Case Name: AMERICAN MORTG. CO. v. BUTLER et al.
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1901-11
Citations: 73 N.Y.S. 334
Docket Number: 
Parties: AMERICAN MORTG. CO. v. BUTLER et al.
Judges: 
Reporter: West's New York Supplement
Volume: 73
Pages: 334–336

Head Matter:
(36 Misc. Rep. 253.)
AMERICAN MORTG. CO. v. BUTLER et al.
(Supreme Court, Special Term, New York County.
November, 1901.)
1. Mechanic's Lien—Excessive Claim—Mortgage Foreclosure.
In "proceedings to distribute surplus moneys on foreclosure of a mortgage, the fact that the referee decided that one mechanic’s lienor or his assignee had a prior claim over another such lienor, hut that his claim of lien was in excess of the sum due, does not avoid the lien, where there were no findings that the lien was willfully and intentionally false.
2. Same—Costs.
In proceedings for the distribution of surplus moneys on foreclosure, the successful party is entitled to costs and disbursements.
8. Same.
Where a reference was had to enable a senior lienor to establish his claim to surplus money, a junior lienor who intervenes and contests is chargeable, where unsuccessful, with motion costs and one-half of the referee’s fees.
Action by the American Mortgage Company against Jacob D. Butler and others. Judgment for plaintiff. Motion to confirm report of referee as to the surplus moneys arising from foreclosure of mortgage.
ICenneson, Crain, Emley & Rubino, for first lienor and the motion.
M. A. Kursheedt, for second lienor, opposed.

Opinion:
McADAM, J.
The suit was to foreclose a mortgage on real property. Judgment followed, the property was sold, and the surplus paid to the city chamberlain. The contest as to such surplus is between the assignee of Martin V. Cook, who filed a mechanic's lien against the property, and one Andrew Mills, who filed a subsequent lien. The referee reported in favor of the Cook lien, and the present is a motion to confirm the report. The only exceptions filed were by Mills, the junior lienor, who claims that, on account of an excessive claim made by Cook, his lien became forfeited and unenforceable. It cannot be inferred from the mere fact that the referee decided that Cook claimed too much that the lienor forfeited his equitable claim upon the property, nor is there anything in the evidence warranting that conclusion. In Ringle v. Iron Works, 149 N. Y. 439, 44 N. E. 175, it is intimated that the statements that make a notice of lien ineffectual must be not only untrue, but "willfully and intentionally" false in some important or material respect. So, in Aeschlimann v. Hospital, 165 N. Y. 296, 59 N. E. 148, 80 Am. St. Rep. 723, the court held that where in such case it appears that the plaintiffs intentionally and by pretense of a fictitious and fabricated demand enormously exaggerated their claim, with intent to defraud, no recovery could be had on the lien. The court carefully observed the obvious distinction between honest mistakes of fact as to value, and willful and intentional exaggeration fraudulently made. In this respect the rule is similar to-that applicable to false swearing in proofs of loss on insurance policies, which by the conditions thereof vitiates the contract; but, to have this effect, the swearing "must be intentionally false, whether by a fraudulent overvaluation of the goods destroyed, or a statement of items which really have no existence, or by an undervaluation of what is saved, or in other particulars." Richards, Ins. § 137. An innocent mistake (Thierolf v. Insurance Co., 110 Pa. 37, 20 Atl. 412), or an innocent though exaggerated estimate of value, will not avoid the policy (Maher v. Insurance Co., 67 N. Y. 283; Insurance Co. v. Nichol, 35 N. J. Eq. 291, 40 Am. Rep. 625; Insurance Co. v. Staats, 102 Pa. 529; Towne v. Insurance Co., 145 Mass. 582, 15 N. E. 112). The overvaluation, in order to work a forfeiture, must be so plain that it cannot be accounted for upon the principle that every man is prone to put a favorable estimate upon the value of his own property. Sturm v. Insurance Co., 63 N. Y. 77; Insurance Co. v. Vaughan, 92 U. S. 516, 23 L. Ed. 740. Where the discrepancy between the representation of the insured and the finding of the fact by the court or jury is very great, a limit may be reached where the court will intervene and decide as matter of law that the amount of the error is consistent only with bad faith. Where a house was valued at $1,400, and the evidence showed its value to be about $1,000, it was held that this difference did not establish, as matter of law, that there had been a breach of warranty against overvaluation, and that the question as to whether it was designedly •excessive should be decided by the jury as one of fact, and not by the court as one of law. Smith v. Insurance Co., 47 Hun, 30. See, also, Behrens v. Insurance Co., 64 Iowa, 19, 19 N. W. 838; Dogge v. Insurance Co., 49 Wis. 501, 5 N. W. 889. In Ringle v. Iron Works, supra, .a lien was sustained where the lienor, who had a contract for work amounting to $17,500, filed a lien for a balance of $3,259, although it was proved on the hearing that work to the amount of $121.90 had not been done by him. These cases demonstrate that the objections urged against the Cook lien by the junior lienor, Mills, are destitute of merit. Indeed, if they were held to be meritorious, the same imperfection will be found in the Mills' lien. 'The proofs clearly sustain the findings of the referee. The exceptions filed to his report must be overruled, and the report confirmed.
The moving party claims costs, and an allowance in addition thereto. Motion costs and necessary disbursements are all that can be awarded to the successful party in proceedings to obtain the surplus moneys arising from the sale of real property under the foreclosure of a mortgage. No allowance to counsel can be made. Dudgeon v. Smith, 23 Wkly. Dig. 400; Bank v. Sharer, 25 Hun, 409, 413; In re Gibbs, 58 How. Prac. 502, 504; Cowen v. King, 54 App. Div. 331, 333, 66 N. Y. Supp. 621. As the reference ordered was necessary to enable the lienor, Cook, to establish his lien and the amount due.thereon, the subsequent lienor, Mills, should only be charged motion costs and one-half of the referee's fees, which to such extent were caused by his opposition to Cook's demand, and in the effort to establish his own lien as a foundation for his claim to the surplus moneys in preference to Cook. Serve notice of settlement of order.
Ordered accordingly.