Case ID: ad_130/html/0076-01.html
Source: Caselaw Access Project
Author: {"author": "Houghton, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Rutherfurd Realty Company, Respondent, v. Willet F. Cook, Appellant, Impleaded with Simon Lindau.
    First Department,
    January 8, 1909.
    Mortgage — foreclosure—deposit of rents pending action—stipulation. construed.
    A mortgagor defending an action of foreclosure on the ground that he is not liable for a deficiency by agreeing that the rents from the premises ' be deposited to the joint account of the parties, “to be held to abide the event of this action,” the taxes, insurance premiums, etc., to be paid from the sums deposited, merely agrees that the balance of the deposit shall be applied in satisfaction of the mortgage only in case it is determined that he is liable for a deficiency. After a decision that he is not so liable, the mortgagee has no right to have the balance of the deposit applied-to cover a deficiency.
    Appeal by the defendant, Willet F. Cook, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clez-k of the county of Hew York on the 20th day of November, 1908, directing the payment of certain funds to the plaintiff.
    
      Martin L. Stover, for the appellant.
    
      H. H. Snedeker, for the respondent.
   Houghton, J.:

The plaintiff held mortgages upon real property owned by the defendant Cook and obtained a judgznent of foreclosure adjudging that Cook should pay any deficiency that might ai’ise on the sale. Cook had interposed vazious defenses to the foi'eclosure action, and on his appeal to the Court of Appeals that court decided that he was not liable for deficiency azid directed that the judgment be revez’sed unless the plaintiff stipulated to eliminate that part of its judgment (191 N. Y. 555), which stipulation was given. During the progress of the litigation a motion was znade by plaintiff for the appointment of a receiver of the rents. This motion was adjozzzmed from time to time and various stipulations were’ entez’ed into by the parties to the effect that the rents of the pi’operty should be applied to the payment of ground rent, taxes and insurance. Instead of an order appointing a receiver being entered, a general stipulation was finally made that the rents from the premises be deposited in the ¡Fourteenth Street ¡National Bank of the city of ¡New York to the joint account of the defendant Cook and the plaintiff’s attorney, out of which should be paid taxes, ground rent and insurance premiums, any remaining sum “ to be held to abide the event of this action.” The litigation extended over a period of some years and a sale was not had until August 4, 1908, on which the premises brought some §12,000 less than the amount due. At the time of the sale there was on deposit $13,000 and over, from which the court has directed there be paid to the plaintiff the amount of the deficiency arising on the sale.

We think the order was erroneously granted. The defendant Cook was the owner of the premises and as such owner was entitled to the rents. He consented, however, while the foreclosure action was pending and while he was contesting the right of the plaintiff to foreclose and to charge him for any deficiency which might arise on a sale of the premises, that the rents might be impounded and the fixed. charges against the property paid therefrom, any balance, however, to abide the event of the action. The “event of this action,” so far as he personally was concerned, was his liability for the deficiency. That liability the court of last resort relieved him from. . The language of the various stipulations does not warrant the interpretation that he agreed that any surplus of rents should be paid to the plaintiff in case the property did not bring enough, at the sale to pay the amount due on the mortgages. The utmost that can be said to have been agreed by the stipulations was that in case it was finally determined that he was personally liable for any deficiency, the surplus rents should be applied in satisfaction of that liability. He being the owner of the rents, and that event not having ultimately transpired, the money belongs to him, and it was erroneous to direct it to be paid to the plaintiff.

Some unpaid ground rent and some insurance appears to have fallen due before the day of sale. Whether all or some parts of these amounts should be deducted from the fund on deposit before payment of it to appellant, we do not now decide, as those matters are not before us. The order should be reversed, with ten dollars costs and disbursements,. and tlie motion denied, with ten dollars costs.

Ingraham, McLaughlin, Clarke and Scott, JJ., concurred.

Girder reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.