## Facts

- Theresa Levin mortgaged real property to Hibernia Savings and Loan Society (Hibernia).
- Levin later conveyed the mortgaged property to Kernan Robson, who took title subject to the mortgage and assumed and agreed to pay the mortgage debt.
- The property was then conveyed in succession to later owners, including Michael O’Toole, Curtis Hillyer, and John Hoyt; at each transfer, the transferee agreed to assume the same mortgage obligation.
- While a later grantee held title, Hibernia foreclosed the mortgage and sued Levin, Robson, and the later assuming grantees, obtaining deficiency judgments against them.
- Robson paid the deficiency judgment and then filed a separate action against the later assuming grantees (including O’Toole) seeking reimbursement/indemnity based on their assumption agreements.
- In the trial court, a defendant’s demurrer to Robson’s complaint was sustained, resulting in a judgment against Robson.
- Robson appealed, arguing that the later assuming grantees were primarily liable to him as between the parties and that his complaint stated a valid claim for reimbursement.

## Issues

1. When mortgaged property is conveyed through successive grantees who each assume the mortgage, may an earlier assuming grantee who pays the mortgage deficiency recover reimbursement from a later assuming grantee?
2. Does the prior foreclosure and deficiency judgment in favor of the mortgagee bar a later action among the defendants to determine their reimbursement obligations to one another?

## Decision

- The Court of Appeal reversed the judgment entered after the demurrer was sustained.
- The court held that, as between successive assuming grantees, the later assuming grantee is treated as the principal debtor and the earlier assuming grantee is treated as a surety with a right to reimbursement upon payment.
- The court concluded that the foreclosure judgment establishing the mortgagee’s rights did not, by itself, adjudicate the rights of the defendants among themselves and did not bar Robson’s reimbursement claim.

## Legal Principles

- Successive assumption of a mortgage debt shifts primary responsibility: each later assuming grantee becomes primarily liable, as between the grantees, for the mortgage debt that earlier grantees had assumed.
- An earlier assuming grantee who is compelled to pay the mortgage debt may seek reimbursement from a later assuming grantee because, in substance, the later grantee stands as principal and the earlier grantee stands as surety as between them.
- A mortgage assumption agreement may be enforced by a person for whose benefit it was made (including a prior obligor in the chain), consistent with California’s third-party-beneficiary doctrine (Civil Code § 1559).
- A foreclosure decree and deficiency judgment determine the creditor’s right to recover but do not necessarily determine the allocation of payment responsibility among the several defendants; a separate action may lie to resolve reimbursement rights among them.

## Conclusion

Robson v. O’Toole holds that where mortgaged property passes through successive purchasers who each assume the mortgage, the later assuming grantee is treated as primarily liable as between the parties, so an earlier assuming grantee who pays a foreclosure deficiency may seek reimbursement from the later assuming grantee; the foreclosure judgment establishes the mortgagee’s recovery but does not, without more, preclude litigation of reimbursement duties among the defendants themselves.


Robson v. O'Toole, 45 Cal. App. 63, 187 P. 110 (1919)