the payment of the mortgage, upon the maturity thereof told the mortgagee “to go ahead and collect his money without any delay,” as his grantee was then good, but ho did not know how long he would be, and if the mortgagee did not proceed at once, he would not be liable on the bond any longer ;—and the property afterwards became insufficient;—Held, that this evidence was sufficient to show a request that the creditor should proceed to enforce the claim. Sufficiency of evidence of loss and damage suffered in not complying with a request in such a case.

Appeal from a judgment. John Bussell brought this action against Hannah Weinberg, Mary L. McCrum and John J. McCrum, to foreclose a mortgage on certain real estate, in the city of Brooklyn, and for judgment against said defendants for deficiency. The evidence showed that the mortgage was made by Mary L. McCrum and John J. McCrum, her husband, to said John Bussell, to secure the payment of their joint and several bond for $4,000. Afterwards the McCrums conveyed the mortgaged premises to said Hannah Weinberg, subject to said mortgage, which she assumed and agreed to pay as part of the consideration for the conveyance. The deed was duly recorded. The plaintiff testified that soon after the mortgage became due, the defendants McCrum gave him verbal notice to foreclose the mortgage—that he “must shove ’em through and get the money;” that no suit was commenced within one year from such notice ; that the property had depreciated and the defendant Weinberg had also lost money; but it was not admitted that she' was insolvent. The defendant John J. McCrum, testified as follows: “When the mortgage became due I told plaintiff to go ahead and collect his money without any delay ; that the parties were then good, but how long they would be so I could not say ; he had better proceed at once ; that if he didn’t do that we shouldn’t be liable on the bond any longer ; he said he would do it; that is about all till a year had passed; he came to see me again, and said he hadn’t got his interest. I should say, the property was sufficient to pay at the time the mortgage came due; think it was worth between $5,000 and $6,000; pretty hard to put a value on it now; think $4,000 is the extent of its value now.” The court found that shortly after the maturity of the mortgage the defendants McCrum requested the plaintiff to foreclose and collect it; that the plaintiff neglected to do so for more than one year, and that the property described in the complaint, though sufficient at the time of such request to pay the claim, had depreciated in value since said notice so that it became insufficient to pay plaintiff’s claim ; and that the defendants McCrum were discharged from all liability. To these findings the plaintiff excepted and appealed to this court. I. It was error to hold that the transaction, between McCrum and Weinberg (to which the plaintiff was not a party) changed the obligation of the former from principal debtor to the plaintiff to that of surety merely for Weinberg. II. The moral or equitable duty of the creditor to collect the debt from the principal upon request of the surety grows out of the original transaction, when the borrower, standing as principal, has been requested to find a surety (King v. Baldwin, 17 Johns. 383 ; Pain v. Packard, 13 Id. 174; Manchester Iron Mfg. Co. v. Sweeting, 10 Wend. 162; Warner v. Beardsley, 8 Id. 198; Herrick v. Borst, 4 Hill, 650; Remsen v. Beekman, 25 N. Y. 552. III. The McCrums could not relieve themselves without the consent of their creditor (Per Welles, J., 7 N. Y. 175 ; Marsh v. Pike, 10 Paige, 595; William and Mary College v. Powell, 12 Gratt. 372). The following cases, in stating the rule by which a conveyance by the mortgagor to a third person, the latter agreeing to pay the mortgage, converts the mortgagor into a surety for the grantee in respect to the mortgage debt, expressly limit that effect to the parties to the conveyance without affecting the rights of the mortgagee (Comstock v. Drohan, 8 Hun, 374 ; Rubens v. Prindle, 44 Barb. 336, per Welles, J., 345; Mills v. Watson, 1 Sweeny, 378; Johnson v. Zink, 52 Barb. 396 ; Jumel v. Jumel, 7 Paige, 591; Halsey v. Reed, 9 Id. 446; Blyer v. Monholland, 2 Sandf. Ch. 478; Ferris v. Crawford, 2 Den. 598; Garnsey v. Rogers, 47 N. Y. 235; Meyer v. Lathrop, 10 Hun, 67; Penfield v. Goodrich, 10 Id. 43. IV. The reason given for allowing the surety to notify and compel the creditor to collect his debt of the principal in the cases reported is, that “ the surety is a guaranty that the principal shall pay the debt.” When did McCrum guarantee that Weinberg would pay this debt ? I. The evidence was clear and nncontradicted upon the facts found, and the request and notice were sufficient (Remsen v. Beekman, 25 N. Y. 552; King v. Baldwin, 17 Johns. 384). II. The defendant Weinberg, having assumed the payment of the mortgage, became a principal debtor, and the relationship between her and her grantors was that of principal and surety (Thomas on Mortgages, 72, 92, and cases cited; Calvo v. Davies, 8 Hun, 222; Comstock v. Drohan, Id. 373 ; Burr v. Beers, 24 N. Y. 178 ; Garnsey v. Rogers, 47 Id. 233 ; Johnson v. Zink, 51 Id. 333; 52 Barb. 396; Cummings v. Butler, 5 N. Y. Weekly Dig. 61). For the grounds on which a grantee assuming the payment of a mortgage has been held liable as principal debtor, see King v. Whitely, 10 Paige, 465; Flagg v. Munger, 9 N. Y. 483, 501; Trotter v. Hughes, 12 Id. 74 ; Lawrence v. Fox, 20 Id. 268 ; Burr v. Beers, 24 Id. 178 ; Ricard v. Sanderson, 41 Id. 179; Garnsey v. Rogers, 47 Id. 240. The plaintiff, when requested by the McCrums to foreclose and collect the mortgage, was bound by this relationship of principal and surety in and about such foreclosure and collection, and his conduct with reference thereto the same as though he had been a contracting party to such conveyance to Weinberg, and the crreation of such relationship (Thomas on Mort. 71, 72, and cases cited). His neglect so to do discharges the McCrums (Thomas on Mort. 69; Calvo v. Davies, 8 Hun, 223; Manchester Iron Manufacturing Co. v. Sweeting, 10 Wend. 162; King v. Baldwin, 17 Johns. 384; Pain v. Packard, 13 Id. 174; Merritt v. Lincoln, 21 Barb. 249; Remsen v. Beekman, 25 N. Y. 556; Willard's Eq. [Potter’s Ed.] p. 113; Hubbard y. Gurney, 64 N. Y. 457 ; Clark v. Sickler, Id. 231; Colgrove y. Tallman, 67 Id. 95). They had the right as such sureties to call upon the mortgagee at the maturity of the mortgage to foreclose and collect out of the land and principal debtor, while the same was sufficient and solvent (Thomas on Mori. 70; King v. Baldwin, 17 Johns. 384 ; Pain v. Packard, 13 Id. 174).