BRADBURY v. CARTER et al., 291 F. 363

ARSCHULER, Circuit Judge (after stating the facts as above). Conceding the general principle that any grantee of a mortgagor, who agrees to pay the mortgage debt, becomes liable therefor to the holder of the debt, it is contended for plaintiff in error that in no event can there be a recovery against him, because his grantor, Wise, did not in the deed to himself, or otherwise, assume or agree to pay the mortgage debt.

There are 'jurisdictions, notably New York, which hold that the acceptance of a deed wherein it is specified that the grantee assumes and agrees to pay a mortgage indebtedness upon premises conveyed is ineffective to raise in the grantee the obligation to pay, unless his grantor was himself bound to pay it. Illinois and a number of other states hold otherwise. In Dean v. Walker, 107 Ill. 540, 47 Am. Rep. 467, it was said that such an agreement, upon a valid consideration, is a promise between promisor and promisee for the benefit of the holder of the mortgage debt who may maintain action.

We think this is the correct rule, and that Bradbury’s agreement to pay the mortgage debt as a part of the consideration for the conveyance to him will bind him to make good his undertaking even though his grantor Wise did not become liable to pay the mortgage debt. It is next contended that the amended plea 2, A, B, C, and

I) interposed valid defense to the action, in stating that Carter and McClain had theretofore sued Mickelberry upon his (Mickelberry’s)assumption of payment of the same mortgage indebtedness in the deed to him from Bradbury, and that such suit resulted in judgment for $250 against Mickelberry, which was afterwards brought to this court by Carter and McClain on error, and here affirmed. Carter v. Mickelberry (C. C. A.) 263 Fed. 548.

To the extent, if at all, that Carter and McClain realized upon Mickelberry’s promise to pay their obligation, they could not, of course, again recover against Bradbury, since both promises had reference to the same mortgage debt. The pleas, however, do not aver any state of facts from which it would follow that Mickelberry had in fact discharged the obligation to Carter and McClain (except perhaps as to $250 thereof, for which the recovery was had); and we cannot assume that this was the fact. Just how it was that on ah apparent obligation for upwards of $3,000 there was a recovery for only $250 does not appear.

From the opinion rendered here this court evidently considered that there was no evidence to show that Mickelberry evei accepted the deed to him from Bradbury, or ever agreed to pay the mortgage debt, and affirmed the judgment for $250 because of waiver by the defendant there of the error in permitting case to go to the jury at all. Bradbury was no party to the Mickelberry suit, and was not bound by it, and can have no advantage of it except to the extent of whatever Carter and McClain actually realized through it.

The third amended plea sets up a state of facts upon which, in our judgment, a charge of actionable fraud may be predicated. It is true mere exaggeration of value does not ordinarily constitute fraud. But where, apart from the exaggerations, devices are resorted to for the purpose of unduly influencing the mind of a prospective purchaser, 'such may constitute active fraud wherefor relief will be accorded to one injured thereby.

The plea sets forth that the mortgagors had no real interest in the property, but that a plan was contrived with the then owners to take title from them, giving them back the mortgage which was far in excess of the market value of the property, and then a deed would be made to some person who would assume payment of the mortgage, and that in this way should make it appear through such sham transactions that the property had value far in excess of its real worth, and by means of this induce some person to pay an unconscionable price, which it is charged was the case here.

If by such fraudulent means Bradbury was in fact defrauded, he should not in this action, brought by the very persons the plea charges to have been the instigators of the fraud, be prevented from showing it in his defense against an action for the recovery of what, under the plea, would be the very fruit of the alleged fraud. We are of opinion that demurrer to this plea was improperly sustained, and that for this reason the judgment should be.reversed and the cause remanded for a new trial.

Reversed and remanded. <g=s>For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes <gzs>lTor other cases see same topic & KEY-NUMBER in all I^ey-Numbei;ed Digests & Indexes