Case Name: Frederick Von Bernuth, App'lt, v. Stephen C. Sutton, Resp't
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1889-06-28
Citations: 25 N.Y. St. Rep. 508
Docket Number: 
Parties: Frederick Von Bernuth, App’lt, v. Stephen C. Sutton, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 25
Pages: 508–510

Head Matter:
Frederick Von Bernuth, App’lt, v. Stephen C. Sutton, Resp’t.
(Supreme Court, General Term, Second Department,
Filed June 28, 1889.)
Mortgage—Assignment—Rescission—Mistake.
One K. bought the land covered by defendant’s mortgage, which he assumed. Being unable to pay, K. requested plaintiff to advance the money and take an assignment of the mortgage. This was done and an assignment in blank delivered to plaintiff, whose name was filled in. A prior mortgage was on record and under it the land was sold bringing less than the defendant’s mortgage and cutting it off The obligor on the mortgage assigned to plaintiff was insolvent, so that the mortgage became worthless. At the time of the assignment to plaintiff the mortgage was believed by all parties to be a first lien, no representations being made in respect to the order of lien. In an action to rescind for mutual mistake, Held, that as between K. and defendant the transaction was a payment, and that the latter is not bound to make good the mortgage to plaintiff.
Appear from a judgment entered upon a decision rendered at the Westchester special term.
This action was brought in equity to rescind a contract for mutual mistake of fact, and to recover the consideration paid by the plaintiff to the defendant.
The defendant was the owner of a certain bond and mortgage on premises situate in Westchester county.
The mortgage was executed by one Keziah Paine, the then owner of the premises; and the premises were subsequently sold to one Zeba H. Kitchen, subject to the mortgage which was assumed by Kitchen.
The mortgage was believed by said Paine, Kitchen and Sutton to be a first hen on said premises. They had had the property searched, and the mortgage appeared to be a first lien on the premises.
On said 23d of February, 1875, there was due and unpaid on the mortgage the sum of $2,046.66.
The defendant requested the money of Kitchen, and Kitchen, not being able to pay the same, requested plaintiff to take an assignment of the mortgage from defendant and to advance thereon the amount due, which plaintiff did, paying to defendant therefor, through said Kitchen, as agent.
On receiving the money defendant executed an assignment in blank, with a power of attorney to fill up the blank and a certificate of the amount due.
The assignment was subsequently delivered to plaintiff and his name was filled in the blank.
The money had been placed by plaintiff in the hands of Kitchen to take up the mortgage, and the transaction was completed through Kitchen.
_ There existed an old mortgage on the same premises, undischarged of record, which was subsequently foreclosed and the premises sold under a decree, thus cutting off the lien of the mortgage so assigned by Sutton to VonBernuth; and upon the sale the premises did not bring enough to satisfy the said prior mortgage. At the time of the transaction none of the parties knew of this prior mortgage.
Plaintiff then offered to reassign the mortgage to defendant, and asked to have the defendant repay the money paid, therefor.
The obligor on the bond so transferred to plaintiff was utterly insolvent, and the mortgage became worthless.
The plaintiff ask's to have the sale of the mortgage rescinded, on the ground that it was consummated under a mutual mistake of fact, and to recover the amount of money so paid to defendant.
Baldwin & Blackman, for app’lt.

Opinion:
Barnard, P. J.
Kitchen was the principal debtor. He had bought the land covered by the defendant's mortgage, and agreed to pay the mortgage as part of the purchase price. The defendant required payment of Kitchen. When the payment was made, the defendant, at Kitchen's request, executed an assignment in blank, with power to fill up the blank, accompanied with a certification of the amount due. The name of the plaintiff was subsequently filled in as the plaintiff or purchaser. As between Kitchen and Sutton, the transaction was a payment, and the defendant was not a vendor of a mortgage on Kitchen's property. If Kitchen chose to take an assignment in blank, either to protect his title or to put the mortgage organs in circulation, he had the right to do so. Champney v. Coope, 32 N. Y., 543.
Sutton, the defendant, by assenting to this form of business, was not bound to make good the mortgage to plaintiff, because it was a second mortgage, and both Kitchen and. Sutton believed it to be a first mortgage. No representation was made in respect to the order of lien.
The judgment should therefore be affirmed, with costs. Pratt, J., concurs; Barnard, P. J., not sitting.