Case Name: Jamalie Shohfi, Respondent, v. Essa Shohfi et al., Appellants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1952-01-10
Citations: 303 N.Y. 370
Docket Number: 
Parties: Jamalie Shohfi, Respondent, v. Essa Shohfi et al., Appellants.
Judges: 
Reporter: New York Reports
Volume: 303
Pages: 370–382

Head Matter:
Jamalie Shohfi, Respondent, v. Essa Shohfi et al., Appellants.
Argued May 29, 1951;
decided January 10, 1952.
Monroe J. Cahn for appellants.
I. Ordinarily section 47-a of the Civil Practice Act would be a complete bar to this action, entitling defendants to dismissal of the complaint and judgment on their counterclaim. (Chapin v. Posner, 299 N. Y. 31; Kirschner v. Cohn, 270 App. Div. 126; Ernst v. Schaack, 271 App. Div. 1012, 297 N. Y. 566; Jackson Heights Apt. Corp. v. Staats, 272 App. Div. 780; Rookery Investing Co. v. Audley Constr. Corp., 188 Misc. 693; Eagan v. Engeman, 125 App. Div. 743; Central Hanover Bank & Trust Co. v. Roslyn Estates, Inc., 266 App. Div. 244, 293 N. Y. 680.) II. The prior judgment, according to its explicit terms, did not adjudicate the amount, if any, due or owing on the mortgage but left that question open for subsequent adjudication in a proper action. (Maggi v. Sabatini, 250 N. Y. 296; Percy v. Huyck, 252 N. Y. 168; Sears, Roebuck & Co. v. 9th Ave.-31 St. Corp., 274 N. Y. 388.) III. The prior-judgment conclusively adjudicated that by the 1934 conveyance the wife did not become the owner of the premises but merely the husband’s agent; in consequence, the reconveyance compelled by the prior judgment was not by the wife as owner but as agent returning the record title to the husband who, at all times, had been the actual owner. (Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304; Sielcken-Schwarz v. American Factors, Ltd., 265 N. Y. 239; Hellstern v. Hellstern, 279 N. Y. 327; Pagano v. Arnstein, 292 N. Y. 326.) IV. When construed, as it must be in the light of the provisions of the judgment which compelled its execution, the reconveyance had no effect upon the enforcibility of the mortgage. V. The Statute of Limitations could be avoided only by compliance with section 59 of the Civil Practice Act which requires a written acknowledgment by the party to be charged. That party was the husband and since he made no such acknowledgment, there was no extension. (Bennett v. Bates, 94 N. Y. 354; Purdy v. Coar, 109 N. Y. 448; Matter of Oakes, 248 N. Y. 280; Morrill Realty Corp. v. Rayon Holding Corp., 254 N. Y. 268; Miller-Piehl Co. v. McCormick, 170 Wis. 378.)
William F. Bleakley, James D. Hopkins and J. Robert Bleakley for respondent.
I. The acceptance of the deed to the premises subject to the mortgage of $10,000, pursuant to a judgment in an action instituted by defendant Shohfi, constituted an acknowledgment of the mortgage which effectively tolled the Statute of Limitations. (Bennett v. Bates, 94 N. Y. 354; McConihe v. Fales, 107 N. Y. 404; Morrill Realty Corp. v. Rayon Holding Corp., 254 N. Y. 268; Cottle v. County of Erie, 57 App. Div. 443, 173 N. Y. 591; Moore v. Clarke, 40 N. J. Eq. 152; American Investment Co. v. City Sav. Bank, 181 Okla. 511; Texas Land & Mtge. Co. v. Cohen, 138 Tex. 464; Crompton v. Jenson, 78 Utah 55; Liebl v. Schaeffer, 134 Wash. 168; Meinhard v. Salmon, 249 N. Y. 458; Barnett v. Daw, 55 App. Div. 202; Union Trust Co. v. Johns, 107 Misc. 12.) II. Appellant Shohfi is estopped by his conduct and by his words from contesting the enforcement of the mortgage on the ground of the Statute of Limitations. (Andrews v. Cosmopolitan Bank, 183 App. Div. 787; Strong v. Smith, 149 Misc. 80; Matter of Rosevele Frocks v. Sommers, 191 Misc. 614; Lightfoot v. Davis, 198 N. Y. 261; Johnson v. Albany & Susquehanna R. R. Co., 54 N. Y. 416; Conklin v. Furman, 48 N. Y. 527; Dodds v. McColgan, 229 App. Div. 273; Zinovoy v. Lieberman, 249 App. Div. 388; Speciale v. Sciascia, 263 App. Div. 901; Safrin v. Friedman, 96 N. Y. S. 2d 627, 277 App. Div. 1138.) III. Equitable principles require that respondent and appellant Shohfi be placed in the same relative position which they occupied prior to the conveyance of the title of the premises by respondent to appellant in 1934. (Hammer v. Michael, 243 N. Y. 445; Grosch v. Kessler, 256 N. Y. 477; Williams v. Fitzhugh, 37 N. Y. 444.)

Opinion:
Loughran, Ch. J.
The plaintiff Jamalie Shohfi is the wife of the defendant Essa Shohfi. In 1925, she acquired in her own name a parcel of real property which in 1929 she conveyed to the defendant husband who then delivered to her a purchase-money mortgage on that property to secure a bond whereby he undertook to pay to her the sum of $10,000. On or about December 16,1949, this action to foreclose that mortgage was brought by the plaintiff wife against the defendant husband and was referred to Honorable J. Addison Young, Official Referee, for hearing and determination. We quote from his decision the following findings:
" On February 2nd, 1934 the defendant husband reconveyed the premises to the plaintiff wife. This conveyance expressly provided that the mortgage should not merge.
" On about February 20th, 1947 the defendant husband, Essa Shohfi, commenced an action in this Court [the New York Supreme Court] against his wife, the plaintiff herein, demanding judgment that he should be declared the owner of one-half of the real and personal property in his wife's name.
" That action was duly tried before Judge Close as Official Referee and resulted in a decision and interlocutory judgment to the effect that the conveyance of February 2nd, 1934 above referred to, was made, ' upon the understanding and agreement that she, the wife (Jamalie Shohfi) should manage the same for him (Essa Shohfi);' and provided that the premises should be reconveyed to the defendant Essa Shohfi, ' subject only to the mortgage thereon no adjudication being made as to the amount, if any, due or owing upon said mortgage ' ' '.
" The mortgage provided that interest thereon should be at the rate of 6% per annum, payable on the 23rd day of July 1929 and semi-annually thereafter, together with installments of principal of $300.00 on each interest date until January 23rd, 1934 when the whole amount of the principal remaining unpaid should be due and payable.
* ' It is conceded that no part of the principal of this mortgage has been paid.
"It is likewise conceded that no interest has been paid on the principal of the mortgage since July 23rd, 1933."
" Concededly, on January 29th, 1934 default was made in the payment of interest and the moratorium statute no longer forbade the foreclosure of the mortgage, nor suit upon the bond, in consequence of which plaintiff was at all times thereafter free to bring foreclosure. Under these- circumstances, Section 47 (a) [of the Civil Practice Act] operated to limit the period of foreclosure, as though the moratorium statute had never been enacted."
In keeping with the above findings, Official Referee Young (1) dismissed the complaint of the plaintiff wife upon the ground that enforcement of the bond and mortgage was barred by the Statute of Limitations prescribed by section 47-a of the Civil Practice Act; and (2) granted to the defendant husband a judgment canceling the record of the mortgage. (See Real Property Law, art. 15.)
On an appeal taken by the plaintiff wife to the Appellate Division, the decision of Official Referee Young was reversed on the law alone for a single reason stated as follows (277 App. Div. 390, 393):
" When a grantor of mortgaged premises conveys real property subject to an existing mortgage, the recital of the mortgage in the deed constitutes an acknowledgment which will remove the bar of the Statute of Limitations as to the grantor. The grantee who accepts title by a deed in which it is expressly stated that it is conveyed subject to a mortgage is bound by the acknowledgment of the grantor. ®
" On July 16, 1948, when plaintiff conveyed title to the premises to the defendant husband subject to the $10,000 mortgage, pursuant to a judgment in an action which he instituted and whose benefits he accepted, this constituted a recognition of the mortgage debt by both parties which tolled the Statute of Limitations and the husband was not thereafter at liberty to contest the existence or validity of the mortgage. (Bennett v. Bates, 94 N. Y. 354, 370.) However, there being no written acknowledgment by the husband of the indebtedness on the bond, the Statute of Limitations remains a defense to him as to that obligation and the plaintiff may not recover a deficiency judgment against him." In accordance with its views as thus expressed, the Appellate Division made additional findings of fact and new conclusions of law which were merely a necessary basis for a judgment of foreclosure and sale and granted such a judgment to the plaintiff wife.
But at the same time all the above findings of fact made by Official Referee Young were expressly affirmed by the Appellate Division. Besides, a final judgment had been entered upon the findings made by Official Referee Close which are set forth in the decision of Official Referee Young and that final judgment has never been questioned except in one particular which has no relevancy to the present case (see 276 App. Div. 869).
Section 47-a of the Civil Practice Act says: " An action upon a mortgage of real property, or any interest therein, must be commenced within six years after the cause of action has accrued." This provision went into effect on September 1, 1938.
In short, we have this case: The principal of the mortgage in question became payable on January 23, 1934. No part thereof has ever been paid. The interest that was payable on January 23,11 '4, was not paid nor was any interest paid thereafter. Moreov ,r, the plaintiff wife in her amended complaint herein expressly waived all interest that became due prior to July 16, 1948. The summons in this action to foreclose the mortgage was not served until on or about December 16, 1949, although no moratorium statute stood in the way of foreclosure after January, 1934. Hence section 47-a of the Civil Practice Act was a bar to this action at its commencement unless indeed (as the Appellate Division ruled) section 47-a was tolled when on July 16, 1948, the plaintiff wife reconveyed to the defendant husband the mortgaged premises " subject to " the previously outlawed mortgage thereon.
We find ourselves unable to agree to that ruling of the Appellate Division. The principle that acceptance of a title subject to a mortgage can interrupt or suspend the Statute of Limitations has never been declared by this court to be a hard and fast rule. On the contrary, the principle applies, as we have said, only when " the circumstances of the purchase amount to an admission of the validity and lien of the outstanding incumbrance " (Purdy v. Coar, 109 N. Y. 448, 453; Morrill Realty Corp v. Rayon Holding Corp., 254 N. Y. 268, 275). In the present case, there was no purchase of the mortgaged premises by the defendant husband. In fact the premises were reconveyed to him by the plaintiff wife in obedience to a now incontestable final judgment of the New York Supreme Court which declared that his earlier conveyance to her was executed " upon the understanding and agreement that she should manage the same for him ". True, the same final judgment declared that her reconveyance to him should be " subject to " the mortgage but that judgment also declared that no adjudication was thereby made "as to the amount, if any, due or owing upon said mortgage ". In that state of the record, the acceptance by the defendant husband of the plaintiff wife's reconveyance to him of his own property subject to the already outlawed mortgage thereon cannot, in our judgment, be taken to have been an admission by him of the validity and lien of that mortgage within the principle of Purdy v. Coar and Morrill Realty Corp. v. Rayon Holding Corp. (ubi supra).
Whether the Statute of Limitations could have been avoided — as the defendant husband claims — only by a written acknowledgment signed by him in accordance with section 59 of the Civil Practice Act is a question we do not reach.
The dissenting opinion calls upon us to take up the record again. In the prior litigation that was decided by Judge Close, the husband was plaintiff and the wife was defendant. As a witness therein she swore that her husband had reconveyed the mortgaged premises to her because taxes, water rates and other charges against the property were due and unpaid. In respect of that testimony Judge Close made the following findings: " These were not the facts. <!: " * Taxes were paid to date, the first mortgage had been reduced and the building was fully occupied. I find that the plaintiff [the husband] conveyed this property to the defendant [the wife] so that she could manage it for him ". Of course, that finding which has never been disturbed is here binding on us.
Oftentimes a grantee buys land subject to a mortgage and the grantor credits the amount thereof on the purchase price. In that situation, the grantee is estopped to question the validity of the mortgage. But that is not this case. More than that: There is here no finding of any estoppel nor of any fact that would justify such a finding.
The judgment entered upon the order of the Appellate Division should be reversed and the judgment entered upon the decision of Official Referee Young should be affirmed, with costs in this court and in the Appellate Division.