#### Corporate Investing Company, Respondent, *v.*Gracehull Realty Company, Appellant, Impleaded with J. Charles Weschler, Defendant.

Second Department,

May 23, 1913.

Mortgage — foreclosure by assignee — complaint — election by assignee to declare mortgage due.

A complaint in a suit for the foreclosure of a mortgage upon realty alleged that the bond and mortgage had been assigned by the mortgagee to a title company, which had transferred the same to the plain tiff, who had elected, in accord with certain provisions of the mortgage, that the whole principal sum be immediately due and payable on account of the failure of the mortgagor to pay an installment of interest and certain taxes. A ■written agreement entered into by the mortgagee and the title company at the time of the assignment to the latter was set forth, which provided, among other things, that the title company owned said bond and mortgage to the extent of a certain amount, with interest, and that the mortgagee “is the owner of the balance of said mortgage debt remaining,” but that the ownership of the title company is superior to that of the mortgagee, and that it should have the right to collect all interest, to accept payments, accounting to the assignor for her share and to foreclose the same. It also appeared on the face of the complaint that prior to the commencement of the suit the mortgagee, having refused plaintiff’s request to join therein, was made a party defendant.

*Held,*that the complaint stated facts sufficient to constitute a cause of action, and that a demurrer thereto was properly overruled;

That an election to declare a mortgage due for failure to pay an installment of interest or taxes may be made by an assignee of the mortgagee.

Appeal by the defendant, the Gracehull Realty Company, from an interlocutory judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Westchester on the 10th day of February, 1913, upon the decision of the court rendered after a trial at the Westchester Special Term.

*Sol Rothschild,*for the appellant.

*William J. Wallin,*for the respondent.

Jenks, P. J.:

The defendant corporation appeals from an interlocutory judgment that overrules its demurrer that this complaint, in *260an action to foreclose a mortgage upon realty in the sum of $25,000, does not state facts sufficient to constitute a cause of action. The complaint showed that the mortgage, with the bond, had been assigned by recorded instrument of assignment executed by the defendant Otis, mortgagee, to a title company, which in turn, by instrument of assignment, had transferred the obligations to the plaintiff, and that the plaintiff elected, in accord with certain provisions of the mortgage, that the whole principal sum be immediately due and payable on account of the failure of the defendant corporation, mortgagor, to comply with conditions to pay an installment of interest and certain taxes. The complaint further showed that the defendant Otis, as mortgagee, and the said title company at the time of the said assignment by Otis to it, entered into a written agreement under seal and for a valuable consideration paid each to the other, that the said title company owned said bond and mortgage to the extent of $15,000 and interest, and that the said Otis “is the owner of the balance of said mortgage debt remaining,” but .that thé ownership of the said title company is superior to that of Otis as if the said title company held a first mortgage for the sum of $15,000 and interest and Otis “ the balance as a second and subordinate mortgage to secure her interest in said mortgage debt.” The said agreement was incorporated in the complaint and contains other provisions which will be stated in the course of discussion.

The contention of the defendant corporation, appellant, is that it appears on the face of the complaint that there are two owners of the bond and mortgage — namely, the plaintiff and the defendant Otis — that at the time of the election by the plaintiff to call the entire principal sum, such sum had not become due according to its terms, save by breach of the said conditions as to payment of an installment of interest and the taxes, and that the plaintiff alone could not so elect, but that Otis must join in election. It appeared on the face of the complaint that prior to the beginning of this action Otis had refused plaintiff’s request to join with the plaintiff and, therefore, was made a party defendant.

Such an election may be made by an assignee of the mortgagee as if by the mortgagee. (Wiltsie Mort. Fore*261closure [3d ed. by Spurr & Rogers], § 63, citing authorities, among them *Leopold*v. *Hallheimer,*157 N. Y. 696. See, too, *Stewart*v. *Ludlow,*68 I11. App. 349; *Brand*v. *Smith,*99 Mich. 395.) I think that the plaintiff alone could foreclose. The said agreement executed between the said Otis and the said title company, in addition to the provisions heretofore recited, provides that the said title company is authorized to collect all the interest which is secured by said bond and mortgage and shall retain therefrom a sum equal to the interest then accrued upon the share of said bond and mortgage owned by the party of the second part (the said title company), and then remit to the party of the first part any balance of interest remaining; that the said party of the second part, or any assignee of the interest of the party of the second part in said bond and mortgage, is authorized to accept payment of said mortgage and to execute the proper satisfaction therefor, and the holder so satisfying shall account to the party of the first part (the said Otis), for all money received in excess of the ownership in said mortgage of said party of the second part or its assignee. And it is further provided: “The party of the second part shall have all the rights of any holder of said bond and mortgage including the right to foreclose the same and to receive the proceeds of sale from the referee, but the party of the first part shall in any and every event, have the right to an accounting for all money received by the party of the second part or any assignee of the interest of the party of the second part in said bond and mortgage in excess of the ownership of the party of the second part in said bond and mortgage. In case of foreclosure the party of the second part shall be under no obligation to protect the interests of the party of the first part upon a sale of the mortgaged premises. *Fifth.*All rights and authority given to the party of the second part under this agreement are irrevocable so long as the party of the second part, or any assignee of the party of the second part has any interest in said bond and mortgage and shall pass to and apply to the party of the second part and to any assignee of the interest of the party of the second part in said bond and mortgage. *Sixth.*The interest of the party of the first part under this agreement in said bond and mortgage or mortgage debt is *262not assignable as against the party of the second part except by an instrument duly executed in the manner required for the execution of a deed of real property and indorsed upon or attached to this instrument; no assignee of the interest of the party of the first part in said bond and mortgage shall have any rights under this agreement, nor be entitled to any payment thereunder until such assignment shall have been exhibited to the party of the second part, and a copy thereof shall have been filed with the party of the second part, and the receipt of such copy shall have been noted by the party of the second part on this agreement. Whenever the proceeds of the ownership of the party of the first part in said bond and mortgage shall be paid to the holder of this agreement, it, and all assignments thereof shall be surrendered to the party of the second part. The interest of the party of the second part is assignable to any person or corporation, without liability on the part of the party of the second part, but the interest of any such assignee shall be subject to this agreement. *Seventh.*This agreement shall be binding upon and inure to the benefit of the successors, legal representatives and assigns of the parties hereto.” Thus the agreement specifically clothes the title company (and its assignee, this plaintiff) as against Otis with the rights of collection of the interest, of acceptance of payment of the bond and mortgage and of foreclosure, subject in each event to an accounting to Otis. Jones on Mortgages (6th ed; § 1374) says: “ If, however, it appears from the assignment that it was the intention of the assignor to give the assignee the right to foreclose, or to receive the moneys in his own name, it is unnecessary to make the assignor a party, although he retains an interest in the mortgage. It was so held where the assignment • was absolute in form, except that it stated that the money, when collected, was to be applied in liquidation of the debts for which the complainant stood security for the assignor. It is proper, however, to join both the assignor and assignee as plaintiffs in the action,” citing *Christie*v. *Herrick*(1 Barb. Ch. 254). Wiltsie on Mortgage Foreclosure (3d ed., Spurr & Eogers) says (§ 94): “It is not necessary for the assignee to join his assignor with him as co-plaintiff, as the assignor no longer has any interest in the bond and mortgage. . This *263is also true where it is the assignor’s intention simply to authorize the assignee to collect for his benefit the moneys secured by th e mortgage, ” citing the same case. The following language of the chancellor in *Christie*v. *Herrick (supra)*applies to the conditions in the case at bar: “ The case under consideration comes directly within the principle decided in *Bifield*v. *Taylor*[1 Moll. Rep. 193; Beat. Ch. Rep. 91], For it was evidently the intention of the assignor of this bond and mortgage, to give to the assignee the right to receive the moneys due thereon, or to foreclose the same in his own name; and to apply the proceeds to the payment of the creditors to whom the complainant was holden as the surety for the assignor. I think, therefore, a decree in this case will be a perfect protection to the defendants, and to those who may become purchasers of the mortgaged premises under the decree, against any claim of the assignor or of those creditors, arising out of the assignment in trust; and that it was unnecessary to make the assignor or the creditors parties.” (See, too, *Long Island Loan & Trust Co.*v. *L. I. C. & N. R. R. Co.,*85 App. Div. 38, 39.)

The cases cited by the learned counsel for the appellant *(Shaw*v. *Wellman,*59 Hun, 447; *Cresco Realty Co.*v. *Clark,*128 App. Div. 144, and *Getty, Inc.,*v. *Cauchois,*141 id. 443) may be discriminated in that in each of these cases the assignor and assignee, or those in similar relation, stood before the court as joint owners of the obligation and, therefore, the election of one owner would not suffice. Daniels, J., in *Shaw*v. *Wellman (supra)*cites only the authority of *Marine Bank*v. *International Bank*(9 Wis. 57). In that case the reason is well expressed by Oole, J., “that the mortgagor did not agree that the mortgagees, or their assigns, might elect to have a part of the principal sum become due on his failure to pay, within thirty days, any moneys secured by the mortgage. He agreed that in such a case, at their option, the entire sum might become due and collectable. * * * it was, therefore, not competent for the International Bank, to which a part only of the mortgage debt belonged, to exercise the election, without the co-operation of the Marine Bank.” But the said agreement between Otis and the plaintiff as assignee of the title *264company, takes this case out of the principle invoked by the appellant.

The defendant need not apprehend two judgments of foreclosure at the instance of the plaintiff and of Otis respectively. Otis is made properly a party defendant, her rights may be finally determined in this action so far as the defendant is concerned, and in this respect it is immaterial whether she be made a party plaintiff or defendant. *(Simson*v. *Satterlee,*64 N. Y. 657.)

The interlocutory judgment must be affirmed, with costs of this appeal, with leave to the defendant to plead within twenty days upon payment of costs.

Burr, Carr, Rich and Putnam, JJ., concurred.

Interlocutory judgment affirmed, with costs of this appeal, with leave to defendant to plead within twenty days upon payment of costs.