#### Germania Life Insurance Company, Respondent, *v.*Ethel Potter, Appellant, Impleaded with Howard Nott Potter and Others, Defendants.

First Department,

March 20, 1908.

Mortgage—foreclosure — failure of mortgagor to pay taxes on first day due — equity — power to deny foreclosure on technical default — ténder — judicial notice.

• Where on appeal from- a judgment of foreclosure it appears that the plaintiff took' an unconscionable advantage by declaring the mortgage due because of the defendant’s failure to pay taxes as covenanted, on the very- day they became due, a court of equit)' will reverse the decree and grant a new trial,, although the answer did not ask for affirmative relief from the default, hut merely demanded a dismissal of the complaint..

A court of equity under the circumstances‘appearing in the present case should not entertain an action to foreclose a mortgage because of a technical default in the payment of taxes even though there was no offer to repay the taxes ■before action commenced, if the action was begun so quickly that there was no opportunity to do .go, and the defendant upon learning that the plaintiff had taken advantage of the default tendered all taxes paid with interest and costs of action to date.

Although the tender of taxes and costs was made in the form of a certified check the plaintiff cannot take advantage of the fact that money was not tendered if it did not refuse the tender upon that ground.

Whether a court of equity will relieve a mortgagor who has covenanted *to*pay taxes from a failure to pay on the first day the tax became due depends upon the circumstances. The foreclosure of a mortgage is equitable in its nature, although based on legal rights, and it is the province of a court of equity to see to it that a party invoking its aid shall have dealt fairly before relief is given.

The court will take judicial notice of the fact that during the month of October, 1907, there was great financial depression and disturbance.

Laughlin, J., concurring, was of the opinion that final judgment should be ¿directed.

Appeal by the defendant, Ethel Potter, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the. clerk of the county of New York on the 2d. day of January, 1908, upon the decision of the court, rendered after a trial at the New York Special Term,

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      *Edward O. Sperry,*for the appellant.

*J. Brewster Roe,*for the respondent.

Houghton, J.:

The respondent held a mortgage of $300,000 upon premises owned by the appellant, which was given by her predecessor in title. Interest was payable semi-annually, and the principal was to become due on the 1st day of August, 1908. The mortgage contained a tax clause which provided that the mortgagor should pay and discharge all taxes,- etc., *“*as soon as the same may become due and payable,” and in default of such payment the respondent had the right to pay the'same and add the amount thereof to the sum due on the mortgage, and to declare, if it so elected, the Avliole principal due.and playable forthwith. The first day upon Avhicli the taxes levied in 1907 became due was on the seventh of October. The appellant did not pay the taxes on that day, and on the day following the respondent paid them and elected to declare the Avhole principal due and payable forthwith, and on the same day began this action for foreclosure. The appellant was not requested to pay the taxes or given any notice that if she did not do so the respondent Avould pay them and declare the principal sum due. By her answer the appellant alleged that the principal had not become due, and that the premises were leased to a tenant for a term of years who had covenanted to pay the taxes, and that she had no knoivledge that they had not been paid on the seventh-of October, or that they had been paid by the respondent, until she saw announcement of it in the public press, and that shortly after being served Avitli process she tendered to the respondent the amount of the taxes paid by it with interest thereon and costs in the foreclosure action up to that time, which respondent refused to accept, and discontinue the action.

' The only relief demanded in the answer is that the complaint be dismissed. The answer could well have been drawn with a view to affirmative relief asking permission to pay and to be relieved from the default, and the facts could- have been more fully developed on the trial, but, nevertheless, the court could have relieved the defendant from the default and refused to grant the judgment- of foreclosure and sale upon such fenns as justice required. Equity has *816the power to relieve from- such oppression as is apparent in the present case. Aside from the question as to whether or not the respondent was within.its legal rights in asserting that the appellant should have paid or caused' to be paid the taxes levied on the premises on the seventh of October, which was the first day qn which it w.as possible to pay them, it is manifest that the omission to do so on that day was a mere technical default. A court of equity will not entertain an action to foreclose a mortgage because of technical default in the payment of taxes where-it appears that such taxes were promptly paid by the mortgagor when attention was called to the (jefault before an action was commenced and the mortgagee was not injured by the default. *(Ver Planck*v. *Godfrey,*42 App. Div. 16.) It is true that in the present case there was no offer to repay the taxes, before action was commenced;- but the action was begun so quickly there was' no opportunity to do so. As soon as it became apparent that the respondent was insisting upon its advantage the appellant did tender all taxes that had been paid, with interest thereon, as well as the costs of the action. The respondent refused to accept this tender which was in the form of a certified check. This refusal, however, was.not put on the ground that the tender was not made in currency, and the respondent cannot now take advantage of the fact that money was not tendered, because it made no objection to the form in which such tender was made but refused to accept it in any form. If the respondent had accepted the offer to repay it would have lost nothing and would have been fully reimbursed.

The appellant might well have been-misled by the course of dealing in payment of taxes which the respondent had acquiesced in without complaint during former years. In *French*v. *Row*(77 Hun, 380) the court went so far as to refuse to permit a foreclosure where the course of dealing,, with respect to paying interest, had led the mortgagor to assume that a forfeiture would not be declared if the interest was paid within periods varying from one to.six months after the time it became due.

We do not feel called upon to lay down a hard and fast rule as to-whether or not a fair interpretation of 'the tax clause in the present mortgage required the mortgagor to see to it at all hazards that the taxes were paid on the first day they became due and payable, nor *817do we decide that in all instances a,certain course of dealing might relieve a mortgagor. _ The court can take judicial notice of the fact that during October, 1907, there was great financial depression and disturbance. What might be deemed reasonable at one time might be wholly unreasonable at another time under a different situation. The foreclosure of a mortgage is equitable in its nature, although based on legal.rights, and it is the province of a court of equity to see to it that a party invoking its relief shall have dealt fairly before relief is given. Under the circumstances of this case it is very evident that this respondent did not deal fairly with the appellant and that it took a technical and unconscionable advantage of the situation. The respondent contends that .it had reason to do as it did because the appellant had agreed to pay the principal of the mortgage in the preceding September and that it had arranged to reloan the amount and was compelled to sell bonds to furnish such promised loan. Such an excuse does not appeal to ns.

The judgment is reversed and a new trial granted on which as the facts are developed it may appear that justice can be fully done by permitting the appellant to repay to plaintiff the taxes which it paid with interest thereon to the time of payment and the costs of the foreclosure accrued at the time of the original tender in October with interest thereon to time of payment. Such a course will save the plaintiff from all loss except that occasioned by its own fault.

The judgment should be reversed and a new trial granted, with costs to appellant to abide event.

Patterson, P. J., Ingraham and Scott, XL, concurred.

Laughlin, J. (concurring):

I concur in the reversal of the judgment, but I am of opinion that final judgment should be directed by this court. All of the material facts appear, and in their nature they are not susceptible of change upon a new trial. The case as presented by this record is this: On the undisputed facts as found the conclusions of law are wrong, aud they should be modified by providing that in the event that the defendant, within a period fixed, say five days, tenders payment of the taxes, together with interest thereon and the-*818costs of the action to the time of the tender the complaint should be. dismissed, without costs, and on' failure of tlié defendant to so tender the taxes and costs the plaintiff should be entitled .to judgment of foreclosure and sale, together with the- costs of the action.

Judgment reversed, new trial ordered, costs to appellant to abide event. *