John E. Danahlr, Respondent, v. Laura A. Hodgkins, Appellant

John E. Danahlr, Respondent, v. Laura A. Hodgkins, Appellant. Debtor and creditor — when a debt is not discharged by a conveyance —parol evidence ' that a deed was accepted as security merely. A debtor conveyed to her creditor certain real estate by a quitclaim deed which stated that a part of the consideration was subject to a mortgage given by the debtor to third parties, and at the same time the creditor covenanted in writing to reconvey to the debtor upon being paid the consideration and interest, and also taxes and assessments and insurance, which latter three items the-debtor agreed to pay, no mention, however, being made of the mortgage or of the grantor’s debt, which together amounted to the consideration of the deed. Held, that the creditor might, where a subsequent foreclosure of the mortgage resulted merely in its payment, leaving no surplus, recover a balance due upon the debt, and also payments made for interest on the mortgage and for insurance upon the premises, notwithstanding the fact that the debtor had assigned her contract to one who had agreed to perform it, as the debt, in the absence of proof that it was agreed to be discharged by the deed, continued to exist, and the creditor was entitled to show that he took the deed merely as security. Appeal by' the defendant, Laura A. Hodgkins, from a judgment of the County Court of Warren county, entered in the office of the clerk of the county of Warren on the 30th day of June, 1897, reversing a judgment of a justice of the peace. A. Armstrong, Jr., for the appellant. . . Charles R. Patterson, for the respondent. [MAJORITY — Merwin, J. :] Merwin, J. : On the 17th of January, 1890, the defendant was indebted to> the plaintiff in the sum of $260.33. At that date the defendant conveyed to the plaintiff by quitclaim deed certain real estate for the consideration, as therein stated, of $840 to her duly paid, In the deed it is stated that a certain part of the' purchase price is subject to a mortgage of $546 and. interest from January 9, 1889, held by McConihie & Co. At the same date a written contract was made between the parties for the sale of the premises by plaintiff to defendant for the sum of $840, payable by the defendant as follows: On January 8, 1891, $2.00 and interest on-the whole sum from the date of the contract; on January 8, 1892, $300 and interest' on the balance unpaid on the contract; and on January 8, 1893, $340 and interest. The defendant also agreed to pay on demand annually the premiums paid by plaintiff in insuring the premises for $1,000, and also agreed to pay all taxes and assessments on the premises. The plaintiff, upon receiving such payments, agreed to give to the defendant or her assigns a deed with covenant against the grantor. Nothing is said in the contract about the mortgage or the plaintiff’s debt of $260.33. The amount unpaid on the mortgage at the date of the deed, together with the amount of the debt due the plaintiff, was practically the sum of $840. The mortgage was dated January 9, 1889, and was for the sum of $546, payable as follows: The interest on the whole sum semiannually on the ninth day of July and January for two years from the date thereof; the principal in three equal annual payments thereafter with interest on all sums unpaid at the time of each payment, the first payment of principal being January 9, 1892. The defendant assigned all her interest in the-contract to one Kelley, and he assumed and agreed to pay the moneys thereon covenanted to be paid. On January 9,1891, Kelley paid the plaintiff $249.14 to apply on the contract. On February 24, 1890, the plaintiff paid for insurance premium $20, and March ' 6, 1891, $20. Plaintiff paid interest on the mortgage as follows: February 13, 1890, $32.76 ; August 15, 1890, $16.38; January 19, 1891, $16.38, and August 31, 1891, $16.38. In April,. 1892, an action was commenced to foreclose the mortgage, and the premises were thereafter sold on foreclosure sale, and there was no surplus after paying the mortgage. Deducting from the amount received by the plaintiff on the contract the sums paid by him on the mortgage, there was a balance of $167.24. Deducting this from the amount of plaintiff’s debt, there is remaining a balance of $93.09. Adding to this the premiums paid by plaintiff and which he demanded of defendant, there is a total of $133.04, which is the amount the plaintiff sought to recover in the action before the justice. The defendant claims that the giving of the deed and contract amounted- to an extinguishment of the debt. The plaintiff claims that the debt was never extinguished or paid, and that the deed and contract were only as security.. It is easy to infer that the sum of $840 stated in the deed and contract was made up of the amount of plaintiff’s debt and the amount unpaid on the mortgage. The payments were evidently fixed in the contract in such a way as to provide the plaintiff with means to make the payments on the mortgage as they became due. The plaintiff paid all that was due on the mortgage prior to the default in making the payments on the contract. The plaintiff did , not agree in the contract .or deed to pay the mortgage. The only' agreement on that subject to be inferred is that the plaintiff, upon receiving the payments as provided for in the contract, would take care of the mortgage. There was no evidence that the debt of the plaintiff was settled by the conveyance, and in this respect the case differed from the case of Morrison v. Brand (5 Daly, 40), cited on the part of the defendant. The debt not being receipted or satisfied, it presumptively continued to exist. . It was competent to show, by parol evidence that the deed was given as security. (Horn v. Keteltas, 46 N. Y. 605.) The plaintiff testified to that effect, and the defendant was not called as a witness. The plaintiff did not accept the liability of Kelley in discharge of the obligation of the defendant. In the absence of any agreement, by the plaintiff to receive the deed and contract in satisfaction of the debt, no extinguishment of the debt was shown. The. defendant having failed to perform her contract, the plaintiff had a-, right to recover the balance of his debt, including the premiums for insurance which the defendant specifically, agreed to pay the plaintiff on demand. The County Court .did not, we think, err in reversing the judgment of nonsuit granted by the justice. All concurred. Judgment of the County Court affirmed, with costs.