This was a suit in equity to foreclose a mortgage. The facts, as found by the referee, briefly stated, were: The defendant Demas L. Grover was the owner of the premises described in the plaintiff’s complaint, and on August 5, 1889, he executed and delivered to Frank M. Weatherwax the bond and mortgage therein mentioned to secure the payment of the sum of $300 and interest one year from date. The mortgage was duly recorded in Jefferson county, where the premises were situated, August 6, 1889. The money thus secured was borrowed by Grover for the purpose of building a cottage on a portion of the premises described, but was not used for that purpose. The defendant Huntley acted as agent in procuring the loan. When Mrs. Weatherwax learned that the money had not been so applied, she saw Huntley about it, and on January.15, 1890, he and the defendant McFarran, to allay her fears, guarantied the collection of said bond and mortgage. Afterwards, and on April 2,1890, Grover and wife, by warranty deed, conveyed the premises to the defendant Huntley. The deed was recorded in Jefferson county, April 5, 1890.' This deed contained a clause by which the defendant Huntley agreed to assume and pay the mortgage as a part of the consideration for such deed. On August 26,1889, Eugene Petit obtained a judgment against Demas L. Grover for $207.21,. which was assigned to the defendant Battese ReVoir by an assignment which recites that $143.40 was due thereon January 14, 1889. The assignment was filed in Jefferson county, August 27,1889, and a transcript of the judgment was filed therein on the same day. There is unpaid thereon the amount last mentioned. This judgment became a lien- on the premises in question prior to the sale by Grover. The mortgage in suit became due August 6, 1890,.but was not paid by Huntley when due, although he was then, and since has been, financially able to pay it. About December, 1890, Huntley was informed of the ReVoir judgment, and that an execution would be issued against the premises unless it was paid. After receiving this information, Huntley raised money on his own note, and used it to pay the Weatherwax, mortgage in full. Instead of taking a satisfaction, he procured an assignment of the same to his wife, the plaintiff'in this action, which assignment was recorded in Jefferson county, January 3, 1891. The money used to pay the mortgage was the money of T. F. Huntley; At the time the money was paid and assignment taken Huntley knew that a fore-, closure of the mortgage would operate to cut off the lien of ReVoir’s judgment, and procured the assignment thereof to his wife, for the purpose, partly at least, of having the mortgage foreclosed, to cut off that judgment. Soon after the assignment was filed in the clerk’s office, the plaintiff commenced this action to foreclose the mortgage assigned to her.
As conclusions of law the referee, in effect, held: (1) That when Huntley received from Grover and wife a deed of the premises in question, and assumed and agreed to pay the Weatherwax mortgage as part of the purchase price, the lots became the primary fund for the payment of the mortgage, and Huntley, the principal and primary debtor, bound to pay and discharge the mortgage debt; (2) that when Huntley, with his own money, paid or caused the mortgage to be paid, the debt was paid and satisfied, and the mortgage security was likewise paid, satisfied, and discharged,-and the lien of the mortgage on the premises was wholly discharged, and the mortgage title of said Huntley was merged and lost in' his fee to said lots; (3) that Huntley, being
The ground upon which the respondent seeks to uphold the judgment is that, when the defendant Huntley accepted the deed from Grover, and thereby assumed and agreed to pay the mortgage as a part of the purchase price, he became the principal debtor as to the mortgage debt, was obliged to pay it, and, when he did pay it, it became merged in his title,'and the lien of the mortgage was discharged, as he could not keep it alive by assignment to a third person. On the other hand, the appellant contends that .no duty was imposed upon the defendant Huntley to pay the mortgage in exoneration of the land, but that the land remained the primary fund for the payment of the mortgage debt. Thus the real question to be determined is whether, by reason of the provisions in his deed to assume and pay the mortgage as a part of the purchase price of the premises, the defendant Huntley became personally and primarily liable to pay the mortgage debt without recourse to and in exoneration of the land, or whether the land remained the primary fund for its payment, with an additional liability on the part of the defendant Huntley to indemnify his grantor against any deficiency that might arise on the sale of the mortgaged premise's. Whatever the rule may be elsewhere, we think it is the settled doctrine of equity in this state that, where premises are conveyed subject to a mortgage, and the deed contains a covenant by which the grantee assumes and agrees to pay the mortgage debt, the land is the primary fund for its payment. The purpose of the covenant is to indemnify the grantor for any deficiency that may arise on the sale of the mortgaged premises, and the liability of the purchaser is that of indemnitor, as between himself and the grantor. This question arose and was considered by Chancellor Kent in Cumberland v. Codrington, 3 Johns. Ch. 229, where, after a careful examination of many of the English and American authorities bearing upon the question, it was held that, where a person takes a conveyance of land subject to a mortgage, and covenants to indemnify the grantor against the mortgage, the land is the primary fund for its payment, and that this is so even where the purchaser has rendered himself liable at law to the mortgagee or creditor for the debt. The doctrine of that ease was also recognized in King v. Whitely, Hoff. Ch. 476. In Halsey v. Reed, 9 Paige, 446, it was held that, where a mortgagor sells and conveys the equity of redemption subject to the mortgage, the purchaser retains enough of the purchase price to satisfy the mortgage, and agrees to pay it, the mortgagor and purchaser stand in the relation of principal and surety,—the latter as security for the former to the extent of the mortgage debt; and the premises are primarily chargeable with the payment of the mortgage. The principle of that case was affirmed in Russell v. Pistor, 7 N. Y. 171, 174; Bowne v. Lynde, 91 N. Y. 92, 96;