Case ID: nys_151/html/0607-01.html
Source: Caselaw Access Project
Author: {"author": "McLAUGHLIN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MORRISON v. STEINBERG et al.
    (No. 6705.)
    (Supreme Court, Appellate Division, First Department.
    February 5, 1915.)
    1. Mortgages (§ 298) — Foreclosure—Payment.
    Where, to obtain an extension of a bond secured by a mortgage, payment was guaranteed by two guarantors by a separate written instrument, and, on foreclosure being threatened, one of them delivered to the owner his check and note for the full amount due, and received a receipt reciting that the check and note were accepted as additional security, there was no payment of the debt, so as to preclude subsequent foreclosure.
    [Ed. Note.- — For other cases, see Mortgages, Cent. Dig. §§ 836-854, S64, 871; Dec. Dig. § 298.*]
    2. Mortgages (§ 431*) — Foreclosure!—By Assignee.
    One to whom a bond and mortgage was assigned, for the purpose of bringing suit, had the legal title, and was the real party in interest, entitled to sue as provided by Code Civ. Proc. § 449.
    [Ed. Note. — For other cases, see Mortgages, Cent. Dig. § 1268; Dec. Dig. § 431.*]
    Appeal from Special Term, New York County.
    Action by Isidore D. Morrison against Kate Steinberg and another, impleaded with Louis Schmeman and others. From a judgment dismissing the complaint on the merits, plaintiff appeals.
    Reversed, and judgment directed for plaintiff.
    Argued before INGRAHAM, P. J., and McLAUGHLIN, LAUGHLIN, SCOTT, and HOTCHKISS, JJ.
    
      Jacob R. Schiff, of New York" City, for appellant.
    Max Monfried, of New York City, for respondent Steinberg.
    Meyer Levy, of New York City, for respondent Feld.
    
      
      For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Bep’r Indexes
    
   McLAUGHLIN, J.

Action to foreclose a mortgage upon certain real estate in the city of New York. On January 28, 1907, the defendant Schmeman executed a bond and mortgage in favor of the McKinley Realty & Construction Company to secure the payment of $5,500, in certain stipulated installments. The property covered by the mortgage was thereafter conveyed to the defendant Steinberg, and the bond and mortgage, after several mesne assignments, came into possession of the plaintiff. Steinberg and plaintiff thereupon, on June 15, 1910, entered into an agreement extending the time of payment of the $4,000.then remaining unpaid. Simultaneously with the execution of this agreement the defendants Schmeman and Reid, by separate instruments in writing, guaranteed the payment of the bond and mortgage in accordance with their terms. The final installment of $2,-500 fell due on Rebruary 1, 1914, and was not paid. The plaintiff’s assignor,' Silverstein, who then held the bond and mortgage, threatened to bring an action against Schmeman to foreclose. To prevent this Schmeman delivered to Silverstein his check for $1,500, and his promissory note for $1,010, which was the full amount due, and received therefor a receipt, of which the following is a copy:

“Received from Louis Schmeman a check for the sum of fifteen hundred ($1,500) dollars, and a promissory note for the sum of one thousand and ten ($1,010) dollars, bearing even date, as additional security for the payment of a certain bond made by Louis Schmeman to McKinley Realty & Construction Company, bearing date January 28, 1907, and now held by one Isidore D. Morrison in trust for the undersigned, as follows:
“I am to collect the amount of said check and note and hold the same as aforesaid as additional security for the bond aforementioned. In the event of the amount remaining unpaid from any other person liable on said bond being collected by me, I am to pay over the amount so realized to the said Louis Schmeman. At the request of the said Louis Schmeman the said Isidore D. Morrison is to commence an action to foreclose the bond and mortgage aforesaid. * * * ”

The check and note were subsequently paid by Schmeman to Silver-stein. The defendants Pahle and Johnson are the present owners of the equity of redemption.

At the conclusion of the trial the complaint was dismissed upon the merits, on the ground that the payment of the check and note by Schmeman to Silverstein operated as a paymefit in full satisfaction of the bond and mortgage. That this was an erroneous conclusion is evidenced by the receipt itself, which shows that the check and note were taken, not as payment, but “as additional security.” To have constituted payment, they had to be delivered by Schmeman and accepted by Silverstein with that intent. Not only the receipt, but the testimony is undisputed to the effect that they were accepted not as payment, but solely as additional security. The defense of payment, therefore, completely failed, and the court should have so held.

The respondents further contend that the plaintiff is not the real party in interest under section 449 of the Code of Civil Procedure, and for that reason the complaint was properly dismissed. But the plaintiff holds the bond and mortgage by a written assignment from Silverstein. He had the legal title at the time the action was commenced, and while it is true the testimony shows they were assigned to him merely for the purpose of bringing the action, that in no way invalidates the assignment. Sheridan v. Mayor, 68 N. Y. 30; Greenwood v. Marvin, 111 N. Y. 423, 19 N. E. 228; Foster v. Central National Bank, 183 N. Y. 379, 76 N. E. 338; Osborne v. Hughes, 128 App. Div. 128, 112 N. Y. Supp. 572; Hunter v. Allen, 106 App. Div. 557, 94 N. Y. Supp. 880. It is sufficient to entitle the plaintiff to maintain the action that he has the legal right to enforce collection of the bond and mortgage and that the respondents would be protected in a payment to or recovery by him.

The judgment appealed from is therefore reversed, and judgment directed for plaintiff for the relief demanded in the complaint, with costs. All concur.