Case Name: John F. Curlette, Respondent, v. Franklin M. Olds, Appellant, Impleaded with Clinton S. Harris and Others, Defendants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-01-08
Citations: 110 A.D. 596
Docket Number: 
Parties: John F. Curlette, Respondent, v. Franklin M. Olds, Appellant, Impleaded with Clinton S. Harris and Others, Defendants.
Judges: 
Reporter: Appellate Division Reports
Volume: 110
Pages: 596–602

Head Matter:
John F. Curlette, Respondent, v. Franklin M. Olds, Appellant, Impleaded with Clinton S. Harris and Others, Defendants.
Third Department,
January 8, 1906.
Stay— when foreclosure not stayed because of prior action in Federal - court to cancel mortgage on ground of usury. s
The defense of a former action pending for the same catise between the same . parties is not available when the courts are in different States, or oné is a Federal court and the other a State court, even though the Federal court he in a district embracing the State. A stay of such subsequent action is in -the x sound discretion of the court.
An action to foreclose a mortgage will not'be stayed on the ground that a prior action has been begun by the mortgagor in a' Federal court to set aside the mortgage On the ground of usury, when it appears that the mortgagor is an attorney of the courts of this State and brings.said action in the Federal' court on a technical non-residence and there are* circumstances which make it probable that said action tyas so brought to hinder and delay the mortgagee.
Rules governing stay of proceedings on conflict in jurisdiction between State and Federal courts stated by Smith, J.
Appeal by the defendant, Franklin M. Olds, from an order of the County Court of Sullivan county, entered in the office of the clerk of said county on the 11th day of September,’1905, denying the said defendant’s motion for a stay of proceedings.
This action is pending in the County Court of Sullivan county for the foreclosure of a mortgage given May 5,1904, by the defendant Franklin M. Olds ,to the plaintiff. The wife of the mortgagor and several judgment creditors are also parties defendants. Just after the first payment became due upon the mortgage, and before the beginning of this action, the mortgagor began an action against plaintiff in the United States Circuit Court for the Southern District of New York, seeking to set aside said mortgage and two grants of rights over his lands, alleging that the same were void -for usury. He thereupon moved the' County Court of Sullivan county, upon affidavits, for an order staying the proceedings in this action until the decision of the action in the Federal court, which motion was denied, and the defendant appeals to this court. The moving affidavits show that the plaintiff held a prior mortgage made by the defendant upon the same premises, and upon default being made an action of foreclosure was brought and judgment, of foreclosure and sale had, and that from time .to time the defendant had made payments upon said judgment, and upon the 5th day of May, 1904, the amount remaining unpaid was $3,875, and that upon that day the.mortgage now in suit was given in place of the other mortgage, which was discharged. The prior mortgage and judgment are conceded valid in all respects. The defendant Olds is an attorney with an office and doing business at Mountaindale, Sullivan county, but with a legal residence at Newark, N. J. As jl part of the transaction in which the second mortgage was given, and in consideration of the forbearance of the debt represented by the judgment and the first mortgage, he alleges that the plaintiff (in addition to the full lawfql rate of interest) exacted, took and received, without other consideration, two valuable rights or privileges, namely, the - right to flow water onto, upon and over adjacent lands belonging to him, from an overflowing'artesian.well upon plaintiff's premises, and the right (in case of completion of a telephone line then recently' projected'and partially constructed through JVlountaindale) to connect. therewith by poles and wires extending over, upon and across other lands of the defendant, "so that plaintiff might have a telephone receiver in his house for liis-own use, and that a certain grant of said rights was executed and acknowledged by both parties in writing, “ all contrary, as claimed by me, to' the statutes of this State against usury.” . ■ ■
Franklin M. Olds, 'for the appellant.
Melvin H. Couch and T. F. Bush, for the respondent.

Opinion:
Kellogg,. J.:
The defense-of-a former action pending for the same cause between the same parties is not availablé where the courts are in different States, -or one is a. Federal an^d the other a State'court, and this -is "true notwithstanding the fact that the Federal court is in a district embracing the State. Each action may proceed to judgment, unless the court in wliidh -the' latter action is brought,"in the exercise of a sound discretion, stays its prosecution, and. the party .first obtaining his judgment may, in a .propet' case, use'-it, by an. amended pleading, or as evidence in the other action. (Douglass v. Phenix Ins. Co., 138 N. Y. 209 ; Stanton v. Embrey, 93 U. S. 548 ; 1 Cyc. 36, 38, 39.) Here neither the parties, the cause of action nor' the relief'-sought are the-saíne. A former action to set aside a judgment is no defense to an.action brought to enforce the judgment, as they are not for. the same cause and their scope is different. (McGrath v. Maxwell, 17 App. Div. 246.) If-the plaintiff'in this case is successful- in the other action, he must still proceed here to realize his mortgage debt.- And as the Code of-Civil Procedure '(§' 982) requires an action of foreclosure to be brought in- the county where the -mortgaged property is situate, the plaintiff was not required to set up and seek to enforce his mortgage in the Federal court. In fact, he could not effectually do so, for the reason- that the wife and the judgment creditors of the mortgagor are. necessary parties- to the foreclosure. .
It is true that .the policy, of the law is that the first tribunal obtain ing jurisdiction of the parties and the subject of the action shall decide the controversy, so that a multiplicity of suits may bp avoided, and that there shall be no unseemly race between parties after action brought to get a speedier trial in some court in- which they feel a trial is more convenient or otherwise more desirable. Here a stay cannot be claimed as a matter of right, but rests in the sound discretion of the court, and there are many circumstances which appeal to the discretion of the court and naturally lead to a denial of the defendant's motion. The mortgagor is an attorney of this court, having an office for the practice of his profession in the county in which the foreclosure is sought; and while he lias the right to bring the action in the Federal court, based upon his technical non-residence, it would seem that the State court would be more, accessible to him and more convenient for all parties concerned. The action of foreclosure, as we have seen, is local in its character, and the allegations conferring upon the Federal courts jurisdiction in this case may be considered somewhat technical instead of really substantial. It is conceded that the original mortgage and the judgment of foreclosure were in all respects valid, and even though the defendant establishes usury in the second mortgage, the first mortgage and judgment are not voided by his defense of usury. They may be reinstated and enforced, if not in this action, . at least in a proper proceeding brought for that purpose. (Winsted Bank v. Webb, 39 N. Y. 325 ; Gerwig v. Sitterly, 56 id. 214 ; Troy Carriage Co. v. Simson, 15 Misc. Rep. 424 ; affd., 12 App. Div. 626.) The usury laws provide that where usury is established a payment of the loan shall not be required, and accordingly that the borrower may maintain an action in equity and shall not be required to make restitution of the money borrowed as a condition for equitable relief. It is not necessary to consider here whether a court of equity will require as a condition of such relief the reinstatement of the valid security, and in that way avoid a circuity of action. It is probable that the'mortgagor must at some time either pay the original indebtedness or lose his farm. It is not very material to him whether he pays the judgment or this mortgage, or whether his farm is sold upon that judgment when revived or in this action. He has not, therefore, any real substantial interest in the controversy aside from the rights granted, and his moving papers do not allege- that they have any real substantial value, and it cannot be inferred fiom the description of them that they aré of great value. Assuming that their value is small, he is still at liberty to' bring an action for their cancellation and have his'rights adjudicated by the Federal court". This court, however, will not feel called upon, in a substantial controversy like this, to compel a creditor to await the result of an action where so little actually depends, and " the result' of which will not be conclusive here. - Upon all the circumstances, the pourt may well feel .that the Federal action is not brought in good faith to establish a right or redrpss a wrong, but rather is intended to delay the plaintiff and put him to expense,and trouble, and to prevent him obtaining a speedy collection of his mortgage debt. The order of the County Court is affirmed, with ten 'dollars costs and disbursements.
All. concurred; Parker, P. J., in result, and Smith, J., in concurring memorandum. 1