Case Name: Lauritz Termansen, Respondent and Appellant, v. Sarah Matthews, Individually and as Administratrix, etc., of Peter Matthews, Deceased, and Others, Appellants and Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900
Citations: 49 A.D. 163
Docket Number: 
Parties: Lauritz Termansen, Respondent and Appellant, v. Sarah Matthews, Individually and as Administratrix, etc., of Peter Matthews, Deceased, and Others, Appellants and Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 49
Pages: 163–169

Head Matter:
Lauritz Termansen, Respondent and Appellant, v. Sarah Matthews, Individually and as Administratrix, etc., of Peter Matthews, Deceased, and Others, Appellants and Respondents.
Sale under the foreclosure of a junior mortgage — when the interest on the prior mortgages and the costs of their foreclosure a/re not allowable.
A referee to sell, appointed by a judgment foreclosing a junior mortgage, rendered after actions have been brought to foreclose the prior mortgages, has no power — in the absence of express authority in the judgment — to allow the purchaser the amount of the interest due upon the prior mortgages, together with the amount of the costs and allowances made in the actions to foreclose such mortgages.
A statement in the terms of sale that the premises would be sold subject to the principal sums of the prior mortgages, not coupled with any reference to the interest due upon such mortgages, does not entitle the purchaser, who was the plaintiff in the action, to be allowed the amount of such interest, where it appears that the notice of sale, which was read by the auctioneer, stated that the premises would be sold subject to the two prior mortgages, and that, in addition to the principal sum, interest was due upon each of them from a certain date.
Semble, that the power of the referee could not be extended by the language of the notice of sale or of the terms of sale.
Appeal by the plaintiff, Lauritz Termansen, from so much of an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 23d day of January, 1899, upon a motion to confirm the report of sale in the above-entitled action, as reads as follows:
“ Ordered that the first and second exceptions taken by said defendants to the report of said referee be, and the same hereby are sustained, with ten dollars costs of this motion, to be paid by the plaintiff to the attorney for said defendants, and that the fifth and seventh of the said exceptions be and the same hereby are sustained to the extent of the sum of eight hundred and twenty-six and 63/100 dollars, the interest upon the prior mortgages upon said mortgaged premises.”
And from so much of said order as reads as follows:
“ It is further ordered that the referee herein amend and correct his report herein, in the second paragraph thereof, so as to state that the piece first sold, being the premises second described in the judgment herein, was sold for the sum of twenty-nine hundred dollars over and above the mortgage thereon for six thousand dollars 1 with interest thereon from July 1st, 1897, at 4J per cent per annum,’ and that the piece second sold, being the piece first described in said judgment, was sold for the sum of forty-three hundred dollars over and above the mortgage thereon for $7,000, ‘ with interest thereon from July 1st, 1897, at 4J per cent per annum.’ ”
And from so much thereof as reads as follows :
“ It is further ordered that said referee on proof of service of this order on the defendants’ attorney, forthwith demand and proceed to collect from the said Lauritz Termansen, the plaintiff purchaser herein, the said sum of eight hundred and twenty-six and 63/100 ($826.63) dollars illegally and improperly retained by said plaintiff purchaser, and allowed him by said referee, as interest on the first mortgages on the mortgaged premises herein, with interest thereon from the 23d day of November, 1898, and that the said Lauritz Termansen, the plaintiff purchaser herein, pay the same to said yeferee within two days from the service upon his attorneys herein of notice of the entry of this order, and that said referee, John J. McCauley, Jr., deposit the same with the Chamberlain of the City of New York, to the credit of this action, as part of the surplus moneys herein, and that he make a further report of such payments to him and deposits by him, and file the same witli the Clerk of the County of New York with all convenient speed.”
And from so much of said order as reads as follows:
“ Ordered that that part of the report of sale of said referee in which he credits himself with the sum of $826.63 allowed to the plaintiff on account of the interest on said prior mortgages, and subject to which they were sold, be and the same hereby is set aside and vacated, and said credit is disallowed to said referee.”
And also from so much of an order made at the New York Special Term and entered in said clerk’s office on the 23d day of January, 1899, upon a motion to compel the plaintiff to complete ■ his purchase, as reads as follows:
“ Ordered that said motion be and the same hereby is granted to the extent of said sum of $826.63, with ten dollars costs of this motion, to be paid by the plaintiff to the defendants’ attorney.”
And from so much of said order as reads as follows:
“ Ordered that said Lauritz Termansen, the plaintiff and purchaser herein, complete his purchase, and pay to the referee herein the said sum of eight hundred and twenty-six and 63 /100 dollars, improperly retained by said plaintiff purchaser, and erroneously allowed him by said referee, as interest on said first mortgages on the mortgaged premises herein, with interest thereon from the 23d day of November, 1898, within two days from the service upon his attorneys herein of notice of entry of this order; and that the referee herein deposit the same with the Chamberlain of the City of New York to the credit of this action, and that he make a report of such payment to him and deposit by him, and file it with the Clerk of the County of New York with all convenient speed.”
Also an appeal by the defendants, Sarah Matthews, individually and as administratrix, etc., of Peter Matthews, deceased, and others, from so much of the second above-mentioned order, entered in said clerk’s office on the 23d day of January, 1899, upon the motion of the defendants for an order compelling the plaintiff to complete his purchase of the mortgaged premises herein, and to pay to the referee the sum of $1,617.72, as denies said motion in regard to the sum of $791.09, retained by said purchaser and allowed by said referee as costs awarded in the judgments of foreclosure of the first mortgages on said mortgaged premises, and subject to which mortgages they were sold, and also from so much of the first above-mentioned order, entered in said clerk’s office on the 23d day of January, 1899, ujjou the motion of the plaintiff, for an order overruling the exceptions filed by the defendants to the report of sale herein, and confirming said report, as overrules the third, fourth and sixth of said exceptions and overrules the fifth and seventh of said exceptions so far as the same relate to the amounts specified in said third, fourth and sixth of said exceptions, and from so much of said order as overrules any of the defendants’ exceptions to said report of sale, and from so much of said order as confirms said report of sale in any of the particulars excepted to in and by said exceptions, to wit, the third, fourth and sixth of said exceptions overruled in said order.
George H. Taylor, Jr., for the plaintiff.
George H. Hart, for the defendants.

Opinion:
Rumsey, J.:
This action was brought to foreclose a'mortgage of $2,000 on two pieces of land in the city of Hew York. One of these pieces was subject to a mortgage' for $6,000 and the other to a mortgage of $7,000, each of which was prior to the mortgage of $2,000, which covered both pieces. An action had been brought to foreclose each of the two prior mortgages; and at the time of the sale under the $2,000 mortgage, judgments had been entered in those actions, and. certain costs and allowances awarded to the parties and directed to be paid out of the proceeds of the sale in those actions when that should take place. The judgment of foreclosure in this action was entered in October, 1898. The sale was made on the 17tli of Hovember, 1898.
The property was sold subject to the two prior mortgages. The referee allowed to the purchaser at the sale the sum of $826.63, which was the interest then due on those mortgages; and the further sum of $791.09, being the amount of the costs and allowances awarded as above mentioned; and he proposed to convey to the purchaser upon the payment of the amount of his bid, less the amount of these sums, being $1,617.72.
The report of sale was filed on the 23d of Hovember, 1898, and exceptions were duly filed by the defendants to the allowances of those sums. The exceptions were heard upon the motion to confirm the report. A motion was made at the same time for an order requiring the plaintiff to complete his purchase by paying the full amount of his bid without deducting these allowances. The two motions were heard together. The court at Special Term sustained the exceptions to the allowance of the sum of $826.63 for the interest on the $6,000 and $7,000 mortgages, and required the plaintiff to pay that sum back to the referee. He overruled the exceptions to the allowance of $791.09, being the costs and the allowances awarded in the actions to foreclose those mortgages, and required the referee to convey upon receiving the amount fixed by his order. Appeals were taken by the defeated parties, and thus the question comes here.
Section 1626 of the Code of Civil Procedure prescribes that in an action to foreclose a mortgage, if the sale of the property is directed, the judgment must require that so much thereof shall be sold as will be sufficient to discharge the mortgage debt, the expenses of the sale and the costs of the action. The term li expenses of the sale " in such an action is defined in section 1676 as the sums necessary to pay all taxes, assessments and water rates, which are liens on the property sold. The judgment of foreclosure in this case complied with the statute and directed the referee to pay the expenses of the sale as provided in section 1676; certain sums which were fixed as costs and allowances to certain parties therein mentioned ; the amount of the mortgage with the interest thereon ; and then directs him to pay the surplus, if there should be any, after making these payments, to the city chamberlain, as is required by the General Rules of Practice. The duty of thé referee was prescribed by the judgment, and he had no authority to make any payments other than were directed therein. His allowance to the purchaser of the interest on these mortgages and of the costs and expenses of the actions brought to foreclose them, was beyond his power, because no such payments were required to be made by the judgment, which was his sole authority to sell.
But it is said that these allowances were authorized by the notice of sale and by the terms of sale. It is perhaps sufficient to say that the referee could not add to his powers by what he chose to say in those documents. But passing that, it appears that there were stated in the notice of sale the approximate amount of the taxes, assessments and water rates and other charges which were to be deducted from the bid or paid by the referee. The amount of these taxes, assessments and other charges were allowed to the purchaser upon his producing receipts of their payment. The notice of sale further states that the premises were to be sold subject to the two mortgages, upon each of which it was stated interest was due from the 1st of July, 1897, at the rate of four and one-half per cent per annum, in addition to the principal sum. The reference to these mortgages was made to comply with the provisions of section 1678 of the Code of Civil Procedure, which prescribes that if the property is sold subject to liens that fact must be disclosed at the sale. It is admitted that the terms of sale were read, and that the formalities of the Code wrere complied with in that regard. The plaintiff must have known when he bid that the premises were sold subject to the two mortgages and interest. If he had no such knowledge, and was misled by the terms of sale, he might be relieved from his bid upon proper application to the court.
But it is claimed by the plaintiff that he was entitled to have these items allowed to him because by the terms of sale, which, he says, constituted the contract between him and the referee, it is stated that the premises secondly described are to be sold " subject to the principal sum of mortgage, $6,000," and the premises first desci'ibed sold " subject to the principal sum of mortgage, $7,000 ; " and he says that because nothing is said in the terms of sale as to interest due on these mortgages, he had the right to suppose when he bid that there was no interest due, and, therefore, that the amount of the interest should have been deducted as the referee had deducted it. The answer to that is quite plain. The notice of sale stated the amount of the interest due on these mortgages. It is stated that before the sale took place-1 the auctioneer read the notice of sale containing the statement that the property was sold subject to these mortgages and the interest due upon them. Whether the terms of sale were read before the bidding began does not appear. There is no statement as to the fact made by any one; but as it is not denied that the notice, of sale was read, and that notice was in an action in which the plaintiff was the moving party, it must be assumed that he had knowledge of the fact that the sale was made subject to the two mortgages, which were prior liens, with the interest due upon them. There was no reason why the precise amount of these mortgages should have been stated in the terms of sale; and these terms can receive a reasonable and proper construction if they are taken as referring to the mortgages, which were incumbrances on the property, simply to describe them, rather than to state the precise amount due upon them. Even if there were no other reason, therefore, the facts made to appear by the affidavits, and which are not denied, are sufficient to have warranted the learned justice at the Special Term to require the plaintiff to pay back this interest which had been allowed to him.
Applying the same rule, the exceptions should have been sustained to that ¡Dortion of the report which j)ermitted the purchaser to retain the costs awarded to the plaintiff in the former actions. These were not pro23erly " expenses of the sale," under section 1676 of the Code and sjjoken of in the judgment of foreclosure in this action. But it is said that by the terms of sale the plaintiff was to be allowed all taxes, assessments, water rates and all other incumbrances which at the time of sale were liens or incumbrances on the premises. The answer to that is that any such allowance ivas beyond the power of the referee to make, and as the plaintiff was a party to the judgment fixing the expenses which were to be allowed, he is not now in a situation to say that any other sum should have been allowed to him as expenses of the sale than those which are prescribed in the judgment which he caused to be entered and under which the sale was made.
So much of the order, therefore, as requires the purchaser to pay to the referee the sum of $826.63 should be affirmed, and so much of the order as requires the referee to allow to the purchaser the sum of $791.09 for the costs and allowances in the former foreclosure actions of the two mortgages should be reversed; and the order requiring the plaintiff to complete his purchase should be modified according to the views expressed herein, and as so modified the order should be affirmed, with ten dollars costs and disbursements of this appeal.
Van Brunt, P. J., Barrett and Patterson, JJ., concurred; McLaughlin, J., concurred in result.
So much of the order as requires the purchaser to pay to the referee $826.63 affirmed; so much of the order as requires the referee to allow to the purchaser $791.09 for costs and allowances in former foreclosure actions reversed; and order requiring plaintiff to complete his purchase modified as directed in opinion, and as so modified affirmed, with ten dollars costs and disbursements.