[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 501 On the 18th day of August, 1871, the defendant, Almira E. Holahan, who owned, and Susan Lyons, who had a dower interest in, the premises known as No. 146 West Fourth street, New York, mortgaged them to one Socarras for $9,000 to secure the payment of their bond for the same amount.
The payment of this bond and mortgage was subsequently, on May 2, 1874, guaranteed by Henry A. Kerr, the plaintiff's testator. In June, 1877, and after the death of Kerr, the plaintiffs, by purchase and assignment, became the owners of these securities and have brought this action to foreclose the mortgage, claiming judgment for any deficiency which might arise against the defendant Holahan.
The entire defense is based upon the claim that the plaintiffs' testator, during his life-time, became primarily liable to pay this bond and mortgage by reason of certain transactions *Page 503 between himself and the defendants relating to the title to the mortgaged premises.
This defense is attempted to be established in two ways, viz.: first, by the claim that Kerr assumed the payment of the mortgage in accepting a deed of the mortgaged premises in May, 1872, from one John J. Drake and wife, containing a provision for its payment by him; second, by inferences sought to be drawn from evidence relating to certain transactions occurring between Kerr, the defendant, and others, respecting the title to this property.
The facts having been found against the defendant upon both of these claims, it is now also incumbent upon her to show that the referee has, upon request, refused to find as claimed by the defendant, and that the uncontradicted evidence establishes the facts as claimed.
Appropriate requests were made to the referee, and exceptions were duly taken, which enable the appellant to raise the questions. This necessarily involves the examination and consideration of the evidence taken on the trial. Certain facts in addition to those already stated were undisputed and were briefly these:
Prior to the execution of the mortgage in suit, the defendant Holahan was the owner in fee of the mortgaged premises, subject, however, to a right of dower therein in favor of Susan Lyons, her mother, who was then in possession. On the 20th day of October, 1871, the defendant Holahan conveyed an equal undivided half of these premises to one John J. Drake. Thereafter Drake commenced an action to procure a partition or sale of the premises, and under the decree rendered the premises were sold, and Drake became the purchaser thereof. The referee appointed in the partition proceedings, on April 30, 1872, conveyed the premises to Drake by deed, containing a provision making it subject to the payment of the mortgage in suit, and on May 20, 1872, Drake and wife conveyed the same to Henry A. Kerr by deed containing this clause: "Subject, nevertheless, to a certain mortgage made by Almira E. Holahan and Susan Lyon, bearing date the 18th day of August, *Page 504 1871, to secure the payment of $9,000, and interest," "the payment of which said mortgage, with the interest thereon from the 18th day of February last, is hereby assumed by the party of the second part." Kerr accepted this deed and retained the title of the premises until his death in December, 1876. It does not appear that he ever took possession of them, or that he received any benefit from their use or occupation.
It could not be claimed upon these facts that Kerr, by virtue of the clause contained in Drake's deed to him, became liable to the defendant upon such covenant. That deed evidenced a contract between the parties to it alone and created no right in favor of third persons. The only ground upon which a liability has been sustained between others than the immediate parties to such a contract is that growing out of the relation of principal and surety, whereby one becomes entitled to the benefit of any security received by the other from a party primarily liable for the payment of the debt. (King v. Whitley, 10 Paige, 465;Curtis v. Tyler, 9 id. 432.) In order to avail himself of the benefit of such a security, the party must show that the person acquiring it owes some debt or obligation in respect to the subject of the covenant to the person claiming its benefit. In this case, Drake never became personally liable for the payment of the mortgage debt, and therefore owed no duty or obligation to his grantor, Mrs. Holahan, by which she became entitled to the benefit of a security taken by him. There was no privity between Mrs. Holahan and Drake, and she was a stranger to the transaction out of which this covenant grew, and was not affected by the form which it took or the promises therein made. It was not entered into for her benefit, and she has paid nothing to induce or support its obligations. Drake never having been personally liable for the payment of any part of the mortgage debt, the covenant taken by him from Kerr did not inure either to the benefit of his grantor or to that of the holder of the mortgage. (Trotter v. Hughes, 12 N.Y. 74; Garnsey v. Rogers, 47 id. 233; King v. Whitley, supra; Vrooman v. Turner, *Page 505 69 N.Y. 280; 25 Am. Rep. 195.) The appellant impliedly, if not directly, conceding the correctness of these positions, attempted to evade their effect by showing that Drake acted as her agent in the transactions relating to this real estate, and claimed that the rights of the parties should, therefore, be determined as though the conveyance containing the covenant of payment had been made by her directly to Kerr. The referee, upon a request by the defendant, refused to find that Drake acted as the defendant's agent, either in purchasing the property on the partition sale or in deeding it subsequently to Kerr. It might well be questioned whether the defendant has requested such a finding in form from the referee as enables her to raise this question. The requests to the referee were to find certain evidence from which Drake's agency might possibly be inferred. The fact of agency was requested to be found as a question of law alone.
The referee might have found all of the evidence as requested by the defendant, and still have properly found that in fact no agency existed. But treating the case as though there had been a proper request to find as a fact that Drake acted as defendant's agent in buying and conveying the real estate, and that an exception was duly taken to the referee's refusal to find such fact, we think the evidence was not such as entitled the defendant, as matter of right, to this finding.
It did not appear that there had been any direct communication or agreement between Holahan and either Drake or Kerr with reference to the office which either should perform in the several transfers of this real estate. Their relations to each other and to these transfers can only be inferred from their acts and their subsequent conduct. Mrs. Holahan's object in procuring a transfer of the real estate to Kerr through the process which was adopted is evident enough, and that was to dispose of her mother's right of dower and to acquire the exclusive ownership and possession of the premises. It is evident that in some way Kerr and Drake were both made use of to accomplish this object. It is equally evident that neither of them expected to reap any benefit from the transaction or *Page 506 incur any responsibility in its performance. Every thing that was done was for the exclusive benefit and advantage of Mrs. Holahan. It is true that Kerr received the title to the property, but it was the mere naked legal title (as is even now claimed by the appellant), and subject to Mrs. Holahan's right to claim reconveyance upon rembursing Kerr for his advances. In this transaction it does not appear that Drake was any more an agent than Kerr, and neither of them received any consideration from Mrs. Holahan or otherwise which would support a contract to pay this mortgage. If the correctness of the appellant's theory be conceded, neither Drake nor Kerr have received any benefit from the transaction, they have simply consented to be used as Mrs. Holahan's instruments for retransferring this property freed from some of the incumbrances existing upon it into her possession.
We do not think in performing this office that either Drake or Kerr can be termed her agent in such a sense as to entitle her to all the benefits of the contracts entered into between them in transacting her business and at the same time to discharge her from all her liabilities with reference to the subject-matter of said contract. We have thus far regarded this question from the standpoint taken by the appellant, but going further and considering the defendant and Kerr as occupying independent positions with reference to this property, we think the referee properly declined to find that Drake acted as the agent of Mrs. Holahan in purchasing the property.
It may be conceded that Drake was pointed out or selected by Mrs. Holahan or her attorney as a proper person to hold the title of the real estate temporarily to accomplish the result intended, but inasmuch as a certain trust was to be reposed by all parties in some one this did not conclusively indicate whose agent he was. It appears, nevertheless, that Drake received from Kerr not only the funds with which to purchase the property on the partition sale, but also his authority and instructions for making such purchases. It is unimportant that Mrs. Holahan subsequently repaid Kerr for the advances made by him *Page 507 in the purchase of the property. The money when advanced was Kerr's money, and it was in accordance with the whole theory of the transaction that it was conducted for Mrs. Holahan's sole benefit and she was under obligation to repay all expenses incurred in its execution. This fact did not preclude Kerr from holding the property as security for his advances or from appointing and controlling the agencies by which his connection with the affair was to be manifested. We think, therefore, that there was evidence to show that Drake acted as Kerr's agent in buying and deeding the property, and the referee properly refused to find as requested.
There is no foundation for the claim that the mortgage merged upon its transfer, by its holders, to Kerr's executors. This portion of Kerr's real estate having been undisposed of by the will the title on his death went to his heirs; there was never a union of the equitable and legal estates in the same person. We are, therefore, of the opinion on the whole case that Kerr never became liable to Mrs. Holahan to pay and discharge the mortgage in suit.
The defendant on the trial offered in evidence a number of receipts for moneys paid by Mrs. Holahan to Kerr during his life-time.
Their admission in evidence was objected to by the plaintiffs and they were excluded by the referee, to which decision the defendant excepted. These moneys were alleged in the answer to have been, and the receipts were apparently offered to prove payments by Mrs. Holahan to Kerr between the years 1872 and 1876 upon the bond and mortgage in suit. At the time they were paid, Kerr being neither the holder nor the owner of the mortgage, they could not possibly operate as payments thereon. There was no offer to give any evidence to connect these payments in any way with the mortgage, nor was there any claim made to prove them as a counter-claim thereto. Even if such claim had been made they were not properly the subject of a counter-claim to a demand acquired by the executors after the death of the testator. (Patterson v. Patterson, 59 N.Y. 574; 17 Am. Rep. 384.) *Page 508
The evidence as offered was in effect to show that the defendant had made payments to Kerr upon some pre-existing liability, the nature of which did not appear.
We think the referee properly rejected the proof.
The judgment should, therefore, be affirmed.
All concur.
Judgment affirmed.