Case Name: William Hawkins, Respondent, v. Florence J. Maxwell, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1913-03-20
Citations: 156 A.D. 31
Docket Number: 
Parties: William Hawkins, Respondent, v. Florence J. Maxwell, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 156
Pages: 31–34

Head Matter:
William Hawkins, Respondent, v. Florence J. Maxwell, Appellant.
Second Department,
March 20, 1913.
Mortgage —foreclosure — non-payment of taxes — evidence —record as notice —usury — agreement for extension of timé of payment and for discontinuance of foreclosure — notice to mortgagor of non-payment of taxes — payment of interest by holder of second mortgage.
The holder of a second mortgage, taking advantage of a clause permitting him to demand payment of the principal after default in the payment of any tax or assessment for a certain period after it became due, brought a suit of foreclosure. A prior suit had been commenced for the foreclosure of said mortgage, but an agreement was entered into by which upon payment by the defendant of all the costs, and a certain sum in addition thereto, and the assumption by her of the payment of the principal of the mortgage, the time of payment was extended and the action discontinued.
Held, that although in the conveyance of the property to the defendant no reference was made to the mortgage in suit, evidence offered by the defendant to prove that she was ignorant of the existence of said mortgage when she purchased the property was properly excluded, for, as the mortgage had been recorded, she was chargeable with notice thereof;
That the eviden.ce was insufficient to show that the agreement for the extension of the time for the payment of the principal was based upon a usurious consideration.
The plaintiff was under no legal obligation to call defendant’s attention to the unpaid tax and request payment before bringing suit for foreclosure, as the mortgage did not in express terms require it.
The holder of a second mortgage is entitled to pay the interest due upon a prior mortgage for his own protection, and, having done so, to be treated as the assignee thereof.
Appeal by the defendant, Florence J. Maxwell, from a judgment of the County Court of Kings county in favor of the plaintiff, entered in the office of the clerk of said county on the 23d day of March, 1912, upon the decision of the court rendered after a trial before the court without a jury.
J. Franklin Tausch, for the appellant.
Henry Joralemon Davenport, for the respondent.

Opinion:
Per Curiam:
This action is brought for the foreclosure of a second mortgage, made February 16, 1910, by Frank A. Bandholtz to secure the payment of $1,500 and interest to one Elizabeth A. Bandholtz. This mortgage' was immediately assigned to the Mortgage Securities Company. Upon the trial of this action ' an assignment from said company to plaintiff was offered in evidence. This assignment, dated June 28,1910, had, not been recorded at the date of the trial., Subsequently to the making of said mortgage the premises covered thereby Were conveyed to defendant's husband) and by him to her. Although the former conveyance was in express terms made subject to a first mortgage on said premises, no reference was made therein to the mortgage in suit, and defendant attempted to prove that she was ignorant of the existence of said mortgage when she purchased the property. The evidence was properly excluded. The mortgage had been duly recorded, and she was chargeable with notice thereof.
In July, 1911, another action was commenced to foreclose this mortgage. At that time an agreement was entered into by which, upon payment by defendant of all the costs which had accrued in that action and the sum of $150 in addition thereto and the assumption by her of the payment of the principal of said mortgage, the time for the payment of such principal was extended to August 20, 1912, and that action was discontinued. In January, 1912, this action was commenced, advantage being taken of a clause in the mortgage permitting the holder thereof to demand payment of the principal after default in the payment of any tax or assessment upon the property for sixty days after it became due and payable. Defendant had omitted to pay a tax upon the mortgaged property which became due on the first Monday of October, 1911. If the agreement' for the forbearance of the mortgage debt until August 20, 1912, was based upon a usurious conr sideration, it was void, and consequently there was no valid extension thereof, and defendant was not liable upon her assumption of the mortgage debt, which was a part of the same agreement, and she is entitled to have the sum of $150, paid at •that time, credited upon account of the principal. (Ganz v. Lancaster, 169 N. Y. 357.) The burden of proof was on defendant to establish this. If suspicious circumstances sufficed for proof it would not be difficult to give defendant the relief sought. When the prior foreclosure action was commenced it was brought in the name of the Mortgage Securities Company, although, according to the written assignment, it had belonged to Hawkins, the plaintiff here, for more than a year. Hawkins was a stockholder of said company. The same attorney acted both for the securities company and Hawkins. When asked to explain why, if the mortgage at that time belonged to the latter, the action to foreclose was begun in the name of the former, the attorney's explanation was neither lucid nor satisfactory. It is true that when the extension agreement was finally executed Hawkins was a party thereto, and defendant testified that this same attorney told her that the bonus which she had agreed to pay and did pay was for Hawkins. When the attorney was called as a witness he testified that the bonus of $150 and the whole of it was paid to the Mortgage Securities Company, and that Hawkins received no portion thereof. Just why the securities company should be paid. $150 for procuring the extension of a mortgage which it had assigned a year before, it is difficult to understand. Hawkins was not called as a witness. If he had been, and his books and those of the Mortgage Securities Company had been brought into court, perhaps more light would have been thrown upon this transaction,. and there would have been less suspicion of the bona fides of the alleged assignment, and ¡it would have more satisfactorily appeared who did receive the bonus paid. But there is no competent evidence in this.récord that.Hawkins did receive it, or any portion of it! Even if we should reject the testimony of the attorney as unworthy of credence, we have nothing upon which we can base a finding to the contrary.
With regard to the other points raised by appellant, it is sufficient to say that plaintiff, as a junior incumbrancer, was entitled to pay the interest due upon the prior- mortgage for his protection, and, having done so, to be treated as the assignee of the claim. (Twombly v. Cassidy, 82 N. Y. 155; Patterson v. Birdsall, 64 id. 294.) While it would have been courteous for plaintiff to call defendant's attention to the unpaid tax and request payment thereof before starting this action for foreclosure, he was under no legal obligation to do so. The mortgage did not in express terms require it, and the clause therein relating to notice! may be referred to a case where notice of application for the appointment of a receiver is required. Even though the ^mortgage provides that such a receiver may be appointed without notice, the court is not bound thus to appoint, and in its discretion may. require notice to be given. (Jarmulowsky v. Rosenbloom, 125 App. Div. 542.)
We think that the judgment appealed from must be affirmed, but in the exercise of the discretion conferred upon us in an action of this nature, such affirmance should be without costs.
Jenks, P, J., Burr, Carr, Rich and Stapleton, jj., concurred.
Judgment of the County Court of Kings county, affirmed, without costs.