Waters v. Bossel , 58 Miss. 602 ( 1881 )

Cooper, J.,

delivered the opinion of the court.

Mrs. Bossel was the owner of several lots of laud in the town of Biloxi, subject to two mortgages, one of which was made in 1873, to secure the payment of a note of $2,000 due by her to F. Amare; the other, made in 1875, to secure the payment of a note of $1,000 due by her to said Amare. On the nineteenth day of March, 1876, she sold and conveyed said lots to the appellant Louisa Waters, for the sum of $10,000. Of the purchase-money, $4,000 was paid in cash. No note was given for the unpaid balance, but the deed of conveyance by Mrs. Bossel, which was also signed and acknowledged by Mrs. Waters, contained the following stipulations : —

“In deduction also of the above consideration-price, the said Louisa Waters, the purchaser, with the consent of her husband, does hereby promise and agree, and by these presents binds herself, to pay the sum of three thousand dollars in place and instead of the said Mrs. Bossel, by paying, at their respective maturity, the following described promissory notes.’' The notes to Amare are then fully described, as are also the mortgages securing'their payment. “And in liquidation of the balance of three thousand dollars, the said Mrs. Waters, the purchaser, has given, granted, confirmed, and constituted, and by these presents does give, grant, confirm, and constitute, unto the said Mrs. Anna G. Bossel, and she accepting the same, one annuity or yearly rent-charge of three hundred dol'lars, to be received, taken, had, and issuing out of said property, to have and to hold the said annuity or yearly rent-charge of three hundred dollars unto the said Anna G. Bossel, for and during the natural life of the said Anna G. Bossel, payable and to be paid monthly, at the rate of twenty-five dollars per month, to commence on the first day of March, 1876.”

A special mortgage is retained in the conveyance to secure the payment of the purchase-money, and for all the promises and agreements therein set forth.

On the seventh day of January, a. d. 1880, Mrs. Bossel filed the bill in this cause against Mrs. Waters and her husband, charging that Mrs. Waters had failed and refused to pay the notes due to Amare, and had refused to pay the sums of $25 per month reserved to complainant. The prayer of the bill is for an account of the amounts due on the notes to Amare, and of the sums due complainant, and for a decree for the sale of the lands for the payment thereof.

The defendants, answering, admit that the notes held by Amare have not been paid, but state that all interest due on them has been from time to time paid; that the mortgagee, being satisfied with his security, was willing to permit the time for payment of the notes to be extended; and they further state that all amounts due to complainant on account of the monthly payments have been promptly paid.

On hearing, the chancellor referred the.cause to a commissioner, with instructions to take and state an account of the amount of principal and interest due Amare, and allow the same. The chancellor found that the monthly payments due to complainant had been made up to April 1, 1879, amounting to $1,200. This sum he directed the commissioner to deduct from $3,000, “the amount agreed to be paid in annuities,” and on the balance — viz., $1,800 — to allow interest at six per cent per annum from April 1, 1879. The commissioner having-reported that by such accounting there was due the sum of $5,130.46, the report was confirmed and a final decree made directing the payment of this sum to Mrs. Bossel, and in default of payment, directing the sale of the laud subject to the mortgages of Amare. From this decree Mrs. Waters and her husband appealed. It is argued by counsel for appellants that by reason of the covenant of Mrs. Waters she became, as to the appellee, the principal debtor to the mortgage creditor, appellee being her surety ; that the contract from the principal to the surety is one of indemnity, and, therefore, as appellee has not paid the debt, no right of action has accrued to her. To this we deem it sufficient to reply that appellee is more than a mere surety. She has conveyed property to Mrs. Waters, in consideration of which the latter has assumed the payment of the debt, and a mortgage is expressly retained in the conveyance to secure the performance of the purchaser’s contract. This mortgage she is certainly entitled to foreclose. The chancellor, however, erred in directing the payment to complainant of the amount due to Amare, the mortgagee. It is unnecessary to consider what recovery could be had at law by the grantor in the conveyance, under the facts disclosed, if the grantee had been sui juris at the time of the purchase. There are many authorities which hold that the full amount agreed to be paid to the mortgagee could be recovered, and we are satisfied the chancellor was controlled by them in the decision of this cause. Furnas v. Durgin, 119 Mass. 500, and authorities there cited.

The reasons why such judgments are rendered at law are not applicable to proceedings in equity, in which, because of the machinery of the court and the flexibility of its decrees, exact justice may be done to all parties. These proceedings are not like an action at law to recover damages for the breach of the covenants. While called a suit to foreclose a mortgage, they partake largely of the character of a bill for the specific performance of the contract. Complainant is entitled to compel the payment of the amount due the mortgagee, both for the purpose of freeing herself from liability on the notes and of releasing the equity of redemption conveyed by her to Mrs. Waters, on which she has a lien for the payment of her annuity from the mortgage ; but she ought not to be permitted to foreclose her mortgage to enforce the payment of the mortgage debt due to Amare, and then to withhold the money so collected, leaving the debt unpaid and the mortgage still a lien on the property.

It would have been admissible, under the circumstances of this case, for complainant to have made the mortgage creditor a party defendant to the bill, in order that he might have been put to his election whether he would consent to the sale of the whole estate in the lands, and from the proceeds receive the sum due him, or would insist upon a sale subject to his mortgage. Wickenden v. Royson, 6 De G. M. & G. 210. When the cause is remanded, she will be permitted to amend her bill so as to make the mortgagee a party. If she declines so to do, or if the mortgagee shall refuse to consent to a sale, complainant may either foreclose her mortgage upon the equity of redemption sold by her to Mrs. Waters, for the purpose of collecting what may be due to her, or she may foreclose both for this purpose and to enforce the payment of the mortgage debt due Amare. In the latter event, Avhile an amount arising from the sale sufficient to pay the Amare debt will be paid to him, the effect will not be to discharge the mortgage held by him, but this mortgage will be impressed with the same equity in favor of complainant, to secure the pajnnent of the annuities to her, as was the fund appropriated to its payment.

The chancellor also erred in directing the account to be taken so as to allow complainant to recover the sum of $3,000, less the amounts which had been from time to time paid to her in monthly instalments. It is true, the deed recites this $3,000 to be a part of the unpaid purchase-money, but by a subsequent clause in the deed it in turn becomes the consideration of Mrs. Waters’ agreement to pay to Mrs. Bossel $25 per month during her life. Instead of enforcing the contract as to these payments, the decree in effect dissolves it and decrees its consideration to be paid. Mrs. Bossel’s rights are limited by the contract. If she lives a few years she will be entitled to receive more than $3,000 ; if she dies within a short time, the amount to be paid her may be much less.

The decree is reversed and cause remanded, to be proceeded with in accordance with the views herein expressed.