text:
    PATRICK BANNON, Plaintiff and Appellant, v. ANNA McGRANE, Executrix, and WILLIAM F. NEALIS, Executor, &c., Defendants and Respondents.
    Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    “Executor,” &c., added to name op party—may be treated as SURPLUSAGE, WHEN.—VERDICT, MOTION TO SET ASIDE, AS AGAINST THE WEIGHT OP EVIDENCE.
    Adding the word “executor,” &c., or “executors," &c., to' the name of parties to an action, may be treated as mere descriptio personal and surplusage, when nothing appears in the summons or complaint indicating the intention of the .plaintiff to charge defendants in their representative capacity.
    The reversal of an order of a trial judge, setting aside a verdict as against the weight of evidence, by an appellate court, is a matter of grave importance. Such motions are not governed by any well defined rules, but depend, in a great degree, upon the peculiar circumstances of each case. They are addressed to the sound discretion of the judge or court, and whether they should be granted or refused involves the inquiry and consideration, in each case, as to whether substantial justice has been done or not. The decision is one particularly for the judge before whom the trial was had and who heard the testimony and saw the witnesses on the stand; and where the decision has been reached after full deliberation and due judicial discretion, it should be confirmed.
    Appeal from order setting aside a verdict for $6,255.60 in favor of the plaintiff against the defendant, and granting a new trial. The motion for a new trial was made on the judge’s minutes, upon exceptions taken during the trial, and on the ground that the verdict was contrary to the evidence, and the damages excessive.

      The action was brought to recover the sum of $6,255.60, and interest, under an alleged contract, made with the defendants, to complete the filling-in, grading and finishing of the Fifth avenue, in the city of. New York, between Eighty-sixth street and Mount Morris Square. A contract had been made between one John McGrane and the Mayor, Aldermen and Commonalty of the city of New York, for that work. John McGrane died. before completing the contract. The contract in this suit was made for the completion within a specified time of the work left unfinished by John McGrane, deceased. The plaintiff made about six thousand four hundred cubic yards of filling, and then abandoned the work, leaving several thousand cubic yards more to be done.

      L. Laflin Kellogg, for appellant.

      Alphonso H. Alker, for respondents.
   By the Court.—Freedman, J.

The contract with the plaintiff having been made after the death of the testator, plaintiffs’ cause of action is against the executors personally, and not against the estate (Austin v. Munro, 47 N. Y. 360; Ferrin v. Myrick, 41 N. Y. 315). There is nothing in the title of the summons or complaint to justify a claim against the defendants in their representative capacity. They are described “ executrix” and “executor.” Without the wmrd “as” prefixed, the words thus used are a mere description of the persons.

Nor is there anything in the body of the complaint charging .the defendants in their representative capacity. True, the will is set out, and the appointment of the defendants as executrix and executor, and it is apparent that the pleader deemed these'allegations relevant and material. But their insertion detracts nothing from the subsequent plain count against the defendants individually, and consequently they may be treated as surplusage.

If the case was advanced on the calendar, on the ground that it was an action against the defendants in their representative capacity, and for that reason entitled to a preference, it should, the moment the fact appeared to be otherwise, have been relegated back to its proper place by the trial judge. But that this was not done, does not constitute a circumstance to be táken into account in the consideration of the present appeal.

The question, therefore, remains, whether, upon the main issue, the verdict was properly set aside. That related to the terms of the agreement between the plaintiff and the defendants. The plaintiff contended that he was to be paid fifty per cent, of the price of the work performed by him, as often as the city surveyor handed in a certificate or estimate of the work done. The defendants claimed that he was not to be entitled to any pay until the whole of the work was entirely completed by him, and the defendants had obtained their payment from the city.

Upon this issue there was testimony given on both sides, which was conflicting. The defendants’ version, however, stood corroborated by a receipt given by the plaintiff in acknowledgment of a sum of- money claimed by the defendants to have been paid to him as an advance, in which he expressly agreed that such advance should not- conflict with the agreement as made, according to which he was to be paid “ after the said work is completed as aforesaid, and as soon, and immediately after the payment of the amount due, or to grow due, under the said contract of John MeG-rane, deceased, and the corporation of the city of New York, by the said corporation to said executrix or executor, or to the holders or assignees of said contract.”

At the close of plaintiff’s testimony, and again at the close of the whole case, the defendant moved for a dismissal of the complaint, and in each instance excepted to the .refusal to dismiss, and on the rendition of the verdict he moved for a new trial upon the facts and the law of the case. The court accorded to the counsel on both sides an opportunity at a later day in the term to argue all the questions involved, which they availed themselves of, and after due deliberation the court came to the conclusion that the verdict should be set aside.

Upon this state of facts it is difficult to see how the order can be disturbed. It is at all times a grave question for an appellate court to reverse, On the ground of error, an order made by the trial judge setting aside the verdict as against the weight of evidence. Motions to set aside verdicts, as against the weight of evidence, are not governed by any well defined rules, but depend in a great degree upon the peculiar circumstances of each case. They are addressed to the sound discretion of the court, and whether they should be granted or refused involves the inquiry, in each particular case, whether substantial justice has been done, the court having in view solely the attainment of that end.

In the present case the learned judge below proceeded with more than nsual deliberation, and the real ground for his decision was stated by his decision as follows, viz.:

“After looking over the testimony I am of the opinion that injustice would be done to allow the verdict to stand. It is difficult to believe that the plaintiff could have read the receipt for $1,500 without reading the terms written in connection with and in continuation of the receipt itself.
“ It is not pretended that the plaintiff was deceived or in any way entrapped into signing his name to the whole paper, which sufficiently appears to have been read over to him, and which had been read by him, as it was his duty to do when he had it in his hands to read. The only excuse.given was, that he had not his glasses, and if anything, that he was not a good reader, not that he could not read. There must be a new trial.”

Upon the facts as they appear, the conclusion reached was one which the judge, who not only had heard the testimony, but also had observed the manner and behavior of the witnesses upon the stand, had a right to reach, and it, therefore, should be sustained.

The order appealed from should be affirmed with costs.

Curtis, Ch. J., concurred.


source: Caselaw Access Project

author: By the Court.—Freedman, J.

license: Public Domain

text:
    HORACE B. CLAFLIN, et al., Plaintiffs and Respondents, v. JOHN F. MAGUIRE, et al., Defendants and Appellants.
    Equity, among judgment creditors op insolvents.—Modification OF JUDGMENT ON APPEAL.
    Courts of equity are accustomed to relieve judgment creditors, against impediments fraudulently or inequitably interposed against their legal remedies.
    Wherever superior equities exist, and are established in favor of one judgment creditor or a class of creditors against other judgment creditors, or against the property of their common debtors, court of equity have full jurisdiction in the premises, to adjudicate upon and enforce the same, by judgment in reference thereto.
    A judgment of tliis character maybe modified by the appellate court in accordance with its views of such equities, without costs to either party.

      Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    Appeal from judgment, entered upon the decision of the court at special term, and from an order denying motion for new trial upon the judge’s minutes.

      T. J. McKee, and M. Compton, for appellant Maguire.

      Henry Thompson, and Charles W. Gould, for respondents.
   By the Court.—Freedman, J.

In connection with the exemplified copy of the execution, returned nulla bona in the marine court action of Claflin v. Maguire, which may be considered upon the present appeal as incontrovertible record evidence, the evidence adduced at the trial amply justifies the'findings of fact made by the learned judge below, and the findings so made fully sustain the conclusions of law based thereon, with a single exception which will be presently noticed. The case falls within the principle on which courts of equity are accustomed to relieve a judgment creditor against impediments fraudulently or inequitably interposed against his legal remedy. No error appears to have been committed in “the reception of evidence. The only error which appears, is the conclusion under which a personal judgment is directed against both defendants, not only for the costs of the action, but for plaintiffs’ entire claim with interest and costs, and the incorporation of a provision to this effect, in the direction for the entry of judgment, and in the judgment as entered. The plaintiffs cannot have, in addition to the equitable relief awarded to them, and the direction to the sheriff to apply the moneys in his hands to the satisfaction of their just claim, with interest and costs,—a personal judgment against the defendants, enforceable by execution against, them beyond the costs of the action. They already have judgment in the marine court against Maguire, which ig the foundation of the present action!

Another well founded suggestion is that the judgment appealed from should, in form, provide that the judgment and execution in the marine court action of Maguire v. Maguire be vacated and set aside as against the plaintiffs only.

But the error and suggestion referred to do not call for a reversal, but only a modification of the judgment.

The judgment should be modified in accordance with the views above expressed, and, as thus modified, affirmed without costs to either side on this appeal.

Curtis, Ch. J., concurred.

Note.—The following case reported under the same head notes, —Reporters.


text:
    ANTON HEIM, Plaintiff and Respondent, v. JAMES S. DAVENPORT, et al., Defendants and Appellants.
    Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    Appeal from judgment.

      S. E. Church, for appellant.

      D. M. Porter, for respondent.
   By the Court.—Freedman, J.

This case presents a contention between creditors of the insolvent firm of Davenport & Co., for the proceeds of goods of the firm sold on execution by James S. Davenport.

It is quite plain that the plaintiff originally commenced the action as a judgment and execution creditor, upon the theory that the judgment of James I. Davenport was fraudulent, and without consideration, and the result of a scheme between him and the other defendants to possess himself wrongfully of the property of the firm. This is the gravamen of the complaint.

Upon the trial the plaintiff failed to prove any such case. But the facts developed, for the reasons stated by the learned judge below, established an equity in favor of the plaintiff to the property in question, superior to that of James I. Davenport, and on that account the plaintiff made out a case against the latter. Upon full consideration I can, upon the questions which appear to have been raised, find no ground for a reversal of the judgment as against James S. Davenport.

On the other hand, I fail to see how the judgment appealed from can be sustained in its present form, as to the defendants, James B. Davenport and James Grant, constituting the firm of Davenport & Go. It stands against them, as it does against James I. Davenport, as a simple money judgment, and as such it is enforceable by execution against them directly. But the plaintiff-has already, recovered such a judgment against them in the marine court, which was made the basis for the present action. Nor is there anything in the facts of the case which calls for a duplication of it. Their names seem to have been included because they omitted to call, by some appropriate motion, the attention of the trial judge to the fact that they were not necessary parties to the cause of action remaining against James I. Davenport.

Under all the circumstances, and especially as the three defendants have throughout appeared by the same attorney, the most equitable disposition that can be made of the present appeal is as follows, viz. :

The judgment should be modified so as to adjudge and decree a priority of judgment and execution in favor of the plaintiff as against the defendant James I. Davenport, and that the plaintiff recover judgment against said James I. Davenport for the sum of $449.85, principal and interest, and costs and disbursements, taxed at $147.65, amounting in the aggregate to the sum of $597.50, and as thus modified, the judgment should stand affirmed against all the defendants, without costs to either side, on this appeal.

Curtis, Ch. J., concurred.


text:
    WILLIAM S. VERPLANCK, as Receiver, &c., Plaintiff and Respondent, v. MARCUS KENDALL, Defendant and Appellant.
    Before Curtis, Ch. J., and Freedman, J.

      Decided December 1, 1879.
    Reference.
    Issues in an action for damages for fraud and deceit cannot be referred for hearing and determination without consent of parties.
    But when the complaint sets forth an action on a contract, and it appears that the trial thereof involves the examination of a long account, the defendant cannot defeat a reference by a tender of an issue of fraud in the transaction, and a claim for damages therein, in the way of recoupment or counter-claim.
    Appeal from an order referring the issues to a referee to hear and determine the same.

      Alvin Burt, for appellant.

      William W. Badger, for respondent.
   By the Court.—Freedman, J.

This action, as -pleaded, is for the recovery of damages for fraud and .deceit. Tort being the - whole groundwork of the .action, it is settled that the defendant has a constitutional right of trial by jury, of which neither the court ■nor any statute can deprive him, and that it is no ■answer to his claim of. such a trial to say that the plaintiff may fall back upon an implied promise (Townsend v. Hendricks, 40 How. Pr. 143, reversing S. C., 32 N. Y. Super. Ct. [2 Sweeny] 503).

The same right exists in an action to recover unliquidated damages for the breach of a contract (Ross v. Combes, 37 N. Y. Super. Ct. [5 J. & S.] 289).

The character of the action is determined by the .complaint, and it is only when the complaint sets forth ■an action on contract which is shown to involve the .examination of a long account, that the defendant cannot defeat a reference by a tender of an issue of fraud -in the transaction, and claiming damages by way of recoupment or counter-claim (Welsh v. Darragh, 52 N. Y. 590; Patterson v. Stettauer, 39 N. Y. Super. Ct. [7 J. & S.] 413).

The order should be reversed, with costs.

Curtis, Ch. J., concurred.


text:
    CHARLOTTE ANN NICOLL, et al., Executors, &c., Plaintiffs, v. EDWARD BURKE, Defendant.
    cOOTXHT OF APPEALS, JUDGMENT OF.
    "Where the court of appeals reverses the judgment of the court below, unless the plaintiff stipulates to deduct therefrom certain amounts with interest, &c., but does not direct that- plaintiffs’ costs on appeal to the general term be waived or deducted, this court will not modify the judgment by any change of the con-editions therein.

      Before Sedgwick and Freedman, JJ.

      Decided December 1, 1879.
    Motion at general term to modify the judgment, as entered on the remittitur from the court of appeals.
   By the Court.—Freedman, J.

The judgment pronounced by the court of appeals reverses the judgment of this court and orders a new trial, unless the plaintiffs stipulate to deduct certain amounts with interest; but, if they do thus stipulate, the judgment, as reduced by the stipulation, is- ordered to stand affirmed in every other particular. In thus prescribing and enumerating certain specific conditions upon which the judgment is to stand, the court of appeals did not include that the plaintiffs should waive the costs of the appeal to the general term. It certainly could have done so ; but as it did not see fit to do so, it is not for this court to change the conditions upon which the plaintiffs may elect to end the litigation.

Sedgwick, J., concurred.


author: Freedman, J.

text:
    THE REAL ESTATE TRUST COMPANY, Plaintiff, v. EBENEZER H. BALCH, Impleaded, &c., Defendant.
    I. Mortgage.
    1. Assumption by grantee.

      (a) Break in chain of covenants does not necessarily render SUBSEQUENT COVENANTS INOPERATIVE.
    Í. It does not when the subsequent covenant is a' clear express one to pay the mortgage.

    II. Reformation of instruments.
    1. Case in which it may he decreed.

    (it) Where it clearly appears that a clause inserted in an agreement is contrary to the agreement pursuant to which the instrument was given, and contrary to the intention of the parties to the agreement, and was inserted in the instrument through the mutual mistake of all the parties thereto, and the party on whom the clause imposes a liability, satisfactorily accounts for his non-discovery of its insertion, the instrument may be reformed by striking out the clause, unless an estoppel has arisen in favor of a third party.
    IH. Estoppel in pais.
    1. Mortgage purchaser.

      (a) When estoppel not raised in favor of.
    1. Where, after the purchase of a mortgage, the mortgaged premises are conveyed subject to the mortgage which the grantee, by the deed, assumes and covenants to pay, such grantee is not estopped from insisting, as against such purchaser, that he is not liable under the covenant.
    Before Freedman, J., at Special Term.

      Decided March, 1877.
    2. Elements of estoppel in pais.

      (a) Three elements must concur.
    1. A declaration made, or act done by the party against whom the estoppel is claimed, with intent that it should be acted on.
    2. That the party claiming the estoppel relied and acted upon such declaration or act.
    3. That the party claiming the estoppel would be injured if the other party were permitted to retract his declaration, under his act.
    1. None of these elements exist in the above put case of the purchase of a mortgage.
    TV". Pajotes, defect of, how cubed.
    1. Reformation of instruments, action for.

      (a) Omission of one of the parties to the instrument maybe cured by the written cement of the party omitted.

    • The action is brought upon three bonds and mortgages made by Caroline A. Scranton to Eliza A. D. Tweed on premises on West Seventy-fourth street, in the city of New York, and dated January 15, 1874.
    On July 9, 1874, Eliza A. D. Tweed assigned these three bonds and mortgages to S. Foster Dewey, who on July 24, 1874, assigned them to the plaintiff.
    By deed dated July 23, 1874, and recorded August 13, 1874, Mrs: Caroline A. Scranton, together with her husband, conveyed the mortgaged premises to Harriet N. Trask, subject to the said mortgages. In said deed the grantee did not assume to pay the mortgages, nor the debt secured by them.
    By deed dated October 2, 1874, and recorded February 11, 1875, Mrs. Harriet N. Trask, together with her husband, conveyed the mortgaged premises to the defendant Ebenezer H. Balch. This deed contains the following, after the habendum clause, viz.: “Subject nevertheless to three certain indentures of mortgage affecting said premises and given to secure the aggregate principal sum of $12,000 and interest, and said party of the second part hereby assumes said mortgages and agrees to pay said principal sum as a part of the consideration hereinbefore set forth, together with all interest thereon from the-day of-, 1874.”
    A foreclosure of the mortgages has been had; the property has been sold, and a judgment for deficiency was entered against Balch by default. Then Balch obtained leave to answer the complaint and to litigate the question of his liability for deficiency, the judgment obtained to stand as security.

      Davies, Work, McNamee & Hilton, attorneys, and Julien T. Davies, of counsel, for plaintiff.

      Isaac L. Egbert, attorney, for defendant Balch.

       This point was so ruled on the authority of Vrooman v. Turner (8 Hun, 78); the learned judge, although not satisfied by the reasoning of that case, regarded it as an authority binding on him at special term.
      Since the decision of the above case, that of Vrooman v. Turner was reversed by the court of appeals (69 N. Y. 280).
      The doctrine of the court of appeals in Vrooman v. Turner has since been applied, by the general term of the superior court, in Cashman v. Henry, 44 Super. Ct. 93.

   Freedman, J.

The principal questions raised by the answer of the defendant Balch are:

(1) That Mrs. Harriet 1ST. Trask, the grantor of Balch, was not liable to pay the mortgages, nor the debt secured by them, and that consequently there was no valid assumption by Balch under the deed to him; and,

(2) That the assumption clause contained in the deed to Balch was placed there by mistake, contrary to the intentions of the parties to said deed, and hence was without consideration.

It may be stated, as a general rule, that if a grantee accepts a deed containing a clause stating that he thereby assumes the payment of a certain mortgage upon the premises conveyed, he is deemed- to have entered into an express undertaking with the grantor to do so, and he is fully bound, though he does not sign or seal the instrument (Belmont v. Coman, 22 N. Y. 438).

The first question which therefore arises is whether the defendant Balch can avoid his liability under the assumption clause contained in the deed to him by showing that his grantor, Mrs. Trask, had not, in the conveyance of the premises to her, assumed payment of the mortgages in question, nor the debt secured by them.

Prior to the decision in Lawrence v. Fox (20 N. Y. 268), the courts of this State placed the liability of a grantee who had assumed payment, upon the ground that, as between the grantor and the grantee, the grantee, by the agreement of assumption, became the principal debtor of the mortgage debt, and the grantor stood in the situation of surety for him ; that the agreement of the purchaser was given for the indemnity of the vendor, who thus stood in the relation of surety for him, and that the mortgage creditor was entitled to the benefit of such indemnity, upon the principle that where a surety, or person standing in the situation of surety for the payment of a debt, receives a security for his indemnity, and to discharge such indebtedness, the principal creditor is in equity entitled to the full benefit of that security, though he did not even know of its existence; and consequently it was held that when the grantor, in whose conveyance such a stipulation was contained, was not himself personally liable for the mortgage debt, the holder of the mortgage acquired no right to resort to the grantee for payment (King v. Whiteley, 10 Paige, 465; Trotter v. Hughes, 12 N. Y. 74).

The case of Lawrence v. Fox (20 N. Y. 268), introduced a new principle for the enforcement of liability by reason of the assumption clauses under consideration, and this principle has taken the place of the doctrine of subrogation in equity relied upon in the earlier cases, and has not only virtually set that doctrine aside, but has opened the door to liability beyond that enforced in those cases.

Lawrence v. Fox brought forward more prominently than had been done before, the principle that .where one person makes a promise to another for the benefit of a third person, such third person may maintain an action upon it although not privy to the consideration for the promise, nor cognizant of the promise when made. Whatever doubt w?as at first cast upon this decision, by the fact that it was made by a divided court, was removed in Burr v. Beers (24 N. Y. 178), where the court unanimously reaffirmed the doctrine without discussion on the ground of stare decisis. This was a case where the mortgagor conveyed to the defendant by a deed containing words of express assumption. The action, however, was not brought to foreclose the mortgage, but directly against the grantee upon the promise of assumption. Judge Denio, who had delivered the opinion in Trotter v. Hughes (12 N. Y. 74, approving King v. Whiteley), also delivered the opinion in this case, and declared that the principle of equitable subrogation could not be applied to the case, but that the principle laid down in Lawrence v. Fox governed, and that under that the plaintiff was entitled to recover.

But although the doctrine of Lawrence v. Fox has ever since remained as the rule of decision, in cases clearly within the principle there decided, the courts have been disinclined to extend it, and many subsequent cases, which were claimed to fall within the rule as stated in Lawrence v. Fox, have been distinguished from that case.

In some of thém, some element in the definition of the rule given in Lawrence v. Fox has been wanting. Of this character is Turk v. Ridge (41 N. Y. 201), where there was no absolute promise, but a bond. to be void in case the obligor paid the third person. So in Dingeldein v. Third Avenue R. R. Co. (37 N. Y. 575, reversing 9 Bosw. 79) where the court intimates that taking a conveyance subject to a lien would not be a promise to pay the lien, but holds that taking it subject to a payment to be made, which is not a lien, amounts to such a promise and to an express contract to pay.

Garnsey v. Rogers (47 N. Y. 233) was a case in which a deed, absolute on its face, but in fact intended as a mortgage, was given containing a clause of assumption of prior mortgages. The court went fully into a discussion of the principles upon which, in such cases, the liability of grantees rests, but decided that, as the conveyance was a defeasible one, and had in fact been canceled by a reconveyance, the grantee was not liable. In delivering the opinion of the- court on that occasion, R apallo, J., uses the following language concerning the cases of Lawrence v. Fox and Burr v. Beers, viz:

“I do not understand that the case of Lawrence v. Fox has gone so far as to hold that every promise made by one person to another, from the performance of which a third would derive a benefit, gives a right of action to such third party, he being privy neither to the contract nor the consideration. To entitle him to an action, the contract must have been made for his benefit. He must be the party intended to be benefited ; and all that the case of Lawrence v. Fox decides is, that where One person loans money to another, upon his promise to pay it to a third party, to whom the party so lending the money is indebted, the contract thus made by the lender is made for the benefit of his creditor, and the latter can maintain an action upon it. Johnson, Ch. J., and Denio J., placed their votes upon the distinct ground that the contract could be regarded as having been made by the debtor as the agent of his creditor, and that the latter could ratify the contract thus made for his benefit.......The case of Burr v. Beers, though in conflict with Mullen v. Whipple (1 Gray, 317), and apparently in conflict with King v. Whiteley (10 Paige, 465) and Trotter v. Hughes (12 N. Y. 74), may well be sustained for the reason mentioned by Chancellor Kent, in Cumberland v. Codrington (3 Johns. Ch. 254, 258, 261), where he intimates that a spe- , eial agreement between the purchaser and seller of the equity of redemption, by which the amount of the mortgage debt is considered as so much money left in the hands of the purchaser for the use of the mortgagee,, would be sufficient ground for a suit at law by the mortgagee.”

Upon the principles actually decided by the authorities so far considered, it seems as if the claim of the defendant Batch that he is not liable for any deficiency, for the simple reason that his grantor was not liable, could not be denied.

But in strange contrast with the careful distinctions and guarded language of the court of appeals is the language of the commission of appeals in Thorp v. Keokuk Coal Co. (48 N. Y. 253). In this case the grantee’s deed contained a clause of assumption, but the mortgage itself provided that in case of default recourse should first be had by foreclosure and sale to the property described in the mortgage, and that the mortgagor should only be answerable for any deficiency of the mortgage debt after such foreclosure and sale. Earl, C., after referring to the doctrine of Lawrence v. Fox, says: “It matters not that the mortgagor was not liable to pay personally until after foreclosure, and that he was then liable onl^ for the deficiency. It would have made no difference, if he had not been liable at all, the defendant having promised, upon a sufficient consideration, to pay the debt. This suit is not primarily upon the bond and mortgage, but upon the promise of the defendant to pay it. . . .”

The natural deduction from this opinion is that every promise made on sufficient consideration to do an act beneficial to a third party will sustain an action by such third party, whether he be a creditor of the person to whom the promise is made or not, or have, or have not any interest in the matter other than that arising from the promise ; so that, if this view be correct, the remarks of the court of appeals in Garnsey v. Rogers in reference to the cases of Lawrence v. Fox and Burr v. Beers are at least inappropriate, since the commission of appeals thus assert to be law all that could be implied from the most liberal interpretation of those cases.

The same conflict of views also appears from a comparison of the case of Claflin v. Ostrom (54 N. Y. 581), decided by the commission, with the case of Merrill v. Green (55 N. Y. 270) decided by the court of appeals.

The existence of this conflict of judicial opinion as to the - extent to which the doctrine of Lawrence v. Fox is to be carried, renders it difficult to determine what the precise state of the law is which is to govern the case at bar upon the point I have been considering. None of the cases above referred to directly determines the point in question. The only reported decision which is directly in point, was recently made by the general term of the supreme court of the second department. It was there expressly decided that a grantee of real estate is liable to a mortgagee on a covenant in the deed to pay a mortgage on the land, although his grantor was not liable (Vrooman v. Turner, 8 Hun, 78). The reasons assigned for so holding are far from being satisfactory to my mind ; but as the decision made was made at general term, I deem it best to follow it at special term.

The defendant- Balch being therefore prima fade liable upon his covenant of assumption, though his grantor was not, the next question to be considered is whether he can defeat such liability by showing that such covenant was inserted by mistake.

All the cases agree that such a covenant, in order to be enforceable by a third person for whose benefit it was made, must in point of fact have constituted part of the bargain between the parties to the deed in which it is contained, and that it must rest upon a sufficient consideration. It is not necessary that the consideration should pass from the party seeking to enforce it. But a sufficient consideration between the covenantor and his immediate covenantee is indispensable.

Now it appears by the uncontradicted testimony of Balch, and of the witness Benjamin J. H. Trask, who had conducted the negotiation with Balch as agent of his wife, that the assumption clause appearing in the deed to Balch was placed there by mistake; that it was neither the agreement nor the intention of the contracting parties that Balch should incur any personal liability; that, on the contrary, both the intention and the agreement of the parties was that Balch was not to assume the payment of the mortgage debt. The evidence fully establishes the fact that the mistake was a mutual one, and Balch satisfactorily accounts for not discovering it before the commencement of the suit.

These facts, therefore, establish not only that the covenant in question was no part of the bargain between the parties to the deed, but also that its appearance in the deed was wholly without consideration. They consequently constitute a complete equitable defense. The right to interpose such a defense is expressly conferred by section 150 of the Code. True, a defense like the one which has been interposed in this action, should be closely scrutinized ; but, at the same timé, full effect must be given to it, when fully and satisfactorily established. It having been thus established, the defendant is just as much entitled to the benefit of it, as the defendant in Garnsey v. Rogers was held entitled to the benefit of the defense, that in that case the conveyance was a defeasible one, and had in fact been canceled by a reconveyance. Nothing short of an estoppel could deprive him of it; but of this there is no evidence. Three elements are necessary to constitute estoppel: (1) Declaration made or act done by the defendant, with the intent that it should be acted upon ; (2) That the plaintiff relied and acted upon such declaration or act; and, (3) That the plaintiff, thus misled, would be injured in case the defendant were permitted to retract his declaration or undo his act.

Every one of these elements is lacking in the case at bar. Plaintiffs having purchased the mortgages in question before the deed to Balch was made, it cannot be said that they were influenced or misled by the insertion of the covenant. Nor is there any pretense that they were subsequently misled in any way by discovering it. At the time of the execution of the deed to Balch, Mr. Trask, the owner of the fee, was not liable for the mortgage debt. Neither she nor Balch was under any duty or obligation to the holder of the mortgages to deal with the premises in a particular way. Both were free to make any contract or bargain concerning the mortgaged premises they might see fit to make. Hence the actual fact, the intention of the parties, must govern.

My conclusion is, that upon the facts as they appear, the defendant Balch is entitled to a dismissal of the complaint so far as the same asks for a judgment for a deficiency against him, to a vacation of the provision of the judgment heretofore entered, adjudging him liable to pay the deficiency, and to a reformation of the deed to him by striking therefrom, the covenant of assumption which was inserted by mistake, as aforesaid. Plaintiffs’ objection to the reformation of the deed, on the ground that in the present position of the case the proper parties are not before the court, is obviated by the consent in writing of the defendant Harriet N. Trask, which was produced on the trial. She is, besides the plaintiff, the only party entitled to be heard upon the question.

I am also of the opinion that no costs should be awarded to the defendant Balch.


text:
    SAMUEL HATHAWAY, Plaintiff, v. HENRY RUSSELL, Defendant.
    I. Accounting, action fob.
    1. Reference to hear and determine issues, the determination of the issues not involving the taking of the account.

      (a) REFEREE’S ACTION AND REPORT, WHAT PROPER.

    1. To hear, determine, and report on the issues, and if he decides that plaintiff is entitled to an accounting, then to pass on the principles on which the accounting should be had, so far as the same are involved in the determination of the issues, and to direct the entry of an interlocutory judgment for an accounting in conformity with his report.
    (6) PROCEEDINGS UPON A REPORT DIRECTING INTERLOCUTORY JUDGMENT POR AN ACCOUNTING.
    1. Entry of interlocutory judgment in conformity with the report is matter of course, unless there are allegations of irregularity, surprise, or newly-discovered evidence.
    1. Motion for interlocutory judgment on such report.

      (a) What cannot he reviewed on.

    1. Neither the merits nor any alleged error in the admission or rejection of evidence, or in the finding.

      (a) Mode in which a review of the merits or of alleged errors, is to he obtained, pointed out.

    (e) ACCOUNT, TAKING OP.
    1. Mode of proceeding under interlocutory judgment directing an accounting by defendant.

      (a) Plaintiff has a right to the formal bringing in by de

      fendant of the account in the form of debit and credit and duly verified, and to his examination on interrogatories.

    Before Freedman, J., at Special Term.

      Decided October 27, 1879.
    Motion for interlocutory judgtnent.

       The question whether, under an order referring all the issues to a referee to hear and determine, without also constituting him a referee to take and state the account- in case he should determine that plaintiff was entitled to an account, the referee was empowered to take and state the account, seems not to have been involved in above case, and is not considered in the opinion.
      In Palmer i>. Palmer (13 How. Pr. 363), it is held that under such an order of reference, the referee is empowered to take and state the account. It is submitted that the reasoning by which the court reached that conclusion is not satisfactory. It is this: The court, upon a trial before it of the issues, had the power, in case it determined in favor of an- accounting, to proceed and itself take and state the account. A referee to whom all the issues are ref erred to hear and determine stands in the place of and is substituted for the court. Therefore areferee has the same powers of the court and can, the same as the court could, proceed to take and state the accounts. The error in the argument is that the order of . reference does not invest, the referee with all the powers of the court. It only invests him with so

        much of the power of the court as relates to the hearing and determining of the issues (i. e., the trial thereof), and matters incidental thereto. Now the court takes and states the account, not by virtue of its power to hear and determine issues, but by virtue of its general powers, wholly distinct and independent of its power to hear and determine. As the power of the court to take and state accounts is not derived from, but wholly independent of its power to hear and determine, it follows that the transfer of the latter power to a referee does not carry with it the former.
      Cases will arise where it would-be deemed advisable, by the court and parties, to entrust the decision of the issues to one person, and the taking of the accounts to another, by reason of the peculiar aptitude for, skill in, and knowledge of the duties to be performed by them respectively, in the execution of the trust to be confided to them.

       It would seem that no motion to the court for interlocutory judgment is necessary, unless questions are reserved by the report to be passed on by the court; but that such judgment should be entered by the clerk, as of course. If it is sought to set aside the report on the ground of irregularity, or to open it and have a new trial on the ground of surprise or newly-discovered evidence,' a motion should be made therefor in the same manner as when it is desired to set aside a verdict for like causes.

       It would seem that under the present practice written interrogatories and written answers thereto are not absolutely requisite; but that the party may be examined orally before a referee as to his accounts.

   Freedman, J.

The referee to whom it was re ferred to hear and determine the issues, reported only in favor of plaintiff’s right to an accounting within certain limits, but did not take and state the account between the parties. This course was adopted in order to facilitate a review of his decision before putting the parties to the expense of a long- accounting, and the plaintiff now applies for an interlocutory judgment, in conformity with the report. This practice has prevailed before the new Code (2 Van Santvoord Eq. Pr. 194, 195), and I cannot find that the latter has abrogated it.

Upon the present application I cannot consider allegations of error, nor review the merits, for the evidence is not before me, and there being no allegation of irregularity, surprise, or newly discovered evidence, an interlocutory judgment should be entered as of course in conformity with the report.

Defendant’s right of review may then be exercised, either under section 1001 of the new Code by motion for a new trial to the general term, or, under section 1349, by appeal to the general term from the interlocutory judgment.

If-the defendant simply claims that the findings of fact do not support the conclusions of law, he may, within ten days after service of a copy of the decision or report of the referee, and notice of the entry of the interlocutory judgment thereon, file exceptions, to the conclusions of law and rely solely upon them.

•' If, on the other hand, he claims that there is no evidence to sustain the findings of fact, or that the referee refused to find facts which he should have found, and desires a review of the questions of law arising upon such findings, or refusals to find (for such questions constitute questions of law under section 993), or if he desires a full review upon the law and the facts under section 1349, he must make, serve and print a full case containing the appropriate exceptions together with the evidence.

But whichever mode of review he may resort to, he must go to the general term ; for the remedy, by motion for a new trial on the judge’s minutes, or by a similar motion to the special term on a case, applies only to trials by jury, while section 1002 expressly provides that a trial by a referee cannot be reviewed, by a motion for a new trial, founded upon an allegation of error in a finding of fact, or ruling upon the law, except in a case specified in section 1001.

As to the mode in which the interlocutory judgment should direct the accounting to proceed, it must be considered that an accounting before a master in chancery was regulated by the rules of that court, the 107th of which provided that “all parties accounting before a master shall" bring in their accounts in the form of debtor and creditor; and any of the other parties who shall not be satisfied with the accounts so brought in, shall be at liberty to examine the accounting party upon interrogatories as the master shall direct.”

• In Wiggins v. Gans, decided in 1851, in the superior court with the concurrence of three judges, it was held, that the rules and practice of the court of chancery, on the subject of accounting, existing at the time of the adoption of the Code, are not inconsistent with any provision of the Code, and that consequently, by section 469, they are continued in force. The defendant, in that case, was thereupon ordered to bring in an account like that prescribed by the said 107th rule, duly verified as prescribed by the chancellor, and file it with the referee within ten days, in default of which the. plaintiff might apply for an attachment.

Since that time the same rule has been recognized by the supreme court in Palmer v. Palmer (13 How. Pr. 364), and Ketchum v. Clark (22 Barb. 319), and I cannot find that any change has been effected by the new Code.

The conclusion is, therefore, that although the formal mode of proceeding under the chancery rules must not necessarily be pursued, the plaintiff nevertheless has the right, if he demands it, to the formal bringing in of the account in the form of debit and credit, as prescribed by the rule, and duly verified by affidavit as stated in Story v. Brown (4 Paige, 112), and Benson v. Leroy (1 Id. 122), and to the examination of the defendant upon interrogatories.

The motion for interlocutory .judgment must be granted as prayed for.


text:
    DANIEL R. KENDALL, Plaintiff, v. HENRY P. NIEBUHR, AARON B. WOODRUFF and others, Defendants.
    I. MORTGAGEE.

    1. DISCHARGE OP PART OP PREMISES ALIENED BY OPERATION OP A RELEASE OP THE PART RETAINED.
    1. General rule does not operate, when.
    1. Does not, unless the releasor has hnowledge of the fact of the alienation or notice sufficient to put him upon inquiry.

      (cs) Notice, sotticibnct oe.
    1. What is not. The record of the deed of itself is not.
    2. What is. Where it appears that the deed was recorded before the release was given, that the releasor employed an attorney to make the necessary searches and prepare the release, who did make the searches, and found various conveyances (there being ten several lots released), and reported the result to his client, and the attorney, being called as a witness, did not, by his evidence, negative the presumption that he found the deed of the lot in question on record,—Held, sufficient notice to the releasor, although he testified that he could not recollect that he was informed of the conveyance of the lot in question.
    2. Does not operate as a discharge from so much of the debt as remains after applying thereto the value of the lands released, even though the releasor had notice of the alienation.
    3. Involuntary release.
    1. Building contract. Land was conveyed, and a mortgage taken back for the whole purchase-money, and simultaneously therewith a contract was entered into between the vendor and vendee, whereby the vendee agreed to erect eleven houses on the land, and the vendor agreed to loan money to the vende ■ to be applied toward the erection of buildings thereon, the advances to be made at certain steps of the building, and to take back mortgages for the advances, and on the completion of the houses a mortgage was to be given on each house and lot for the one-eleventh of the whole purchase-money and of the advances, and all other mortgages were to be removed and canceled. At a certain stage of the contract there was due the vendor for advances $18,700, and for purchase-money $29,920, total, $48,020. The vendee then made to an insurance company eleven mortgages, each for $4,000, one on each lot. The money received on these mortgages ($44,000), was paid over to the vendor (who discharged the purchase-money mortgage) thus leaving due the vendor $4,020. Thereafter the vendor made another advance called for by the contract, amounting to $0,600, making then due him $11,220. for which the mortgage in suit, covering ail the lots subject to the mortgages held by the insurance company, was made to him by the 'vendee and his wife. The description in this mortgage does not indicate into how many lots the premises were subdivided ; but contained this provision: “In case of foreclosure of this mortgage, all to be sold in one parcel, or in single lots, at option of ” the mortgagee. It was agreed between the vendor and vendee, that this mortgage should be held by the vendor, as security, until he got his final mortgages, which would be eleven of $1,770 each. This mortgage was recorded May 17, 1878. By October, 1878, the vendee had sold and conveyed eight of the lots. One of the eight was the lot in question, which was sold and conveyed to the defendant August 23, 1878. Subsequent to this sale to defendants, the original vendor made to his vendee the last advance called for by the contract, amounting to $8,250. Second mortgages of $1,770 were given on each of these eight lots (except the one sold to defendants), which were turned over to the original vendor; the original vendee gave to the original vendor a second mortgage of $1,770, on each of the three lots remaining unsold by him. The ten lots on which the second mortgages of $1,770 were given, were released from the mortgage of $11,220. It was agreed between the original vendor and vendee, that these ten mortgages should be applied first to the last advance of $8,250, and then on the mortgage for $11,220, which left $1,770 of the mortgage of $11,220 (which $1,770, with the first mortgage of $4,000 on the lot, constitutes one-eleventh of $63,470, the aggregate amount of the purchase-money and advances), a charge on defendants’ lot, unless that lot was relieved therefrom by force of the above-mentioned releases. It should be mentioned that the deed to defendants conveyed subject to two mortgages amounting in the aggregate to $5,000, which, by their answer, they admit had reference to the mortgage of $4,000, and to one-eleventh of the mortgage of $11,220.
    Held,
    that the mortgage for $11,220 continued to be, and was a lien on defendants’ lot to the extent of $1,770, with interest.

      Before Freedman, J., at Special Term.

      Decided November 17, 1879.
    II. VENDOR'S LIEN.

    1. Under the above circumstances, and it further appearing that the deed to defendant was made in payment of materials, &c., theretofore supplied by them to the vendee, which were used for, and upon the houses.
    Held,
    that the contract between the vendee and vendor constituted an equitable mortgage and a specific lien for the said sum of $1,770, on defendants’ lot, and the vendor was in this aspect entitled to a judgment of foreclosure and sale.

      William, McDermot, for plaintiff.

      Edward P. Flint, for the defendants Woodruff, Conklin & Bayer.
   Freedman, J.

This is an action for the foreclosure of a mortgage to the extent of a balance of $1,770 claimed to be still due upon it. The mortgage originally covered a number of lots, but foreclosure is prayed for only against a certain lot owned by the defendants Woodruff, Conklin & Bay.er, who are the only litigating defendants.

The questions involved are somewhat novel and interesting, as well as complicated, and in consequence thereof they received special attention.

On October 6, 1877, Daniel R. Kendall made a deed to Niebuhr of a number of lots on One-Hundred-and-Twenty-first street in the city of New York, presenting a frontage on said street of 187 feet, and received from Niebuhr the latter’s bond and mortgage on said lots for $29,920—which was the purchase price. Contemporaneously therewith the said parties entered into a written contract whereby Niebuhr agreed to erect on said lots eleven houses, each of the dimensions of seventeen by forty-five feet, as therein provided, and to have them completed before May 1,1878, and whereby Kendall agreed to make advances as follows, viz. :

“ When all the houses are enclosed, girders and posts in cellar, leaders connected with sewer, bridging done, window frames in, coping on roof, and chimneys, skylight and scuttle on, the roof on all completed, an advance to be made on each house of $1,200.00
“ When floors are laid, studding, browning and scratch coating done, sewer connections made; grounds or james set for doors and windows in all the houses, . $500.00
“When the hard finishing and trimming is done, stairs up, sashes hung and glazed, mantels in, brown stone stoops completed, and doors all hung in all the houses,....... $600.00
“When said houses are fully completed, including warming apparatus, grates and mantels, flagging and all yard work done, front and rear, in each house, . . $750.00

The contract- further provided as follows, viz. :

“For each of the above advances the said Kendall agrees to receive the bond and mortgage of the said Niebuhr with the signature of his wife, payable on or before May 1, 1878, with interest at 7 per cent, and usual interest, tax, assessment-, and insurance, clauses, provided all the said houses and lots are free from all 'grants, mortgages, liens, judgments, or otherwise, at the time the said payments are due. Interest on all said mortgages, mentioned in this agreement, with cost of drawing and recording the samé, and all taxes and assessments then confirmed, to be taken out of last-mentioned payment. On the final completion of all of said houses the said Kendall agrees to receive the bond and mortgage (containing usual clauses) of said Niebuhr for $5,770 on each house and lot, being $2,720 for the cost of the lot, and $3,050 for the advance, making together $5,770, payable, with 7 per cent, interest semi-annually, in one year if negotiated with an incorporated company, or three years if otherwise. The said Niebuhr to make the said bonds and mortgages payable to such parties as the said Kendall may direct. The said Kendall hereby agrees (the said mortgage for $5,770 having been recorded) to remove and cancel all the other mortgages mentioned in this agreement, provided that each of said houses and lots are free from all incumbrances by grants, mortgages, liens, judgments, or otherwise. The said bond and mortgage for $5,770, each to be divided at the option of said Kendall into two mortgages, in aggregate for the said sum of $5,770,” &c.

On May 16, 1878, the following state of facts existed :

Kendall had advanced to Niebuhr the first two installments called for by the contract, amounting in the aggregate to,.......$18,700.00
which, with the price of the lots, viz.: 29,920.00
made the sum of,.....$48,620.00
Niebuhr had executed to the New York Life Ins. Co. eleven mortgages, one on each house and lot, and each for $4,000, for which Kendall had received the money upon a surrender, as may be assumed, of his purchase-money mortgage, ....... $44,000.00
This left a balance due to Kendall of, $4,620.00.
Kendall then made to Niebuhr the third advance called for by the contract, amounting to,......$6,600,00
which made the balance due to Kendall on that day......$11,220.00

For this amount the mortgage in suit was executed by Niebuhr and wife, and the same was duly recorded May 17, 1878, as in the complaint alleged. It was made payable July 1, 1878, and covered the entire premises, subject, however, to the eleven mortgages held by the New York Life Ins. Co. From the description of the premises which was used, it does not appear into how many lots the 187 feet of ground described were laid out, but at the end of the description the following provision occurs: “In case of foreclosure of this mortgage all to be sold in one parcel, or in single lots at option of said Daniel R. Kendall.”

Kendall also testified that it was further agreed that this mortgage was to be held by him as security until he got his final mortgages, namely, eleven second mortgages of $1,770 each, and that upon the receipt of those it was to be discharged.

Niebuhr then went on with the erection of the houses, and the last payment under the contract, amounting to $8,250.00, was made to him by Kendall after September 26, 1878.

As the houses neared completion, Niebuhr made attempts to effect sales, and by October, 1878, he had sold eight of them, with the land upon which each stood respectively. Among them was one which was sold to the defendants Woodruff, Conklin & Bayer by deed recorded August 23, 1878, and upon conditions which will be specially noticed hereafter. As to the other seven, each house and lot was sold, subject to a first mortgage of $4,000 held by the New York Life Ins. Co., and the purchaser, in each case, as a part of the consideration paid, executed a second mortgage for $1,770, which was turned over to Kendall. Upon each of the three houses and lots remaining unsold, Niebuhr executed and delivered to Kendall a second mortgage for the same amount.

The ten mortgages thus received by Kendall were by agreement between him and Niebuhr applied in repayment of the last advance of $8,250 made by Kendall under the contract, and then in payment, to the extent of $9,450, of the mortgage of $11,220.

Upon the receipt of each of the said ten second mortgages Kendall released the premises covered by it respectively from the lien of the general mortgage.

The consequence of this course A' dealing was, that in October, 1878, every house and lot had been released except the one purchased by the defendants Woodruff, Conklin & Bayer, against which the general mortgage constituted a lien to the extent of $1,770.

To foreclose that mortgage to the extent named against said premises, the present action was commenced in April, 1879.

Woodruff, Conklin & Bayer, as already stated, purchased the house and lot in question in August, 1878. The deed to them bears no date, but it was recorded August 23,1878. For a consideration therein expressed of “ one dollar (and other good and valuable consideration)” it conveys the premises in question, subject “to two mortgages on said premises, amounting in the aggregate to the sum of five thousand dollars.” The consideration for this deed was, in fact, an indebtedness due by the grantor to the grantees for materials theretofore supplied which had been used for and upon the houses. By their answer these defendants admit that this sum had reference to the mortgage of $4,000, held by the New York Life Ins. Co., and to the proportionate one-eleventh share of the principal sum of the mortgage of $11,220, and they also admit the option secured to Kendall by the last-mentioned mortgage as to the manner in which, in case of foreclosure, the sale is to be made.

They insist, however:

1. That the plaintiff has precluded himself from enforcing the mortgage against the house and lot in question for'the amount of $1,770, or any amount whatever, because the ten releases executed by him operated as a discharge of their house and lot from the lien of the mortgage ; and,

2. That in any event the receipt of the ten second mortgages operated as a payment and satisfaction of the mortgage of $11,220.

As to the first ground:

The general rule undoubtedly is that when a mortgagor sells a portion of the lands which. the mortgage covers, those which he retains become primarily liable for the satisfaction of the debt, and that those which he has conveyed are answerable only for an eventual deficiency; and, as a necessary consequence, that a similar1 equity prevails between purchasers, so that distinct parcels or lots of the mortgaged lands which have been conveyed at different times to different purchasers, are chargeable in the inverse order of their alienation, and must be sold in that order under a decree. The equity which may thus have been created between a purchaser and the mortgagor, or between several purchasers, the mortgagee, when he has a knowledge of the facts, is not permitted to disregard or to disturb, and, with this knowledge, he acts at his own peril when he releases from the lien of the mortgage any portion of the lands which it embraces. If the lands released are primarily liable, and are of sufficient value to satisfy the debt, those previously conveyed are wholly discharged, and in no case can they be charged with any larger sum than the proportion of the debt that may remain unsatisfied when the value of the lands released has been applied and exhausted. (Howard Ins. Co. v. Halsey, 4 Sandf. 565; affirmed, 4 Seld. 271; Gouverneur v. Lynch, 2 Paige, 300; Schryver v. Teller, 9 Id. 173.)

The existence of this equity does not depend upon the nature or extent of the consideration received by the mortgagor for his conveyance, or by the mortgagee for his release ; but before the obligation arises on the part of the mortgagee to regard it, his conscience must be affected by knowledge of the facts upon which the equity depends, or by notice sufficient to put him upon inquiry (Stuyvesant v. Hall, 2 Barb. Ch. 151; Guion v. Knapp, 6 Paige, 35).

The mortgagee is not bound at his peril to ascertain whether any of the mortgaged lands have been aliened, or subsequently incumbered, when applied to to release part of the lands bound by his mortgage, nor is the recording of the mortgagor’s deed to the purchaser notice to the mortgagee of the fact of the conveyance, because by the terms of the statute the constructive notice which arises from the recording of a conveyance of real estate, is limited to subsequent purchasers in good faith and for a valuable consideration of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded (Howard Ins. Co. v. Halsey, 4 Seld. 271; Stuyvesant v. Hall, 2 Barb. Ch. 151).

In the case at bar it sufficiently appears that Kendall not only had sufficient notice to put him upon inquiry, but also knowledge of the conveyance to Woodruff, Conklin & Bayer. According to his own testimony he retained, before accepting the ten mortgages, William McDermot, an attorney, to make the necessary searches, and to prepare the releases, and McDermot did make the searches, found the conveyances on record, and in due time informed Kendall of the result. True, Kendall says that he' cannot recollect that he was informed of the conveyance to Woodruff, Conklin & Bayer specifically, and that he did not pay much attention to whom the houses and lots had been sold. But the deed to Woodruff, Conklin & Bayer, having been duly recorded, the presumption is that McDermot in the discharge of his professional duty found it with the rest, and this presumption became conclusive, by the omission of McDermot, when called as a witness, to give testimony to the contrary. This being so, the knowledge which McDermot had as attorney before the delivery of the releases was in law equivalent to knowledge on the part of Kendall, even if the facts were not communicated to Kendall (Bank of the United States v. Davis, 2 Hill, 451; Ingalls v. Morgan, 10 N. Y. 178, 184, 185; Dillon v. Anderson, 43 Id. 231, 238; The Distilled Spirits, 11 Wall. 356; Bank for Savings v. Frank, 56 How. Pr. 403, 414).

If, therefore, the case at bar fell within the general rule stated, I should reopen the case for the purpose of ascertaining the order of the alienation of the different houses and lots, of ■which there is no evidence, and their value at the time of their respective release, as to which I excluded testimony. But I do not think that the case falls within the rule, and consequently the pursuit of inquiry in the directions mentioned is immaterial. For the same reason it is immaterial whether, in October or .November, 1878, there was, or was not, anything due by Niebuhr to Woodruff, Conklin & Bayer for materials or other things supplied on all or some of the houses, or whether or not there were taxes upon the house and lot purchased by them at the time of the purchase.

The rule of charging the lands in the inverse order of their alienation, or of holding a portion remaining apparently covered by a mortgage discharged, in consequence of the release, by the mortgagee with notice, of the other portion which was primarily liable, is a mere rule in equity. The release to a subsequent purchaser is not a technical discharge of the lands previously conveyed from the lien of the incumbrance. Neither is it an equitable release or discharge, unless, upon the principles of natural equity and justice, it ought thus to operate against the party making the release to the-subsequent grantee (Patty v. Pease, 8 Paige, 278).

In all the reported cases in which the general rule has been enforced against the mortgagee, the latter, when applied to to release part of the lands covered by his mortgage, was at liberty to grant or refuse the application. In the present case the release of the ten houses and lots was not a voluntary one, but one which, under the contract, Kendall was bound to give. If he had refused, Niebuhr or his assigns could have compelled it by action. Nor is the remaining house and lot sought to be held for more than by the terms of the contract it was liable for as its equal proportion of the price of the lots and the moneys advanced to build the houses. Both the contract and the mortgage of $11,220 were anterior to the deed taken by the litigating defendants, and a portion of the money advanced after' the delivery of the said deed was expended in finishing the house bought by them. The record of the mortgage of $11,220, to which Woodruff, Qonklin & Bayer took subject, was notice to them of the existence of a lien enforceable, under certain circumstances, against their house and lot, to the extent of the whole of the sum named in it, and though they may not have had actual notice of the precise amount due, or claimed to be due under it, nor of the terms of the contract, yet by the exercise of due care and diligence they could readily have obtained the necessary information. Moreover, within the principles laid down in Payne v. Wilson (74 N. Y. 348), and wholly independent of the fact that it was agreed that Kimball should have the right to hold on to the mortgage of $11,220 until he got all the mortgages to which he was entitled, from which fact it may be inferred that the intention of the parties was that said mortgage, in case of partial payment, should be kept alive to cover subsequent advances under the contract, not otherwise secured, up to the amount named in it, the contract itself constitutes an equitable mortgage and, in equity, a specific lien upon the houses and lots which, unless released in fact, can be enforced by Kendall against any of the subsequent purchasers from, or creditors of, Niebuhr, to the extent of the amount actually due under it.

Under these circumstances Kendall has the prior equity, and it would be inequitable to enforce the rule referred to against him.

As to the second ground :

Upon this branch of the case the testimony is that in about the month of October, 1878, a settlement took place between Kendall and Niebuhr, in the course of which Kendall accepted the ten mortgages referred to : 1. In satisfaction of the amount of $8,250, advanced by him under the contract subsequent to the mortgage of $11,220 ; and, 2. In payment of the sum of $0,450 on account of the last mentioned mortgage. It certainly was competent for the parties to make this settlement, which was not only fair and equitable in itself, but according to contract; and specific application having been made in the course thereof, the court cannot step in and say that a different application must be made. Woodruff, Conklin & Bayer not only took, as they admit, subject to the proportionate share of the house and lot under the mortgage, without ascertaining the amount of such share, while the record of the mortgage charged them with notice of its existence as a lien to the possible extent of $11,220, but, for reasons already given, they also took subject, whether considered as subsequent purchasers from, or creditors of, Niebuhr, to the equitable mortgage and specific liens in equity of Kendall under his contract, and all that at a time at which the house purchased by them was in an unfinished state. Much that has been said in the discussion of the first point, is also applicable to this branch of the case, but to avoid unnecessary repetition it is sufficient to say that the case is not one in which a subsequent debt has been tacked to the original mortgage, and in which that mortgage, with the debt thus tacked on, is sought to be enforced beyond the amount specifically secured by it against subsequent bona fide purchasers, or creditors for value.

My final conclusion is that in any aspect of the case the plaintiff has the prior equity as against the litigating defendants, and that he is entitled to the usual judgment of foreclosure and sale, as prayed for in the complaint.