Case ID: ny-st-rep_44/html/0033-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Macomber, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eugene C. Denton, App’lt, v. The Ontario County National Bank, Impl’d, Resp’t.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed January 22, 1892.)
    
    1. Foreclosure—Redemption.
    An action to foreclose a junior mortgage after foreclosure of a prior mortgage to which the junior mortgagee was not a party, may be turned into one for redemption where the rights of the plaintiff may be worked out and secured in that manner.
    :2. Same.
    Two concurrent mortgages were given covering two parcels of land, on one of which there was a prior mortgage, the lien of which was postponed to that of said mortgages, and which was subsequently foreclosed and the premises sold to defendant. Prior to that time the other parcel was conveyed and the grantee mortgaged it to plaintiff. Thereafter one of the concurrent mortgages was foreclosed and both parcels sold thereunder to defendant. Plaintiff was not a party to that action. Held, that as plaintiff if a party to that action would have been entitled to demand that the parcel not covered by his mortgage should be sold first, he was entitled to redeem on that basis.
    Appeal by the plaintiff from a judgment entered in Ontario county, March 21, 1891, on the decision of the court at special term, and upon the report of a referee appointed by a preceding interlocutory judgment.
    
      M. H. Field, for app’lt; L. H. Hall, for resp’t
   Macomber, J.

This action is the ordinary one for the foreclosure of a mortgage and for the sale of the mortgaged premises. The mortgage was executed by Letitia ■ Gr. Durand to the plaintiff to secure the payment of the sum of $1,060, with interest, on the 12th day of April, 1888. The land consists of thirty-three acres situated in the town of Canandaigua, R. Y.

The execution of the mortgage and the nonpayment of the same being undisputed, the plaintiff clearly made a ¡prima facie case for a judgment of foreclosure and sale of the mortgaged premises, in pursuance of § 1626 of the Code of Civil Procedure. But the defendant, the Ontario County Rational Bank, which is the only party defending, sets forth in its answer certain allegations, which have been supplemented by evidence, from which the learned trial justice has denied to the plaintiff the right to foreclose the mortgage, and to have a sale of the mortgaged premises, but has granted to him the privilege of redeeming the land covered by the mortgage upon terms which hereinafter appear.

The defendant’s rights depend upon the ownership of. these thirty-three acres, and of another tract of 175 acres, and upon the rights growing out of the incumbrances thereon under the title of one Luman M. Durand, as it existed on the 1st day of May, 1886.

On the last named day Durand and his wife executed to-H. L. Lansing, as trustee, two mortgages, covering the entire lands, consisting of 208 acres; one in the sum of $6,000, and the other in the sum of $2,000, and these mortgages were madé equal liens upon the lands. A previous mortgage of $5,000 had been given upon the 175 acres alone, which bore date the 11th day of April, 1878, and which was subsequently assigned to the defendant, The Ontario County Rational Bank. The lien of this mortgage, however, was postponed to that of the $6,000 and $2,000 mortgages by agreement executed by the bank after the assignment. The $5,000 mortgage was subsequently foreclosed by this bank, and the land covered by it, namely, the 175 acres, was conveyed to it March 3d, 1888, by the referee appointed to make the sale in the foreclosure.

Luman M. Durand conveyed the thirty-three acres of land to his wife, Letitia Gr. Durand, by deed bearing date January 24, 1888, and recorded January 25, 1888. On the 12th day of April, 1888, Letitia Gr. Durand, then the owner of the thirty-three acres, executed to the plaintiff the mortgage in question. The Lansing mortgage of $2,000 was foreclosed in January, 1889, and the mortgaged premises, namely, the whole 208 acres, were, by the deed of the referee in that suit, conveyed to the defendant, The Ontario County Rational Bank, by deed dated the 2d day of March, 1889, and recorded two days thereafter. Thereupon the bank went into possession of the whole of the premises.

But the plaintiff in this action was not made a party to the foreclosure of the $2,000 Lansing mortgage. He subsequently, in the month of June, 1889, brought this action for the purpose of foreclosing his mortgage of $1,060 upon the thirty-three acre tract

It was.claimed upon the trial by the plaintiff’s counsel, that the two thousand dollar Lansing mortgage became merged in the referee’s deed, and that consequently the bank acquired title to the premises subject to the payment of the plaintiff’s mortgage. This view was not adopted by the learned trial justice, but, on the contrary, while holding that the plaintiff’s mortgage was unaffected by that foreclosure, yet under the circumstances disclosed he held that the plaintiff did not have the right to a judgment of foreclosure and sale of the mortgaged premises. The learned justice, with ample authority to support him, also decided that the plaintiff’s right to redeem- was in no way affected by the foreclosure of the two thousand dollar Lansing mortgage. But he further held, and, as we think properly, that by the foreclosure and sale of the last named mortgage, the plaintiff acquired no greater rights or equities than he possessed before that foreclosure. The court thereupon proceeded to adjudge, inasmuch as all the necessary parties were before the court in this action, and the pleadings sufficient for that purpose, that the plaintiff might redeem the premises, within a time named, from the lien of the two thousand dollar Lansing mortgage; that in default of such redemption his rights and of all persons claiming under him in the mortgaged premises, should be extinguished.

On the whole, after considering the reasons stated by the learned justice, and the authorities discussed by him, namely: Gage v. Brewster, 31 N. Y., 218; Peabody v. Roberts, 47 Barb., 91; Salmon v. Allen, 11 Hun, 29, we are inclined to think, that the action may thus be turned into one of redemption of the mortgaged premises, notwithstanding the recent decision in the case of Bigelow v. Davol, 41 St. Rep., 788.

The terms, however, upon which such redemption may be made, must be such as would have been, mutatis mutandis, available to the plaintiff, had he actually been made a party to the foreclosure of the §2,000 Lansing mortgage. While the plaintiff’s rights were not. enhanced by the omission to make him a party to that suit, they cannot in any sense be deemed to have been impaired thereby. Sor the purposes of this action they must be deemed to be wholly unaffected by the former action.

The relief, therefore, actually to be administered in this case must be adapted to the changed situation of affairs caused without the fault of the plaintiff. The referee reported, that the whole of the principal sum of the §2,000 Lansing mortgage, together with the $391 interest, amounting in all to §2,391, should be paid by the plaintiff upon such redemption, less $158.50, deducted for the value of the use of the land by the defendant since its purchase at the foreclosure sale. He further finds, that the thirty-three acres are worth only thirty-five dollars per acre, aggregating in all $1,155. So that the privilege of redeeming in this case is not one which the plaintiff will be swift to avail himself of, if the principle upon which the judgment proceeds can be maintained.

We should, as it seems to us, administer the relief as nearly as we can, so as to secure the plaintiff in the rights which he might Lave asserted in the Lansing foreclosure had he been made a party defendant therein. The deed to Letitia GL Durand of the thirty-three acres was made and recorded prior to the purchase by the defendant, The Ontario County National Bank, of the one hundred and seventy-five acres, at the foreclosure sale of the $5,000' mortgage but not before thé assignment to it of that mortgage. The right, therefore, of Letitia Gr. Durand, the owner of the thirty-three acres, to have the 175 acres in the foreclosure of the $2,000 mortgage sold first, under the well-established principle that land so circumstanced must be sold in foreclosure in the inverse order of alienation, is undoubted. Whether such right was asserted by her in such foreclosure does not appear. Indeed the judgment therein, which probably indicated in what manner the land should be sold, is not laid before us on this appeal.

It does not appear that any rights of Letitia Gr. Durand were thus asserted. Though we cannot in this case adjudicate upon her rights, yet it appears to us that, for the purpose of determining the equities between the respective parties to these parcels of land, subjected as they were to the incumbrance upon all of them of the two Lansing mortgages, the mortgage given to the plaintiff, and now sought to be foreclosed, should be regarded as an alienation of the land, pro tanto, as of the time of its- date. Hart v. Wandle, 50 N. Y., 386, and the cases there cited. Had the-plaintiff been made a party to the foreclosure of the $2,000 mortgage, he doubtless would have asserted, by proper appearance or answer, his right to have the one hundred and seventy-five acres sold first, and that resort should be had to the thirty-three acres covered by his mortgage only in the event that the sale of the one hundred and seventy-five acres did not produce sufficient-funds to pay the lien.

The rights of the holders of the $6,000- mortgage do not seem to be affected by any action heretofore brought. The value of the one hundred and seventy-five acres is found to be fifty dollars per acre, amounting in all to $8,750, which appears to be ample security for both mortgages.

If upon the new trial, which we have concluded to order, a different state of facts is not made to appear, we are of the opinion that the plaintiff would have a right to redeem on the basis above indicated, leaving out of consideration for the moment the rights of the defendant under the $5,000 mortgage; for had the one hundred and seventy-five acres of land been ordered by the judgment to be sold first, and had the $6,000 mortgage been adjudged to have been paid off by the’same decree, if the amount of the-sale was sufficient for that purpose, a fund would have been realized that would have discharged the lien of those two mortgages upon the thirty-three acres. The right, therefore, of the plaintiff, as thus indicated, may be worked out and secured by treating this as one for redemption alone. This view renders a new trial necessary. Whether, on such new trial, it shall be made to appear that the existence, at one time, of the $5,000 mortgage and the purchase of the defendant at the sale under foreclosure thereof affect the application of the above principle, and, if so, to what extent, are matters which have not, either directly or indirectly, been passed upon by the trial court, and, consequently, we do not express any opinion thereon.

It follows, therefore, that the judgment appealed from should be reversed and a new trial ordered.

Judgment reversed and a new trial ordered, with costs to abide the final award of costs.

Dwight, P. J., and Lewis, J., concur,