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Westville Land Co. v. Handle

Decided: March 23, 1934.


On appeal from a judgment of the Camden County Circuit Court.

For the appellant, Carl Kisselman.

For the respondent, Joseph Beck Tyler.

Before Brogan, Chief Justice, and Justices Trenchard and Heher.


The opinion of the court was delivered by

HEHER, J. A mortgage in the sum of $27,600, covering twenty-three acres of land, made by one William Rovner to plaintiff, and by the latter assigned to the Woodbury Trust Company, as collateral security for a loan of $15,000, was in default. It was given to secure Rovner's bond. Under an agreement bearing date October 28th, 1927, defendants, Handle and Abraham J. Rovner, agreed to convey, or cause to be conveyed, to plaintiff a certain tract of land, comprising

twenty acres, owned by William Rovner, subject to a mortgage in the sum of $18,400, and to pay accrued interest on both mortgages, and unpaid taxes for the year 1926, assessed against the first-mentioned tract. In consideration thereof, plaintiff agreed to waive the default in the performance of the covenants and stipulations of the mortgage in the sum of $27,600, and, "at the expiration of the term of the mortgage," to extend, for a further period of two years, the time for payment thereof, "upon the payment by the owner of the land * * * to the mortgagee or mortgagees or assignees thereof of the sum of $7,600 on account of the principal thereof." The mortgage matured on February 11th, 1931. Defendants covenanted and agreed, "in further consideration of the foregoing, to indemnify and save harmless to the extent of $7,600 said mortgagee in said mortgage named, or any assignee or assignees thereof, from any and all loss occasioned by the failure of the owner of said land at the expiration of the term of said mortgage to reduce the principal thereof as hereinbefore provided."

There was compliance with the clause of the agreement requiring defendants to procure a conveyance of the twenty acres tract, and to pay the interest and taxes in arrears. But when the mortgage matured, the landowner defaulted in the payment of $7,600 on account of the principal thereof, and plaintiff brought this action to recover that sum. Trial of the issue was moved before a jury in the court below, and, upon presentation of the proofs, both sides moved for a direction of a verdict. The issue was then, by consent, submitted to the trial judge "for decision on both law and facts," and he found for plaintiff in the sum demanded.

The trial judge held that it was immaterial whether the covenant sued on was a guaranty of payment or provided for an indemnity against loss; that assuming it to be a contract of indemnity, a loss in the full sum demanded by plaintiff had been proven, and that neither the sale of the bond and mortgage, nor the foreclosure of the mortgage and suit on the bond, was a condition precedent to the right of recovery; and that the assignment of the mortgage to the Trust Company

"did not operate as an assignment of the guarantee or indemnity," and the pleaded cause of action was, therefore, vested in plaintiff. Judgment for plaintiff was accordingly entered, and defendant, Handle, appeals.

In awarding judgment to plaintiff the trial judge fell into error. The pleaded cause of action is a breach of an absolute guaranty of payment. But the contract is one of indemnity against loss, and not an agreement of guaranty. It expressly so provides. Defendants did not absolutely and unconditionally guarantee the payment of the specified sum, in event that the landowner failed to do so at the maturity of the mortgage. Compare Pfeiffer v. Crossley, 91 N.J.L. 433; affirmed, 92 Id. 638. Nor was it a guaranty of collection, or collectibility. Neither was it a direct promise by defendants to pay plaintiff in a given event, based upon a specified consideration moving from plaintiff, and entirely independent of the performance of an undertaking by another. Compare Perkins-Goodwin v. Hart, 83 N.J.L. 471. The agreement provided for an extension of the term of the mortgage for a period of two years, in the event of the payment, at maturity, of the mentioned sum in reduction of the principal. Plaintiff agreed to waive "any and all defaults under the said mortgage," and to forebear foreclosure, and, by the same token, to renew the mortgage for the ...

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