[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 200
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 201 The controversy in this case is in the first place between the plaintiff and the defendant Julia E. Ferguson over the validity of the plaintiff's mortgage, and in the second place between the plaintiff and the defendants Kruse and wife over the assumption of the mortgage by those defendants in the deed of the farm to them.
The defendants argue that the deed from the committee, Vellum, reconvening the farm to Woodward was unauthorized and wholly void. But the transaction was not criminal or corrupt or opposed to public policy. On the contrary, the reconveyance to Woodward was made in an attempt to undo all that had been done by Blakely's purchase of the land at a time when he was incompetent to manage his affairs. The deed, therefore, was not void in the sense that it could not be adopted and ratified by the incompetent if he recovered his understanding. It was void because it was beyond the power of Vellum to make it.
The law is that where one person, without any authority whatsoever, undertakes to deal with the property of another person, such other person on learning the facts of the case may at pleasure, either adopt and ratify of repudiate what has been done. (Town of Ansonia v. Cooper, 64 Conn. 536; 66 Conn. 184;Drakely v. Gregg *Page 205 75 U.S. 242; Eckford v. De Kay, 8 Paige, 89; Green v.Green, 69 N.Y. 553; Blinn v. Schwarz, 177 N.Y. 252.) Accordingly, when Blakely on recovering his sanity, and when he was chargeable with full knowledge of Vellum's acts, took back the entire consideration which he had paid to Woodward, he thereby ratified and confirmed the reconveyance to Woodward made in his behalf by Vellum.
The defendants further contend that Blakely did not confirm the deed from Vellum to Woodward by taking back the consideration that he had paid to the latter, because prior thereto he had conveyed the farm to the defendant Mrs. Ferguson. Blakely's deed to Mrs. Ferguson was dated May 4, and acknowledged May 15, 1891, and the order directing the payment of the money in the hands of the committee to Blakely or his attorneys, was not made until June 3, 1891, and so the money must have been received by Blakely after that date.
The transaction, I think, appears plain enough from the findings. Mr. Ferguson was conducting the proceedings on behalf of Blakely to be declared sane again, and to have his property restored to him, and he was also acting for his wife, Julia E. Ferguson, in getting a deed from Blakely to perfect the title to the farm, which she had obtained the year before by the deed from Drefs Cook. The two matters proceeded together and constituted one transaction. The fact, which was perhaps to be expected, that Blakely delivered the deed before he got the money, is not very material. The findings justify the conclusion of the court that the defendant Julia E. Ferguson holds her title subject to the lien of the plaintiff's mortgage.
The conclusion that Blakely adopted and ratified the reconveyance to Woodward also disposes in a large measure of the defense made by the defendants Kruse and wife that they are not bound by the clause in their deed assuming the plaintiff's mortgage.
Counsel for the defendants Kruse and wife proceeds *Page 206 upon two theories. The first is that the defendants never got title to the farm by the deed from McKenzie, because McKenzie had no title to give, and that they never got possession of the farm because it was occupied by Hartman under the contract of sale. Therefore, they argue that the consideration for their covenant assuming the mortgage failed, and they rely on the cases which hold that where a grantee has by his deed assumed payment of a mortgage upon the lands conveyed, though he is liable on his covenant so long as he remains in possession, yet if he is evicted by title paramount, or cannot obtain possession, the consideration for the assumption of the mortgage fails and the grantee is relieved from liability. (Dunning v. Leavitt,85 N.Y. 30; Edwards v. Bodine, 26 Wend. 109.)
The cases cited are not applicable, because the defendants' title under the deed from McKenzie was made perfect by Blakely's confirmation of Vellum's reconveyance to Woodward. That confirmation was complete in 1891, so that it cannot be said in this action, brought in the year 1909, that the title which the Kruses received from McKenzie had failed. Those defendants also got such possession as they bargained for, which was a possession subject to the performance of the contract of sale by Hartman. Hence there was no failure of consideration for their covenant of assumption.
The second theory advanced on behalf of the defendants Kruse and wife is that the conveyance to them by McKenzie was in legal effect only an assignment of a mortgage upon the land, and that a covenant in an assignment of a mortgage to pay a prior incumbrance on the same land creates only a liability to the assignor of the mortgage, and not a liability to the holder of the prior incumbrance. (Garnsey v. Rogers, 47 N.Y. 233;Pardee v. Treat, 82 N.Y. 385; Cole v. Cole, 110 N.Y. 630. ) The counsel's contention is that McKenzie, after the contract with Hartman, became a trustee of the property, holding the *Page 207 legal title for Hartman, and had only a lien for the purchase money on the land agreed to be sold, which, in some cases, has been likened to a mortgage. (Williams v. Haddock, 145 N.Y. 144. )
The doctrine of the decisions referred to does not control. In the case of a deed which contains a covenant on the part of the grantee to assume and pay a mortgage "the amount due upon the mortgage was reserved out of the purchase money and left in the hands of the purchaser, upon his agreement with the vendor to apply it to the payment of the mortgage debt. The purchaser was bound to pay the whole price, but by this agreement a portion of it was set apart for the use of the mortgagee, and the purchaser undertook to pay it to the mortgagee, and no one else. No other person was entitled to receive it. That arrangement was regarded as a contract made for the benefit of the mortgagee, and it was held that he could enforce it. * * * Regarding the conveyance as a mortgage, the stipulation was in effect to advance (money) to the promisee on the security of the property, to discharge prior liens, and was made for the benefit of the promisee only." (Garnsey v. Rogers, supra, p. 241.) The covenant of assumption contained in a mortgage is "an agreement to make further advances upon the security of the land for the payment of the mortgagor's debt. * * * If the defendant makes the advances, the debt of the land and of the mortgagor would remain, the creditor only having been changed, and if he did not make them his liability would be to the mortgagor only and entirely personal in its character." (Cole v. Cole, supra, p. 632.)
In the contract of sale between McKenzie and Hartman, McKenzie agreed to take care of and provide for and see to it that the mortgage on the property to be conveyed was not foreclosed, and to keep Hartman protected in all things therefrom. In McKenzie's deed to Kruse and wife, the grantees agreed to carry out each *Page 208 and every of the conditions assumed by McKenzie in the contract with Hartman. They also assumed and agreed to pay the mortgage to Evers on the land conveyed. By this arrangement, Kruse and his wife became the principal debtors; and they were to receive the avails of the contract of sale for the purpose of paying the mortgage and meeting their covenant of assumption. The case, therefore, comes within the rule which controls where a covenant of assumption is contained in a deed of conveyance, and not where it is contained in a mortgage. It was the ordinary case of a covenant by the grantee in a deed to assume and pay an outstanding mortgage upon the lands conveyed, as part of the purchase price therefor.
Counsel for the defendant Julia E. Ferguson further objects that her claim of title, adverse and superior to the plaintiff's mortgage, could not be tried in this action of foreclosure, and that she was entitled to a trial thereof by jury. She moved for a dismissal of the complaint upon that ground, which was denied, and to that ruling she excepted. (Lembeck Betz Eagle BrewingCo. v. Sexton, 184 N.Y. 185.)
The defendant Julia E. Ferguson was the owner of the equity of redemption under her deed from Drefs Cook in the chain of title which included the plaintiff's mortgage. She was a necessary party to any action brought to foreclose that mortgage, and without her presence the action could not proceed. The plaintiff did not in his complaint attack her title under the deed from Blakely. That issue was injected into the case by the defendant's answer, and her proof on the trial, and she cannot complain because the court proceeded to hear and determine the issue.
In any event, therefore, the defendant was not entitled to have her motion to dismiss the complaint allowed, which was the only thing she asked for. The action was in equity, and the court could adapt its relief to the exigencies of the case (Dudley v.Congregation, etc., of St. *Page 209 Francis, 138 N.Y. 451); and if the defendant desired, and had the right to, a jury trial upon any issue presented, she should have made a proper application therefor to the court; or, if she did not wish to litigate her claim of title under the Blakely deed in this action, she should have asked the court to declare the same unaffected by the judgment rendered. (Lewis v.Smith, 9 N.Y. 502; Jacobie v. Mickle, 144 N.Y. 237.)
I recommend that the judgment be affirmed, with costs.
WILLARD BARTLETT, Ch. J., CHASE, MILLER, CARDOZO and SEABURY, JJ., concur; COLLIN, J., dissents.
Judgment affirmed.