Case ID: ny-st-rep_41/html/0788-01.html
Source: Caselaw Access Project
Author: {"author": "Dykman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

GEORGIANNA BIGELOW, Appl’t, v. WILLIAM H. DAVOL, Impl’d, Resp’t.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed December 14, 1891.)
    
    Foreclosure—Second mortgagee.
    The holder of a second mortgage, whose assignment was duly recorded, can maintain an action to foreclose it, where a prior mortgage has been foreclosed without mating him a party, and the premises purchased by the prior mortgagee. In such case the rights of the second mortgagee have not been cut off, nor is he confined to an action to redeem.
    Appeal from judgment dismissing the complaint. Action to-foreclose a mortgage. The facts appear in the opinion.
    
      A. P. Bates, for app’lt; A. P. & W. Man (William Man, of counsel), for resp’t.
   Dykman, J.

The facts in this case so far as they control the questions of law involved are few and simple, but there are some-unimportant questions respecting the premises, and also respecting an old mortgage which appears to be destroyed by lapse of time.

The question upon which the determination of this appeal must turn is, whether the holder of a second mortgage, whose assignment was duly recorded, can maintain an action for the foreclosure of her mortgage, where the holder of a prior mortgage has foreclosed his mortgage by an action in the supreme court, without making the holder of the second mortgage a party to his action, and has become the purchaser of the premises at the sale under the judgment.

The following are the facts: In August, 1884, Richard B. Duyckinck and Alexander T. Arthur made a mortgage for $20,000 to Henry J. Smith and John E. Smith upon the premises in question, which was recorded the same day as its date. That mortgage was assigned to Henry 0. Hutchinson.

On the 8th day of September, 1887, Cecilia Y. Arthur and Archibald Arthur executed a.bond and mortgage upon the premises to Joseph M. Pray, which mortgage was recorded on the 8tli day of October, 1887.

Joseph M. Pray assigned that mortgage to the plaintiff by a written assignment on the 8th day of October, 1887, which was recorded November 21, 1887.

About April, 1889, Hutchinson commenced an action in the supreme court and made Pray a party defendant, but did not make the plaintiff in this action a party.

The action proceeded to judgment and the premises were sold, subject to an old mortgage, to the plaintiff Hutchinson.

This action to foreclose the second mortgage was tried before the court and decided against the plaintiff, and the court found as a conclusion of law that the only remedy of the plaintiff was by an action to redeem the premises, and dismissed the complaint, with costs.

We are unable to concur with the learned trial judge in his disposition «of this case.

It is a fundamental principle that no person can be bound, concluded or affected by any judicial proceedings to which he is not a party and has been afforded no opportunity to assert his interests or defend his rights.

As a legitimate deduction from this universal principle the plaintiff in this action cannot be affected by the foreclosure suit to which she was not a party, and she stands in relation to it as if there had been no such action; as to her the suit is a nullity. Miner v. Beekman, 50 N. Y., 344; Walsh v. Rutgers Fire Ins. Co., 13 Abb., 33 ; Brainard v. Cooper, 10 N. Y., 356.

If, therefore, the plaintiff remains unaffected by the foreclosure of the prior mortgage, then there is no reason why she should not be permitted to enforce her security, and she has done nothing to forfeit her rights or estop her from the collecting of her mortgage.

It would be a new and somewhat startling doctrine to establish that the holder of a prior mortgage, by omitting to make the Bolder of a second mortgage a party to his action to foreclose the first mortgage, could thus deprive him of his right to foreclose his mortgage and drive him to a redemption by paying off the prior mortgage.

Such, however, is the principle for which the defendant and respondent necessarily contends, and he cites the case of Salmon v. Allen, 11 Hun, 29, in support of his position.

It is true that there were some remarks in the opinion in that case which are favorable to the appellant, but the case was peculiar, and is not an authority for anything.

It was the purpose of the court in that case to point out irregularities and to show that the proper judgment had not been entered, and to place the action in a position -to straighten the title by'the judgment finally to be entered. Such was the view of the judgment which' the court of appeals took when the case was there. Salmon v. Gedney, 75 N. Y., 480.

If it went further, or intended to do so, it is antagonistic to both principle and authority, and will not be followed.

The case of Ross v. Boardman, 22 Hun, 527, was also peculiar, but the judge who prepared the opinion of the court was careful to say that the omission to make the woman, claiming dower a party to the action to foreclose the senior mortgages left her interest in the property the same as though no such action had been prosecuted.

The case of Walsh v. The Rutgers Fire Ins. Co., 13 Abb., 33, decided by the general term in this district, is precisely like this, and is a controlling authority in favor of the plaintiff.

In that case, as in this, the premises had been sold under a judgment upon a- prior mortgage held by the defendant and bought in by it. The plaintiff was not a party to that action, although the original holder of the mortgage was made a defendant. He had assigned the mortgage to the plaintiff, and the assignment was on record.

In a well considered opinion in that case, it was decided that the utmost effect of the foreclosure and sale was to transfer the equity of redemption from the mortgagor to the plaintiff in the foreclosure.

Also, that it was regular and necessary for the holder of the second mortgage to institute a suit to foreclose his mortgage, and the plaintiff in the first foreclosure was properly made a party defendant

That the prior mortgagee in possession was entitled to have a sufficient portion of the proceeds of the sale applied to the payment of his debt, but no offer to redeem the premises or pay the first mortgage was necessary.

This latter point, of course, proceeds upon the theory that as to the holder of the second mortgage the first mortgage is still subsisting and unforeclosed.

We think the examination has proceeded sufficiently far to manifest the error, and the judgment should be reversed, with costs to abide the event.

Barnard, P. J., and Pratt, J., concur.