
    BENJAMIN P. FAIRCHILD, Respondent, v. THERESA LYNCH, Appellant.
    
      Covenant to pay mortgage —construction of—effect thereon of purchase of the bond and mortgage by the mortgagor—Defense in the nature of matter of avoidance—when need not be set up in answer.
    
    The mortgagor of certain premises conveyed the same by a deed containing the following clause: “Which said mortgage the party hereto of the first part hereby assumes and agrees to pay as part of the consideration hereinbefore expressed.” Held, that this was the covenant of the party of the second part (Fairchild v. Lynch, 42 Super. Ct. 265).
    Where the grantee covenants to pay a certain mortgage, as part of the consideration of the deed, &c., and his grantor, who is also the mortgagor and obligor, thereafter purchases the said bond and mortgage, the grantee is not liable on his said covenant;—this, though the bond and mortgage be subsequently transferred to third parties, and foreclosure proceedings instituted, in which the mortgagor is charged with and pays a deficiency. In such a case the mortgagor voluntarily extinguishes the personal liability on said mortgage, before there is any breach of the covenant, there being ho equitable reason why it should be kept alive. Whether the pledge or mortgage of the lands could, in any event, be left, qrnere; but in this case it was disposed of by the foreclosure proceedings.
    
      The nature of covenants to pay mortgage, and what is sufficient to satisfy such covenants, considered.
    Defendant is not precluded by subdivision 2, section 149 of the Code of Procedure (Oode Ow. Broc. § 500, subd. 2), from resting upon a defense in the nature of matter of avoidance, which is not set up in the answer, when the facts upon which the defense is based are stated in the complaint.
    Before Sedgwick and Van Vorst, JJ.
    
      Decided January 9, 1880.
    Appeal from judgment, and from order denying motion for a new trial.
    The facts are as follows: On February 17, 1873, the plaintiff made his bond, in the sum of $15,000, payable on February 15, 1875, to one Luyster, and to secure payment of the bond, mortgaged certain real estate. On February 18, 1873, the plaintiff conveyed to the defendant the mortgaged premises, subject to the mortgage. The conveyance contained the following covenant : “ Which said mortgage the party hereto of the first part hereby assumes and agrees to pay, as part of the consideration hereinbefore expressed.”
    The complaint stated, and the proof was, that on February 20, 1873, this bond and mortgage were duly assigned by the said Luyster to the plaintiff.
    Afterward the plaintiff assigned the bond and mortgage, and it finally went to certain persons, who, on September 23, 1874, began an action to foreclose the mortgage. The defendant had in the mean time conveyed the premises in fee, her grantee assuming the said bond and mortgage, and agreeing to pay. it. The present plaintiff, and defendant, and the grantee of the latter were made parties defendant to the action in foreclosure, and in that action the complaint demanded judgment that, in case of a deficiency, they pay the amount of the deficiency. The defendant Lynch answered in the foreclosure action, but. after issue was joined consented that there should be judgment for the relief asked, except such part of the relief as demanded judgment against the defendant Lynch for any deficiency. There was a deficiency, which was paid by the present plaintiff to the plaintiffs in the action in foreclosure. The present plaintiff brought this action for damages, from defendant’s breach of her covenant to' pay the mortgage.
    
      John A. Bryan, for appellant, among other things, urged :
    The assignment by Luyster, as mortgagee, back to the plaintiff, as mortgagor, of the bond and mortgage which constituted the subject of the alleged covenant, was an extinguishment of the debt and a discharge of the lien. 1. The obligation to pay and the right to receive became united in the same'person ; thereby bringing the transaction under the category of “ Confusion,”—one of the terms designated in the list of matters, which will discharge a contract (Bouv. Law Dic. tit. Discharge ; Id. tit. Confusion). The rule is thus stated by Bouvier : “When the qualities of debtor and creditor are united, in the same person, there arises a confusion of rights which extinguishes the two credits.” 3. It is closely allied to the better known doctrine of Extinguishment (Bouv. Law Dic. tit. Extinguishment; Bac. Abr. same title). 3. The rule wus announced, in 1807, by the supreme court of this State, in these words: “That a personal action once suspended, by the voluntary act of the party entitled to it, is forever gone and discharged, is a rule as well settled as any in the law” (Thomas v. Thompson, 3 Johns. 471, 473). The court there observes: “In order to determine when the suspension of the remedy works an extinguishment of the debt, Holt, Ch. J., in the case of Wangford v. Wangford (1 Salk. 306), says, that when the same hand is to receive that ought to pay, it amounts to an extinguishment” (2 Johns. 474). 4. Substantially the same rule was applied, in 1853, by the Supreme Court, in the Seventh District, Monroe. General Term. There, a canal boat was the fund for the payment of notes; and the plaintiff became assignee of both the boat and notes. The notes were regarded as satisfied (Wayne v. Sherwood, 14 Barb. 633. See Nickles v. Dillaye, 15 Hun, 296, 301, and. cases cited). 5. In the present case, the debt was the plaintiff’s bond; the fund was his mortgage on the land; and the assignment to him of both, discharged the debt.
    
      S. F. & F. H. Cowdrey, for respondent.
   By the Court.—Sedgwick, J.

A former general term has held that the clause as to the assumption of the mortgage, in the deed from plaintiff to defendant, was the covenant of the party of the second part, the defendant herein.

I am, however, convinced that the assignment of the obligee find the mortgagee to the plaintiff, who was the obligor and mortgagor, extinguished any personal liability of the plaintiff upon the bond and mortgage. Upon that bond or mortgage resting in the hands of the plaintiff, there could be no action at law, 1 ‘ and then if a personal thing cannot be had but by action, if the action is extinguished the thing itself is extinguished ” (Plowd. 184; Thomas v. Thompson, 2 Johns. 471, and the cases cited). The plaintiff voluntarily brought the personal obligation to an end before the defendant had committed any breach. All that could be left, if that could be, would be the pledge or mortgage of the land, and the foreclosure proceedings disposed of that in such a way that there is no practical question as to it in this case.

The plaintiff’s sole cause of action is upon the defendant’s promise to pay the mortgage. The defendant cannot be held if there were no breach of that. The defendant’s obligation was not to pay any specific sum, or the amount of the bond and mortgage; the covenant would be satisfied by any extinction of the bond or mortgage as to the plaintiff, by accord and satisfaction, or by release (Mills v. Watson, 31 Super. Ct. 374). The duty of the defendant became absolute for the first time, on the day fixed by the bond or mortgage for payment. Upon that day there was no personal liability of the plaintiff on the mortgage assumed by the covenant. The plaintiff had voluntarily extinguished it, when there was no equitable reason why it should be kept alive.

It does not seem that the foreclosure action involved this point at all. It might have arisen, if the liability of the defendant for the deficiency had been litigated, or could have been litigated, between these parties; but the question was taken out of the issues by the stipulation that there should be no judgment against the defendant here, for the amount of the deficiency.

It is insisted that the defendant cannot rest upon this defence, as the answer does not set it up. I do not think this necessary, when the facts on which the defence rests are stated in the complaint.

This view of the case is so fundamental, that it is not necessary to review the other exceptions in the case.

Judgment reversed, and new trial ordered, with costs of the appeal to the appellant, to abide the event.

Van Vorst, J., concurred.  