#### Crescens Hubbard, Plaintiff, *v.*Jennie E. Lydecker et al., Defendants.

(Supreme Court, Westchester Special Term,

October, 1912.)

Mortgages — foreclosure of — purchase money — actions.'

Plaintiff conveyed to defendant L a lot subject to a mortgage of $2,000 held by C, taking back a purchase money mortgage for $1,500. Thereafter and on the same day said defendant gave to C a mortgage on the lot to secure a loan of $5,000 to be expended in the erection of a building thereon. Said $1,500 mort- gage was canceled, and simultaneously said defendant gave plaintiff a mortgage covering said lot, and another in the same locality, subject to two prior mortgages aggregating $7,000 on the "e first lot held by C. Later, upon satisfying the $5,000 mortgage, • . said defendant gave to a savings hank a mortgage for $14,000 on the first lot, the plaintiff executing an agreement making the mortgage covering both lots subordinate thereto. In an action to foreclose the mortgage covering both lots, held, that as to the first lot it was a purchase money mortgage, the second lot. stand- ing in the position of a guarantor of collection.

Action to foreclose a mortgage.

*81Eugene F. McKinley, for plaintiff.

Clark & Close, for defendant Hustis.

Charles A. Dryer, for defendant Farrell.

*Tompkins,*J.

The mortgage being foreclosed by this action covers two lots in White Plains — one on Prospect street, and the other on Greenridge avenue. On March 23, 1911, the plaintiff sold to the defendant Jennie E. Lydecker the Prospect street lot, subject to a $2,000 mortgage held by one Cameron, the plaintiff taking back from the defendant a purchase money mortgage for $1,500, payable on March 23, 1913, with interest at six per cent, payable on the first days of January and July. On April 15, 1911, the defendant lydecker borrowed from Amelia Cameron $5,000, to be expended in the erection of a building on the Prospect street lot, giving back a mortgage for that amount. On the same day, the $1,500 purchase-money mortgage held by the plaintiff was canceled, and, simultaneously with such cancellation, the defendant Lydecker gave to the plaintiff the mortgage now being foreclosed. It differs from the purchase money mortgage that was canceled only in date of execution, and the fact that it covers both the Prospect street and the Greenridge avenue lots subject to “ two prior mortgages aggregating $7,000 ” on the Prospect street lot held by Amelia Cameron.

Later, the $5,000 mortgage was satisfied, and the defendant gave to the Home Savings Bank a mortgage for $14,000 on the Prospect street lot, the plaintiff executing a subordination agreement, making the mortgage now being foreclosed subordinate to that mortgage. The defendant Farrell purchased the Prospect street lot in May, 1912, at a foreclosure sale, under several mechanics’ liens.

On January 8, 1912, the defendant Lydecker borrowed from the defendant Hustis $2,500, giving to him a mortgage for that amount,, which is a lién on the Greenridge avenue lot alone. All these mortgages were promptly recorded. All "parties having rights in the two lots subordinate to the *82plaintiff’s mortgage now being foreclosed are parties to this suit.

The contest here is between the defendant Hustis and the defendant Farrell, the former claiming that the Prospect street lot should be sold first, and that the Greenridge avenue lot should not be sold unless the Prospect street lot does.not bring enough to pay the plaintiff’s mortgage in full. The plaintiff takes a neutral position and is indifferent as to the order of the sale of the two lots. The evidence shows that before the plaintiff canceled the purchase-money mortgage held by him, and took the mortgage now being foreclosed, he had been asked to-subordinate that purchase-money mortgage to Amelia Cameron’s second mortgage for $5,000, and that he had refused to do so, insisting that the equity in the Prospect street lot, which would be subject to that purchase-money mortgage, would, in that event, not be sufficient security for the sum of $1,500; and for that reason, the mortgage being foreclosed here was given him subordinating his lien to that $5,000 mortgage, and giving him, as additional security, a lien on the Greenridge avenue lot. The mortgage being foreclosed therefore became a purchase-money mortgage as to the Prospect street lot. Price v. Alyea, 13 App. Div. 184.

The mortgage, itself, expressly states that it is a purchase-money mortgage, and being such as to that lot, and the lien on the Greenridge avenue lot being given only as additional security, the mortgage in suit is primarily a lien on the Prospect street lot, and tho Greenridge avenue lot stands in the position of a guarantor of collection. McNamara v. McNamara, 135 N. Y. Supp. 215; Erie County Savings Bank v. Roop, 80 N. Y. 591.

The defendant Hustis is entitled to have this court apply the ancient rule, that where a creditor has a lien upon two funds for the security of his debt, and another creditor has an interest in one of them, without any right to resort to the other, the first creditor will be compelled to take his satisfaction out of the fund in which he alone has an interest, if that be sufficient to pay his claim. Everston v. Booth, 19 Johns, 486; Ingalls v. Morgan, 10 N. Y. 178; *83McConnell v. Muldoon, 30 Abb. N. C. 352; Quackenbush v. O’Hare, 129 N. Y. 485.

The defendant Farrell is not in a position to complain against the sale of the Prospect street property first, as the primary security for the debt represented by the plaintiff’s mortgage, because the said mortgage and the first purchase-money mortgage held by the plaintiff were on record at the time of his purchase of that property. In fact the summons and complaint, and notice of pendency of action in this suit had then been on file in the office of the clerk of Westchester county nearly three months. Hence it must be held that he took the Prospect street property subject to any equities that the defendant Hustis might establish in this action, and at the time of the Farrell purchase, the answer of the defendant Hustis, setting up his right to have the Prospect street property sold first, had been served upon the plaintiff’s attorney; and under section 1671 of the Code of Civil Procedure (the *Us pendens*having been filed), that was notice to Farrell of the . claim made by Hustis, and he was bound thereby.

It seems to me that it must also be held that the defendant Hustis took his mortgage on the Greenridge avenue lot, knowing his right to have the Prospect street lot declared the primary security for the plaintiff’s mortgage.

The plaintiff should have judgment of foreclosure and sale of the two lots, subject to the prior encumbrances, but the judgment must provide that the Prospect street lot be sold first, and that the Greenridge avenue lot be sold only in the event that the proceeds of the Prospect street property are not sufficient to pay the plaintiff’s claim in full.

Judgment accordingly.