Case ID: ad_119/html/0209-01.html
Source: Caselaw Access Project
Author: {"author": "Clarke, J.: Ingraham, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William T. Hookey, Respondent, v. Joseph Greenstein and Others, Defendants, Impleaded with Hyman Adelstein and Abram Avrutine, Appellants.
    First Department,
    May 24, 1907.
    Mortgage — when holder of mechanic’s lien not prejudiced by amendment of complaint in action of foreclosure—when judgment not more favorable than that asked in complaint—only client can contest Vacating judgment on consent of attornéy.
    In an action to foreclose a junior mortgage covering property already sold under a prior mortgage, persons having mechanics’ liens'were made parties defendant and failed to appear or answer. Thereafter a judgment declaring the .mortgage usurious w.as by the consent of the.plaintiff'and the defendant mortgagors set aside and the complaint amended so as to set out that the property had been sold under a prior mortgage and that there v;as a surplus- from said sale, upon Which the lien of the mortgage was prior to the mechanics’ liens.;
    
      Held, that the holders of the mechanics’ liens not being parties to the mortgage were not entitled to notice of the amendment of the complaint and were not prejudiced thereby, not being in a position to raise the question of usury; ’
    That the second judgment declaring the priority of the lien of the mortgage, was not.more favorable than that demanded in the complaint and not in violation of section 1207 of the Code of Civil Procedure.
    The objection that an order vacating a judgment' can only be made by consent of parties and not by. that of their attorneys ■ can only be taken by the client ’ and is not available to third parties, for in the absence of complaint by the client the court assumes the authority of the attorneys-to act.
    Ingraham, J.,. dissented in part, with opinion.
    : Appeal by. the defendants, Hyman Adelstein and ¡another, from an Order of the Supreme Court, made at "the New York Special Term and entered in the office of the clerk of the county of New York on the 25th day of January, 1907, denying the said defendants’ motion to vacate an order and judgment theretofore entered in the above-entitled action.
    
      Samuel D. Lashy, for the appellants.
    
      Joseph Bosenzweig, for the respondent.
   Clarke, J.:

It appears from the record that one Ehrmann began an action to foreclose a mortgage on the property in question which proceeded ’ to judgment and sale and. resulted in a surplus of over $14,000 deposited with the chamberlain. Plaintiff Hookey began an action to foreclose a junior mortgage in which defendants Greenstein and Hirscli set up the defense that the mortgage sought to be foreclosed was usurious and void. In that action the appellant's Adelstein and Avrntine, who had "filed a mechanic’s lien against the premises described in the complaint, were made parties defendant, it being alleged that they “ have or .claim to have some interest in or lien upon" the same" mortgaged premises or some, part thereof, which interest or lien, if any, has accrued subsequently to the lien of the said mortgage and is subject and subordinate thereto.”' ■ ■

The said appellants did not appear or answer. Thereafter the action proceeded to. trial, resulting in' a judgment declaring the mortgage Usurious. Thereafter, upon the consent of the plaintiffs and the defendants'Greenstein and Hirscli, who had obtained the judgment in their favor, the court .vacated and set aside, that judgment and, upon a written stipulation to that effect, entered a judgment in which it was ordered' that the complaint be deemed amended so- as to set forth the fact that the premises therein-described, to foreclose'a mortgage against which this action'was brought, had been sold by the foreclosure of a prior mortgage, and as a result of the said sale there is now in the hands of the chamberlain of the city of New York a large sum of money, upon which the said mortgage debt is a lien prior to.- that of the defendants herein, and adjudged and decreed' that the plaintiff have judgment against the defendants and that the defendants and all persons claiming under .them be forever barred and foreclosed of all right, claim, lien and equity of. redemption in the said mortgaged premises ; that the' ■plaintiff'have a lien on,the said surplus money on -deposit with the chamberlain of the city of New York to the- credit of the action entitled Leopold Ehrmann v. Joseph Greenstein et al., prior in lien to that of the defendants herein in the sum of $3,000, with interest and costs and allowance, making a total of $3,646.91:

The appellants complain first of the order setting aside the original judgment. Their grievance is. that they have lost the benefit of the judgment which declared the plaintiff’s mortgage usurious and void. Of course, if this judgment had stood, a prior claim to-the surplus moneys- in the hands of the' chamberlain would have been wiped out and the appellants’ chance ef obtaining a portion thereof on their subsequent lien would have been improved. Hot having been a party to that mortgage, they were in no position to raise the question of usury. The defendants Greensteiu and Hirsch need not have raised it in "the first instance. If so, the action would have proceeded to judgment and the appellants would have been in the same position- they are now in that regard. Having the right to waive it in the first instance, these defendants and the plain-. tiff had the right to consent to the vacation of the judgment arid the withdrawal of that defense and the entry of a- judgment' for plaintiff in the action. -The only error alleged is that after the entry of the judgment the attorneys lost control of the proceedings, and an order vacating the judgment which had been entered could only have been made upon the consent of the parties themselves, and these consents were signed by their attorneys. The appellants, however, are in no position to raise this question: In the absence of complaint from the clients, the court assumes the authority of the attorneys to act for them. ■

The appellants next complain that the court had no power to amend the complaint without notice to them, although they were in default, because, while they might have had no answer to theoriginal complaint and could not themselves set up the usurious nature of ¿he mortgage, yet, when the amendment undertook to assert a lien upon the surplus fund and determine the priority of such lien they ' ought to have been allowed to answer if so advised, and they further complain that the judgment was improper in that it established alien upon said surplus fund and the priority thereof. It. is true that section 1207 of the Code of Civil Procedure provides that where there is ño answer, the judgment shall not be more favorable to the plaintiff than that demanded in the complaint..

The judgment under review is not more favorable than that demanded in the complaint. The judgment demanded in the complaint was- for the foreclosure of the mortgage and that the defendr ants and all persons claiming under them be forever barred and foreclosed of all right, claim and equity of redemption in the said mortgaged premises. That is what this judgment provides: Instead, however, of providing that the property be sold, it having been made to appear to the court that the property had already been sold upon a judgment of foreclosure and sale under a prior mortgage, and that there v as a surplus in the hands of the chamberlain, equity adapted the form of relief requested to the facts existing- at the time of-its application.

It is true that, notwithstanding the sale, the action could have proceeded and judgment entered in the'ordinary form. “ It seems quite proper to allow the suit upon the junior mortgage to proceed to .judgment-, notwithstanding that there has been a sale under the first decree with a resulting surplus, in order-to establish the interest of the junior mortgagee in such, surplus, where his right to share in it is denied by a plea of usury interposed in his action. * * * For the purposes of the judgment foreclosing tin second mortgage, the surplus occupies the place of the land, and the costs are to be taken out of those proceeds with the amount due on the mortgage.” (Bushwick Savings Bank v. Traum, 26 App. Div. 532; affd. upon opinion below, 158 N. Y. 668.) Ho sale of the property could have been had, however, under such judgment, because that had already been sold under a prior mortgage, but the surplus remaining in the hands of the court Under that proceeding took the place of the land. The judgment being presented on the surplus-money proceedings would have entitled the judgment creditors thereunder to that proportion of the surplus money in that order of priority which the judgment entitled said creditors to as against the land. In other words, the judgment against the land would have foreclosed all of the defendants of their right aiid title and interest in the land as against the plaintiff. When presented in'the surplus-money proceedings, it would have likewise foreclosed all of these defendants as against the plaintiff of their right, title and interest in the surplus moneys. What the learned court has done is to cause to be expressed in the judgment the precise effect that .the judgment would, have had if it had been the .ordinary judgment for foreclosure, neither more nor less.

. To complain that by malting a judgment express in words precisely its legal effect, Upon the ground that nothing was said in the ■ Original complaint about surplus moneys arising upon a former action, as when the complaint was drawn no such condition of affairs existed, is to present a technical objection without force or substance.'

Tlie order appealed from should be affirmed, with ten dollars costs and disbursements.

Patterson, P. J., McLaughlin and Lambert, JJ., concurred ; • Ingraham, J., dissented,'

Ingraham, J.

(dissenting):

I concur with Mr. Justice Clarke as to. so much of the order as refused to vacate the order setting aside the judgment and allowing an amendment to the complaint, but I do not think the court had'. power to enter a judgment upon the amended complaint without notice to the defendants in the action who were in default and who had no notice of or opportunity to be- heard upon a-judgment based upon this amendment. Section 1207 of the Code of Civil Procedure provides that where there is no answer, the judgment shall not be more favorable to the plaintiff, than -that, demanded in the complaint.” It was here sought to foreclose a second mortgage.

There was no question of a surplus to which the plaintiff, if lie . . established the validity of liis mortgage, could be entitled, and the mortgagor had defended by alleging that the mortgage sought to be. enforced was void on account of usury. When plaintiff saw fit to amend the complaint, so as to a'sk to have a direct adjudication as to the surplus which had been realized and which was in court, I think tlie defendants who had not consented to the amendment and were in default should have had notice of the amendment and an opportunity to defend against a demand for a judgment which was essentially different from that asked for by the original complaint. I think the construction to be given .to this section' of the Code of Civil Procedure requires that a summons and complaint, when it is so amended as to ask for substantially, different relief from that demanded in the original complaint — and which was not then in the contemplation of any of' the parties'— should be served upon those defendants who have not appeared before a j,udg-. rae'nt can be entered which grants to a plaintiff the relíéf demanded by the amended complaint, and the court cannot deny a defendant that right by considering .that the judgment newly demanded would accomplish no greater results than would have been accomplished by the judgment as originally demanded.

Order affirmed, with ten dollars costs and disbursements.