Rosenthal v. Heft

Offutt, J., delivered the opinion of the Court. On July 8th, 1921, Morris Heft and Bessie Heft, his wife, by their agreement under seal, bargained and sold to Abel Rosenthal seven lots of ground on Maple Avenue in Baltimore City “at and for the price of $12,000, of which $500 have been paid prior to the signing hereof, and the balance is to be paid as follows: Subject to the present mortgage, which is on the said property which amount shall be deducted of the purchase price and balance in cash on the day of transfer.” On the same day Rosenthal by a similar agreement undertook to sell Heft and his wife a property known as No. 934 Madison Avenue, in that city, “at and for the price of $12,500, of which $500 have been paid prior to the signing hereof, and the balance is to be paid as follows: $4,500 in cash on the day of transfer, and balance by a first mortgage loan to the amount of $J,500 payable within five years at the rate of $200 every three months with interest.” Each of those agreements concluded with this statement: “It is agreed and understood between all parties hereto that one contract is subject to the other one.” The appellant said that the purpose of that clause was to make the performance of each contract depend upon the performance of the other, so that, if the Hefts refused to perform their contract in reference to the Madison Avenue property, Rosenthal would be excused from performing his contract with reference to the Maple Avenue property. Except for that the two agreements appear to have been unrelated and independent. Following the execution of those agreements on July 20th, 1921, Mr. and Mrs. Heft by their deed of that date con ⁴¹⁴ veyed the Maple Avenue property to Abel Rosenthal and.

Howard S. Kroh “subject, however, to the legal operation and effect of two mortgages, one from the said Morris Heft and wife to the Provident Savings Bank of Baltimore dated 11 June, 1920, and recorded among the land records aforesaid in Liber S. C. L. No. 3601, folio 245, and the other from the said Morris Heft and wife to the Linthicum Realty-Company dated 11 June, 1920, and recorded among the lands records aforesaid in Liber S. C. L. No. 3607, folio' 388, and also to the conditions and restrictions contained in the aforesaid deed.” The consideration stated in that deed was “$5 and divers other good and valuable considerations.”’ The Hefts had obtained the property, which they thus conveyed, under a deed from the Linthicum Realty Company and had executed to that company a purchase money mortgage for $4,500, subject to a prior mortgage for $6,000,. given by the Hefts to the Provident Savings Bank of Baltimore, on which a balance of $5,500 was still unpaid, which it assigned to the National Eire Insurance Company of Hartford, Connecticut. $1,300 of the mortgage to the Linthicum. Realty Company was paid on July 1st, 1920, so- that when Rosenthal and Kroh took title to the property there remained due and unpaid on these two' mortgages $3,200 to the Linthicum Realty Company and $5,500 to the Provident Savings-Bank, together with such interest as may have accrued at that time. On April 5th, 1922, the mortgage to the Provident Savings Bank being in default, the assignee instituted proceedings to foreclose it, and subsequently in that proceeding it was foreclosed, and the property sold for $5,800, which sale was in due course ratified, and an auditor’s account stated, showing a deficit of $324.01, which was also finally ratified and confirmed. On November 13th the Frontier Mortgage Company, assignee of the Linthicum Realty Company, sued Morris and Bessie Heft in the Superior Court of Baltimore City on the mortgage and mortgage notes they had given it, and it obtained, on October 22nd, 1924, a judgment against them for ⁴¹⁵ $3,355, together with interest, costs of suit and a counsel fee of $100.

Following that judgment, on July 16th, 1926, the Hefts -commenced an action in the Superior Court of Baltimore City against Rosenthal to recover from him the amount of -the judgment which had thus been entered against them as well as the unpaid deficit on the first mortgage, on the theory that, when he purchased the property subject to- the mort.gages outstanding against it, he assumed the payment of them, and that, in consequence of his failure to make such payment, they, the Hefts, were still obliged to pay the amount for which they were primarily liable under the mort.gages, whereby an action for such amount had accrued to them against Rosenthal. In that proceeding the plaintiffs, on February 24th, 1921, filed an amended declaration, which contained the six common counts and a special -count in which, after alleging the facts to which we have referred, they said “that by reason of the failure of the defendant to- pay said mortgage indebtedness as agreed in the contract and deed aforesaid between the plaintiffs and defendant, and so assumed and agreed to be paid by the defendant herein, the defendant is therefore in-debted to the plaintiffs for the sums- aforesaid with interest from the respective dates as aforesaid and the plaintiffs have been put to- great expense in the employment of -counsel to ■defend the suits against them, for -court costs, counsel fees, .and expenses, and have -sustained other losses and damages by reason of such failure of the defendant to- carry out and perform his agreement to assume and pay the- aforementioned mortgage indebtedness.” The plaintiffs having filed the particulars of their claim, and having made profert of the deed -and agi*eement, in answer to- defendant’s demand, the defendant demurred to the whole declaration and to each count -thereof, and when that demurrer was -overruled they filed nine pleas. To the third, fourth, fifth, sixth and ninth p-leas the plaintiff demurred, joined issue -on the first and second (general issue pleas) and traversed the seventh, which was a plea of payment, and the eighth, which was a plea of re ⁴¹⁶ lease. The demurrers were sustained, issue was joined on the traverse in each instance, and the case proceeded to1 trial, which trial resulted in a verdict and judgment for the plaintiffs for $5,081.74, from which judgment this appeal was taken.

The record contains thirteen exceptions, of which the thirteenth relates to the court’s rulings on the prayers, and the others to its rulings on evidence. Those rulings together with the court’s rulings on objections to the pleadings we are called upon to review. It must be apparent from what has been said that the controlling question in the case is whether the appellant, by his deed or agreement, or either or both of them, assumed the obligation of paying the mortgages outstanding against the property which he purchased, and of protecting his vendors against any liability on account thefeof. But, before dealing with that precise question, we will first dispose of certain formal matters which tend to- obscure it.

The first question is whether we must consider the deed alone, or whether, in connection with it, we may consider the antecedent agreement. If the deed were full, complete, and unambiguous, that question would be free from difficulty, for, in such a case, it would be accepted as the final and exclusive agreement of the parties, in which all prior negotiations and agreements had merged. Lawson v. Mullinix, 104 Md. 156 . But considered in connection with the questions presented by this appeal, and as between the parties to it, the-deed cannot be said to' be either complete or unambiguous, for, instead of naming the actual consideration which the: parties had agreed on, it stated that the grant was made in consideration of the sum of “$5 and other good and valuable considerations.” Manifestly that expression is too general to disclose the details of the consideration and, in an action ix> recover the actual consideration, recourse must be had to some source other than the deed to ascertain what it was, and,, since the deed was executed in attempted compliance with an antecedent contract in which the Hefts and Rosenthal had agreed upon the consideration, we would naturally look to it ⁴¹⁷ for the information.

To do that would not "be to contradict the deed or anything contained in it, hut to make certain and definite that which it leaves uncertain and indefinite. And that distinction is exemplified by the case last cited. In that case a father granted a farm to his daughter in consideration of “$5 and the love and affection I hear to my daughter.” In a suit against the daughter for the specific performance of a contract which the father had made with a third person to convey the farm to him, she attempted to show that the actual consideration was not “love and affection,” but a valuable consideration, to wit, service rendered by her to the grantor, but that the court said she could not do, because that would not explain the statement of the consideration in the deed but would contradict it. But in Mahoney v. Matckubvn, 54 Md. 268, where property subject to a mortgage was sold, but the deed made no reference to the mortgage, it was held that extrinsic testimony was admissible to show how the stated consideration was to he made up and how it was to be paid, because such testimony would not alter, vary, or affect the deed, hut would merely explain an obscurity, and in that case the court allowed extrinsic evidence to he given to show that the vendee as part of the consideration undertook to assume and pay the mortgage.

The next question is whether the appellees’ rights against Rosenthal, which rest in the agreement between them as to the Maple Avenue property, are affected by the fact that that property was subsequently conveyed to Rosenthal and Howard S. Kroh, as tenants in common. While Kroh was not a party to the agreement, he was one of the grantees named in the deed, and as such jointly with Rosenthal was liable for the payment of the actual consideration, whatever it was, for which the deed was executed, and the grantor was entitled to maintain an action in assumpsit for its recovery against both of them. Wolfe v. Hauver, 1 Gill, 92 et seq. The evidence fails to show whether the original contract was abandoned, whether Rosenthal assigned to Kroh any part of the interest he acquired under the contract, or indeed why ⁴¹⁸ the conveyance was to Rosenthal and Kroh instead of to Rosenthal alone, but there is evidence that the conveyance was intended to consummate the contract, and, if that was so, Kroh must have acquired with the vendor’s consent a part of Rosenthal’s interest in it, but he could acquire no greater rights under it than Rosenthal had.

But the only right which Rosenthal had under the contract was the right to receive a grant of the land upon paying the purchase price stipulated in it, and when the property was granted to him and Kroh as tenants in common they became jointly liable for that price. But as this action is not against them both but against Rosenthal alone, a question arises as to whether an action can be maintained against Rosenthal alone on his implied promise, arising from his acceptance of the deed, to pay the consideration agreed upon by the parties to the deed, or on the contract, or on both. The general rule, as stated in Bryant v. Wilson, 11 Md. 443, is that a contract for the sale of land becomes null and void when a deed conveying the property to the purchaser is executed and accepted, except where it contains collateral covenants, or where it appears that the execution of the deed was only a partial execution of the contract. 18 C. J. 270. But, assuming that the agreement contained a covenant to pay the purchase price, it was not a collateral covenant, but an integral part of the transaction, and the appellee himself testified that the deed was delivered to him “in consummation” of the agreement.

So that any right which the vendor may have against the vendee to recover the purchase price of the property must grow out of the deed, and not out of the contract, although, as we have stated, since the deed fails to state it, the contract may be proved to* show what was the agreement of the parties as to the purchase price. Fry v. Talbott, 106 Md. 46 . Under the deed, their obligation to pay the purchase money would ordinarily be regarded as joint rather than as joint and several, since their benefit under it was joint ( WilUston on- Contracts, sec. 392), and both should be joined in an action brought to recover the purchase money. But since that question is not raised by the pleading or the prayers, we will not ⁴¹⁹ attempt to deal with it, but will assume that the obligation of the grantees named in the deed to pay the consideration upon which it was based was joint and several.

Returning then to the principal question, the decisions of this court and the weight of authority elsewhere support the proposition that the mere purchase of property subject to an existing mortgage does not create a personal obligation on the part of the purchaser to pay it (Chilton v. Brooks, 72 Md. 554 ), but if the purchaser assumes the payment of the mortgage as a part of the purchase price of the property, then it does become his duty to pay it, and to protect tho vendor against any demands that may be made against him for the debt which it secures. 39 Cyc. 1632; Lowry v. Downey, 150 Ind. 364 ; 41 C. J. “Mortgages,” secs. 745, 757, 763. Whether he did or did not assume it, is a matter of agreement, which may be express or implied (Ibid, sec. 766), which may be written or rest in parol, (Ibid, see. 769), and which may be separate from the deed; and such an agreement may be shown so long as it does not tend to vary or contradict the material terms of the deed. In the absence of any express agreement to the contrary, by the decided weight of authority, such an assumption will be implied where the amount of the mortgage has been deducted from the purchase money (41 C. J. “Mortgages,” sec. 770), under such circumstances as will fairly and reasonably indicate that the vendee intended to assume the payment of the mortgage, and parol evidence is admissible to show the existence veil non of such an intention. 19 II. G. L. 381.

In this ease the deed from the Hefts to Rosenthal and Kroh purported to convey the property “subject to tho legal operation and effect of” the two mortgages, and standing alone that language would mean that the vendee took only the equity of redemption, and assumed no personal liability with respect to the mortgages. But the same deed recites that the consideration for it is $5 and “divers other good and valuable considerations,” and when the contract is examined it is found that the “other ⁴²⁰ good and valuable” consideration was the purchase price of $12,000, of which $500 had been paid prior to the signing of the contract, and according to its terms the balance was to be “paid as> follows: Subject to the present mortgages which is on the property which amount shall be deducted of the purchase price and balance in cash on day of transfer.” The “present mortgages” with accrued interest aggregated $8,720.80, and, after adjusting taxes, water rents, stamps, etc., Rosenthal owed the Hefts a net balance of $2,788.71 on the purchase price. At the same time the Hefts owed Rosenthal a net balance on the purchase of the Madison Avenue property of $4,279.15, and, after deducting