Summary
In Dodge v. Crandall, 30 N. Y. 307, the court, in expressing its views, declared it was well settled that after the breach of a sealed agreement it may be modified in any respect, or wholly rescinded, by an executed parol agreement founded upon a sufficient consideration.
Summary of this case from Measurall v. PearceOpinion
March Term, 1864
C. Tracy, for the appellant.
E.W. Gardner, jr., for the respondents.
The mortgage sought to be foreclosed by action, was in the winter of 1858-9, held by the administrator of S.V.R. Mallory, deceased. The premises covered by it, had, after its execution, and about the 23d February, 1856, been conveyed by the mortgagor to the defendant Holcomb, who assumed the payment of the mortgage as a part of the purchase price of the premises. The mortgagor had paid the interest, and $266.66 of the principal sum secured by it, before the sale and transfer of the premises to Holcomb. Afterwards, Holcomb paid the interest. The whole principal became due and payable on the 1st March, 1858. Shortly before the 28th February, 1859, (the administrator of Mallory being about to foreclose the mortgage,) Holcomb entered into an agreement with the plaintiff's testator, whereby the latter agreed to purchase the mortgage of Mallory's administrator, who then held the same, and extend the time of payment five years; or give that additional time from the time he took the assignment, to pay the balance due upon the bond and mortgage; in consideration of which, Holcomb agreed to pay him fifty dollars, which he did pay, and Holberton took the assignment of the mortgage, and continued to hold the same, and receive payments of interest thereon up to his death. The bond and mortgage were assigned to the plaintiff's testator on 28th February, 1859, and the time agreed to be given to Holcomb to make payment would not expire until the 28th February, 1864.
This foreclosure suit was brought in June, 1862, and the question is whether the executor of Holberton is entitled to sustain it, notwithstanding the contract of his testator to purchase the mortgage, and forbear foreclosing it for five years; or, in other words, to extend the time of payment of the debt secured to be paid by it, and which was due, for five years from such purchase. If Holberton, in the face of his contract, was not entitled to maintain an action to collect the principal secured by the mortgage by a foreclosure thereof, before the five years elapsed, it is very clear his representative is not.
The ground taken at the trial was, that the contract was void by the statute of frauds, not being in writing, and being an agreement that by its terms was not to be performed within one year from the making thereof. (2 R.S. 135, § 2, sub. 1.) I am of the opinion that it was not affected by the statute. The statute applies to executory, and not to executed contracts; and the one in question, I think, was of the latter description. It was certainly executed by Holcomb; and it seems to me the purchase of the mortgage by the plaintiff's testator was an execution on his part. Holberton, agreed in substance, to purchase the mortgage, and forbear to foreclose it for five years, in consideration of fifty dollars. He did purchase, and take an assignment of it, and Holcomb paid him the fifty dollars. Thus, the contract was fully executed. Nothing further remained to be done by either party. Holberton had simply to wait the five years for his money. Holcomb had paid the consideration money, and Holberton had entered upon the contract by receiving the money and purchasing the mortgage, and neither party could rescind it. Neither could Holcomb recover back the money, nor Holberton refuse to carry out the contract, based as it was upon a good consideration, and which he had undertaken to execute.
The further point is now urged (although not alluded to on the trial), that the mortgage being a specialty, no agreement in regard to it could be valid unless the agreement was also a specialty. It may be conceded that ordinarily a sealed executory contract can not be rescinded or modified by a parol executory contract; but that was not this case. Here the mortgage was due. The holder was about to enforce it by action; whereupon Holberton agrees, for a valuable consideration, to purchase and refrain from collecting it for five years. This agreement is executed by the purchase; and as respected the plaintiff's testator, operated as effectually to extend the time of payment as if it had been under seal. Indeed, as title to the mortgage would pass by mere delivery without a written assignment, I cannot see why an agreement to extend the time of payment, if founded upon a good consideration, would not be valid and effectual for that purpose, even if executory, and not reduced to writing. The agreement, in this case, was not one varying the terms of the sealed contract so as to require it to be under seal, but rather an agreement, based upon a good and valid consideration, to hold such contract in abeyance until the expiration of the time fixed upon by the new contract. It was conceded upon the trial that Holcomb was in a proper position to set up the new contract, provided such an one was made.
But, in any event, as suggested by the learned judge delivering the opinion in the supreme court, the judgment is sustainable upon the equitable ground that the defendant having a cause of action, would be allowed to set it up to prevent circuity of action. Holberton having taken the assignment, and held it under the contract as proved, and received a consideration therefor from the defendant, and this action being by his representative, it is the same as if he were seeking to foreclose the mortgage by suit, notwithstanding his agreement. If the defendant could have no defense to the foreclosure, still his agreement with Holberton would give him a right of action for the injury he received; otherwise he would be remediless. In the face of his agreement, Holberton, or his representative, ought not to be allowed to foreclose the mortgage, and on the principle of avoiding circuity of action, the law will give effect to such agreement as a defense to the foreclosure suit.
The judgment of the supreme court should be affirmed.
The agreement between the defendant Holcomb and the plaintiff's testator, was that the former should pay to the latter fifty dollars, and that the latter in consideration thereof, should purchase the bond and mortgage in question, and extend the day of payment of the principal for the period of five years, from the time of the making of said agreement. Holcomb thereupon, paid the money, and the testator purchased and took an assignment of the bond and mortgage. The mortgage debt was then wholly due, and the testator's assignor was about proceeding to foreclose the mortgage. The principal, if not the only question in the case, is whether this being by parol, was a valid agreement, and operated to extend the time of payment of the indebtedness. If it was, and such was its effect, the action was prematurely brought, and the decision of the supreme court was right, whether the proper reason for the judgment was assigned or not.
That the time of the payment of a simple contract debt may be thus extended, so that no action will lie for its recovery until the expiration of the extended time, when the agreement to extend is founded on a good consideration, is too well settled to admit of question. Under the former system of practice, such an agreement, to defeat the action, could be proved under the general issue, as it went to show that nothing was due, and there was no cause of action when the suit was commenced. (1 Chit. Pl. 512.) And so, I suppose, under the present system, the same evidence may be given under a general denial, as it goes to controvert what the plaintiff is bound to establish by his evidence, to wit: the existence of a demand due at the commencement of the action. In such a case the subsequent agreement operates upon the instrument, where the demand is evidenced by writing, and becomes part of it, so that the obligation, instead of becoming due according to its terms, is only due at the expiration of the extended time, and until that happens, no action can be maintained upon the instrument. The subsequent agreement does not operate to destroy the original agreement, but only to modify it in respect to the time of payment.
It is claimed, however, on the part of the plaintiff, that this principle has no application to instruments under seal, and that in regard to instruments of that character, it requires an agreement in writing of equal solemnity to effect a change or modification in any material particular. This seems to be the rule in such cases, before any breach of the specialty, and where the subsequent agreement is executory merely. It was so held in Allen v. Jaquish (21 Wend. 628), and in Eddy v. Graves (23 id. 84), cited in the opinion of the court in this case at general term.
But it is, I think, equally well settled that after the breach of a sealed agreement it may be modified in any respect, or wholly rescinded, by an executed parol agreement founded upon a sufficient consideration. ( Lattimore v. Harsen, 14 Johns. 330; Dearborn v. Cross, 7 Cow. 48; Fleming v. Gilbert, 3 Johns. 528; Keating v. Price, 1 Johns. Cas. 22; Delacroix v. Bulkley, 13 Wend. 71; Townsend v. Empire Stone-dressing Co., 6 Duer, 208.) Many other cases might be cited to the same effect, but the rule seems to be too well settled to require it.
That this was an executed and not a mere executory contract between the parties is extremely clear. The defendant's proposition was to pay $50, in consideration that the plaintiff's testator would buy the bond and mortgage and extend the time of payment. This proposition was accepted by the testator who received the money and made the purchase. Nothing else was to be done. The agreement did not contemplate the doing of any further or other act, to effect the extension. The extension was effected completely and perfectly in law the moment the agreement was consummated by the payment of the consideration on one side and the purchase of the securities on the other. The agreement was then completely executed, and took effect upon the bond and mortgage which, in the hands of the assignee, became due and payable as against the defendant Holcomb in five years, and not before. After that it was in no conceivable sense an executory agreement. Its entire object and purpose had been completely and perfectly fulfilled. It is upon this principle only that the proof of an agreement to extend the time defeats the action brought before the expiration of the extended time. The defense in such case does not proceed upon the ground of recoupment of damages for a breach of the agreement to extend, but upon the ground that the agreement, by its own force, operates upon the original contract, and effects the extension by way of a modification of the contract. The statute of frauds has, clearly, nothing to do with the case.
The objection that the judgment is made personal for the costs is not reviewable on this appeal. But if it were it is not well taken. The code (§ 317) provides that in an action prosecuted or defended by an executor, administrator or trustee of an express trust, costs shall be recovered as in an action by and against a person prosecuting or defending in his own right, but such costs shall be chargeable only upon, or collected of, the fund or party represented, unless the court shall direct the same to be paid by the defendant or plaintiff personally, for mismanagement or bad faith in such action or defense.
There is no direction in the judgment that the plaintiff shall pay the costs personally; and it can only be collected from the assets in his hands. It is in law a judgment against him for costs as executor, and is properly rendered as though he was prosecuting in his own right.
The judgment should, therefore, be affirmed.
All the judges were for affirmance, except SELDEN, J., who thought the agreement void under the statute of frauds, as not to be performed within a year. Judgment affirmed.