Massachusetts Agencies

Requirement of Consideration: Personal Liability


Although there must be consideration to support a mortgage, it is not necessary that there be any personal liability on the part of the mortgagor. Perry v. Miller, 330 Mass. 261, 112 N.E.2d 805 (1953). The consideration can flow to a third party. In Perry a man ran a business on property the title to which was vested in his wife. The man was indebted to a creditor for certain obligations. The creditor demanded security for the debt. In response to that demand, the wife gave the creditor a mortgage on the property. In connection with a dispute, which developed into a lawsuit between the parties, the validity of the mortgage was brought into question. In making his ruling the trial judge held that the mortgage was null and void, as it was not supported by consideration flowing to the mortgagor.

The Supreme Judicial Court reversed:

A mortgage of real estate is a conveyance of the title or of some interest therein defeasible upon the payment of money or the performance of some other condition. Wearse v. Peirce, 24 Pick. 141.Bayley v. Bailey, 5 Gray, 505, 509. United States Trust Co. v. Commonwealth, 245 Mass. 75, 78. Where the condition of defeasance is the fulfilment of a promise by the mortgagor, the mortgage depends upon the validity of the mortgagor's obligation. If there is no consideration for the promise, there is no enforceable contract and the mortgage security is not available to the mortgagee.Wearse v. Peirce, 24 Pick. 141. Saunders v. Dunn, 175 Mass. 164. Bailey v. Way, 266 Mass. 437, 441. Dow v. Poore, 272 Mass. 223, 226. Pearson v. Mulloney, 289 Mass. 508. A mortgage, however, may exist without there being any debt or any personal liability of the mortgagor. Rice v. Rice, 4 Pick. 349. Campbell v. Dearborn, 109 Mass. 130, 144. Cook v. Johnson, 165 Mass. 245, 247.Pearson v. Mulloney, 289 Mass. 508, 515.

The ruling of the judge in the instant case ignored the difference between a mortgage given to secure an obligation of the mortgagor and one given without personal obligation to secure the indebtedness of a third person. As the final decree was based upon a ruling which we think erroneous, it must be reversed and a new decree entered dismissing the plaintiff's bill.