#### Quinlan *v.*Stratton *et al.*

*(Supreme Court, General Term, Second Department.*

May 15, 1890.)

Subrogation—To Rights of Mortgagee.

. On foreclosure of a second mortgage, where it appears that the loan by the second mortgagee was made on an agreement with the mortgagor that it should be applied to extinguish the first mortgage, and that part of the loan was actually so applied, the second mortgagee is entitled to a decree subrogating him to the rights of the first mortgagee on payment of the balance due on the first mortgage.

Appeal from special term, Queens county.

Foreclosure by John J. Quinlan against Emily A. Stratton and Samuel W. Judson. On July 25, 1862, defendant Emily A. Stratton mortgaged the premises in suit to Joseph Fitch for $2,500. One thousand dollars of the principal was paid off, and then Fitch died. Amos L. Fitch was appointed executor, and, default having been made in paying interest on the bond and mortgage, foreclosure proceedings were begun. Emily Stratton, mother of defendant Emily A. Stratton, loaned at various times sums of money to defendant aggregating $2,000. A portion of this money was used in paying off the incumbrances of the Fitch mortgage, and preventing the property From being sold in foreclosure. Subsequently, on February 18, 1881, the bond and mortgage, and the decree of foreclosure and sale in the action of Fitch against Stratton were assigned to defendant Judson. Before this assignment, on July 27,1880, defendant Emily A. Stratton executed the mortgage in issue in this action to her mother, Emily Stratton, to secure the payment of the *153$2,000 advanced by her. This mortgage was subsequently assigned to Susan C. Currie, and by her to plaintiff, who brought this action. The defendants answered separately, defendant Judson claiming that the assignment of the first mortgage gave him a prior lien. Defendant Emily A. Stratton alleged that Susan C. Currie was the real party in interest in this action to foreclose the second mortgage; that on April 10, 1865, one James T. Stratton mortgaged to defendant Emily A. Strattoú three acres of other land for $2,750; that in September, 1872, she assigned this mortgage to Hallett C. Hicks, covenanting that the mortgage was collectible, and that the proceeds thereof, $2,750, were loaned to Susan C. Currie; thattwo months thereafter Susan C. Currie purchased the land, and assumed the mortgage, but that she never paid it, and that Hicks-foreclosed, and also obtained a personal judgment for deficiency against defendant Emily A. Stratton. Defendant answered further that, when the James T. Stratton mortgage was assigned to Hicks, in September, 1872, this defendant Emily A. Stratton executed another mortgage to him on the land in controversy as security for the $2,750 paid by Hicks on the assignment of the James A. Stratton mortgage, and loaned to Susan C. Currie; that Hicks subsequently obtained a judgment of foreclosure of this mortgage; and that this judgment remains unpaid. There was no evidence, however, tending to show that Susan C. Currie was the real plaintiff in interest in this action, as alleged in the answer, or that she had anything to do with the loans made to Emily A. Stratton by her mother. The court found in favor of plaintiff as against defendant Stratton, and in favor of defendant Judson to this extent: that the assignment of the decree in foreclosure in the Fitch action was for the benefit of Emily Stratton as well.as defendant Judson; that plaintiff succeeded to her rights; and that on payment of $2,015.33, with interest from February 14, 1881, to defendant Judson, plaintiff would be subrogated to all his rights. Defendants appeal. For opinion on motion for new trial, see? 27. T. Supp. 786.

Argued before Barnard, P. J„ and Dykman and Pratt, JJ.

*Samuel W. Judson,*for appellants. *Frank A. O'Brien, (James D. Bell,*of counsel,) for respondent.

Barnard, P. J.

The plaintiff is the assignee of a second mortgage. It was given by Emily A. Stratton to her mother, Emily Stratton, and assigned by her to one Susan C. Currie, and by her to the plaintiff. There is no question made as to this mortgage, nor as to the amount due upon it. There was a first mortgage for $2,500 on the property, and the complaint averred that this mortgage was to have been paid by the loan procured on the second mortgage, by agreement between Emily A. Stratton and her mother; that it was only paid in part, and that the defendant Judson had taken an assignment of the first mortgage in concert with Emily A. Stratton, and claiming that the plaintiff’s mortgage should be deemed the first lien on the premises. The proof failed to show that the first mortgage was subject and inferior to the plaintiff’s mortgage in respect to the amount paid by Judson for the first mortgage, which was the actual amount left unpaid on it. The proof did show that some of the money obtained by the second loan actually went to extinguish the first mortgage, and that the agreement between Emily A. Stratton and her mother was that the loan was all to be used to pay the first mortgage. So far the equities seem to be plain. Judson can hold his claim for all he paid to get it; but the mortgage he holds after he is paid in full should be held for the money, which went to extinguish it, derived from the second loan. That was the agreement between the owner of the land and the person who loaned the money, and no reason is perceived why Judson can object. He is paid in full. Mrs. Stratton cannot object that her property be held as if the portion of the new loan had been used to purchase the first mortgage *pro tanto, (Gans*v. *Thieme,*93 N. Y. 225. The evidence *154shows that one James T. Stratton gave a mortgage to Susan 0. Currie for $2,750 in April, 1865. The defendant claims that Emily Stratton, her mother, asked her to make the loan, and that she “reluctantly sold” the mortgage now owned by Judson, and had to covenant that the $2,750 mortgage was collectible, which realized a large loss. The proof fails to show that the defendant Emily A. Stratton had any claim against Emily Stratton or Susan C. Currie when they severally made the assignments of the mortgage now held and owned by the plaintiff. The first objection to the decree has no weight, if these conclusions are just. The case will then stand as if the plaintiff held a second mortgage, and the defendant Judson a first mortgage, and the decree provided that the first mortgagee should take his debt, interest, and costs, and assign to the second mortgagee. This is in accordance with settled law. *Twombly*v. *Cassidy,*82 N. Y. 155. The judgment should therefore be affirmed, with costs. All concur.