Case ID: ny-st-rep_69/html/0469-01.html
Source: Caselaw Access Project
Author: {"author": "Pratt, J. Dykman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James A. Baker, Resp’t, v. Albert B. Byrn et al., App’lts.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed July 26, 1895.)
    
    Judgment—Fraudulent—Vacation.
    Where a mortgagor pays the amount of the mortgage to an assignee, but does not have either the assignment or satisfaction of the mortgage recorded, and another party, with knowledge of these facts and intent to defraud the mortgagor, subsequently procures an assignment of the mortgage and forecloses it by publication, the mortgagor, in case he had no knowledge of the foreclosure action, can maintain an action to set aside the foreclosure judgment as against a purchaser at such sale, who bought with knowledge of all the facts.
    Appeal from art interlocutory judgment, overruling a demurrer to the complaint.
    
      George W. Stevens, for app’lts; H. M. & D. P. Hall (Howland M. Hall, of counsel), for resp’t.
   Pratt, J.

We think that this demurrer was properly overruled. This disposition of the case does not militate against the application of the general rule that a judgment between the same parties cannot be attacked collaterally. The precise point here is that this judgment is not between the same parties, and this is not a collateral attack. The purchaser, Marcus L. Byrn, who is now in possession of the land which plaintiff claims to own, and which he undoubtedly at one time did own, was not a party to the foreclosure suit. He bought at the foreclosure sale with notice, as plaintiff alleges, of the fraud of which plaintiff complains. Plaintiff alleges that he bought the premises in question subject to a mortgage held by Bowne, which Bowne subsequently assigned to Reid, and that he paid off the mortgage debt, principal and interest, to Reid or his representatives; that Reid did not record his assignment, nor did plaintiff, and the satisfaction piece was not filed; that in 1887, nearly twenty years later, defendant Albert Byrn, with intent to cheat plaintiff, procured an assigment of the mortgage from Bowne, which he recorded, and thereupon began the foreclosure suit, making plaintiff a party defendant and proceeding by publication ; that plaintiff was never served with process, and heard nothing of this suit until long after the foreclosure judgment and sale,—indeed, until just prior to the commencement of the present action; that the premises were sold, and were purchased by defendant Marcus L. Byrn, who was not a party to the foreclosure suit, but who purchased with knowledge of the facts on which plaintiff relies, etc. Of course, plaintiff might have appeared in the foreclosure suit, if he had known of it, and, on proof of his present allegations, would have beaten that plaintiff. But he did not know of that suit. On his allegations the institution of the suit—indeed, the procurement of the assignment from Bowne on which it was based—-was a fraud upon him. The entry of the judgment in his absence and without his knowledge was no less a fraud, and still operated as a fraud. True, as against that plaintiff, he might obtain relief by motion in that suit. But the purchaser under that judgment is now entitled to be heard, not simply on affidavits and in the usual haste of a motion, but deliberately, with that care and consideration which we give to trials, especially trials involving allegations of fraud. If plaintiff had sued Marcus L. Byrn in ejectment very likely he would have been estopped by this judgment in foreclosure. He is bound to take no such risk. He by this action attacks this judgment and proceedings thereunder directly. They give color of title to his property, and, if valid, one of these defendants may deprive him of his property. We feel clear that such an action is proper, both in principle and authority.

Judgment affirmed, with costs, but with leave to answer within twenty days on payment of costs.

Brown, P. J., concurs.

Dykman, J.

(concurring)—This is an appeal from a judgment entered upon an order overruling a demurrer interposed by. the defendants to the amended complaint of the plaintiff. The demurrer was for insufficiency. The action was brought to set aside as fraudulent a judgment of foreclosure and sale entered in the supreme court in the county of Queens on the 6th day of February, 1888, by the defendant Albert B. Bryn, under which the land of the plaintiff was sold, and the defendant Marcus L. Byrn became the purchaser. The complaint states, substantially, that the plaintiff purchased the lots in 1862, at which time they were subject to a mortgage made by one Warner to one Yan Mater, dated March 31, 1857, and due by its terms March 31,1862. This bond and mortgage was assigned to one James Bowne, July 3,1857, and was assigned by Bowne to one Reid, April 1, 1858. On July 20, 1868, the plaintiff paid the bond to Reid’s representatives, and took up the bond and mortgage, and has had them in his possession since that time. On the 24th day of August, 1887, the defendant Albert B. Byrn, finding the record of the mortgage uncan- ' celed, procured an assignment from James Bowne of all his right, title and interest in the bond and mortgage in question, and thereupon proceeded to foreclose the mortgage. An order for publication of the summons was obtained dispensing with depositing the same in the post office, and the summons was served by publication. Upon the reference to a referee to take proof of the facts and circumstances stated in the complaint, the plaintiff herein being an absent defendant in that action, peroof of the mortgage and assignment thereof was made by reference to the records of Queens county, and of the bond by reference to the record of the mortgage which recited a bond. The plaintiff had removed <to' the. state of New Jersey in 1864, and was wholly ignorant of the proceedings taken to deprive him of his property. The plaintiff alleges that the assignment of the mortgage from James Bowne was procured with the intent to cheat and defraud him out of his property by a fraudulent and pretended foreclosure of the mortgage which, though uncanceled, was then paid.

It is further alleged that, in pursuance of that intent to cheat and defraud the plaintiff, the action to foreclose the mortgage was commenced by the defendant Albert A. Baker, and all persons or owners unknown claiming an interest in the premises sought to be foreclosed in that action. It is further alleged in the complaint that the plaintiff was ignorant of the several attempts taken for a foreclosure of the mortgage until very recently. It is further stated that the plaintiff is informed and believes that the attempted assignment of the bond and mortgage by James Bowne to the defendant Albert B. Byrn, unaccompanied by the bond and mortgage, was wholly null and void, and of no effect, and that the judgment and decree for the foreclosure of mortgage was obtained by fraud, and in pursuance of an intent to cheat and defraud the plaintiff out of his property, and by a series of gross impositions upon this court, of which the defendant Marcus L. Byrn had full notice and knowledge. The principal insistance on the part of the defendant in favor of the demurrer is that relief should have been sought in the foreclosure suit, and he cites a class of cases in which the courts have refused to entertain an action to nullify a judgment when the relief sought would require a retrial of the case already tried in the original suit. Such was the case of Railroad Co v. Harrold, 65 How. Prac. 89. But such cases have no application here.

The trial of this action requires proof of an original fraud, concocted and perpetrated against the plaintiff and upon the court. Chancellor Kent, in the case of Foster v. Wood, 6 Johns. Ch. 87, states the rule and its application as follows:

“ The rule is that chancery will not relieve against a judgment at law on account of its being contrary to equity unless the defendant in the judgment was ignorant of the fact in question pending the suit, or it could not have been received as a defense, or unless he was prevented from availing himself of the defense by fraud or accident or the act of the opposite party, unmixed with negligence or fault on his part.”

Again, it is said in Ross v. Wood, 70 N. Y. 10:

“ The fraud which will justify equitable interference in setting aside judgments and decrees must be actual and positive, and not merely constructive. It must be that which occurs in the very concoction of procuring of the judgment or decree,—something not known to the opposite party at the time, and for not knowing which he is not chargeable with negligence.”

It is said in the case of Whittlesey v. Delaney, 73 N. Y. 571, that: “ Whenever a party, liable to be injured by a judgment tainted by fraud, has had an opportunity to protect himself, a court of equity is open to him.”

In the case of Michigan v. Phoenix Bank, 33 N. Y. 26, it is said: “ It is needless to multiply cases showing that the courts, upon bill filed, will set aside as nullity a judgment, decree, or award obtained by fraud.”

In the case of U. S. v. Throckmorton, 98 U. S. 67, it is said: “When an unsuccessful party has been prevented from exhibiting fully his case by fraud or deception practiced upon him by his opponent, as by keeping him away from court, by false promise of a compromise, or where the defendant never had knowledge of the suit, or when the attorney corruptly sells out his client’s interest to the other side,—these and similar cases, which show there has never been a real contest or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul a former judgment.”

This case falls within the authorities cited, and the complaint states a cause of action. The appellant insists that the judgment is conclusive, but it is to be observed that nothing is conclusive in law which is procured by fraud, for fraud vitiates everything into which it enters. The fraudulent manufacture of a claim, and of evidence to secure a judgment upon it, cannot escape the vigilant eye of a court of equity, which is always open to a party injured by a judgment obtained by fraud. Our conclusion, therefore, is that the judgment should be affirmed, with costs.