Case Name: QUINLAN v. PRENTICE et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1912-11-15
Citations: 138 N.Y.S. 216
Docket Number: 
Parties: QUINLAN v. PRENTICE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 138
Pages: 216–221

Head Matter:
(153 App. Div. 140.)
QUINLAN v. PRENTICE et al.
(Supreme Court, Appellate Division, First Department.
November 15, 1912.)
Mortgages (§ 437*)—Foreclosure—Parties.
In the foreclosure of a third mortgage on certain premises on which one defendant, as receiver and trustee in bankruptcy, held the fifth mortgage, such defendant was entitled to an order requiring plaintiff to bring in as a party defendant the holder of the first mortgage, to the end that the bidders at the foreclosure sale could know precisely the amount of the liens subject to which the property was to be sold.
[Ed. Note.—For other cases, see Mortgages, Cent. Dig. § 1290; Dec. Dig. § 437.*]
Ingraham, P. J., and Laughlin, J., dissenting.
•For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
Appeal from Special Term, New York County.
Action by Estelle Quinlan against Ezra P. Prentice, as receiver and trustee in bankruptcy, etc., impleaded with others. From an order made on application of defendant Prentice as receiver and trustee in bankruptcy, requiring plaintiff to bring in as a party defendant the Hudson Mortgage Company, plaintiff appeals. Affirmed.
Argued before INGRAHAM, P. J., and McLAUGHLIN, LAUGHLIN, CLARKE, and SCOTT, JJ.
Benjamin N. Cardozo, of New York City (Benjamin M. Kaye, of New York City, on the brief), for appellant.
Selden Bacon, of New York City (Saul S. Myers, of New York City, on the brief), for respondent.

Opinion:
McLAUGHLIN, J.
It is unnecessary to state the facts, since they are set forth in the opinion of Mr. Justice LAUGHLIN. The authorities there cited, as it seems to me, when applied to the conceded facts, require an affirmance of the order. The trustee in bankruptcy is entitled to know just how much there is due upon the first mortgage ; otherwise, he is not in a position to bid intelligently at the sale. It is alleged that, while the first mortgage is nominally for $300,000, it is in fact for, and there is only due, $260,000. Under such circumstances, the action being in equity, the court was justified in requiring the plaintiff to bring in the Hudson Mortgage Company, to the end that the whole controversy respecting the liens upon the land in question might be settled. I do not see how full and complete justice can be done to all of the parties unless this course be adopted.
In Sutherland v. Lake Superior Co., 1 Cent. Law J. 127, the court, speaking of the propriety of making a prior lienor a party, said:
"It is not enough that a court of equity causes nothing but the interest of the proper party to change owners. Its decree should terminate, and not instigate, litigation. Its sales should tempt men to sober investments, and not to wild speculation. Its process should act upon known and definite interests, and not upon such as admit' of no medium of estimation. It has the means of reducing every right to certainty and precision, and is therefore bound to employ these means in the exercise of its jurisdiction."
While this case was reversed in the United States Supreme Court (sub nom. Jerome v. McCarter, 94 U. S. 734, 24 L. Ed. 136), on the ground that the facts, as found, did not show the existence of any doubts concerning the validity and extent of the prior liens, nevertheless it approved of the rule,'saying:
"And so, when' there is substantial doubt respecting the amount of the debts due prior lien creditors, there is obvious propriety in making them parties, that the amount of the charge remaining on the land after the sale may ae determined, and that purchasers at the sale may be advised of what they are purchasing."
To permit a sale so long as the amount due on alleged prior liens remains uncertain is to deprive would-be purchasers of knowledge enabling them to bid intelligently; in other words, if the trustee in bankruptcy, in order to protect his lien, bids at the sale, he must either assume that there is due the Hudson Mortgage Company $300,- 000, or else take his chances in subsequent litigation having for its object the reduction of that lien to $260,000. This is a position which a court of equity ought not to compel him to take. Full justice can be meted out to all of the parties by requiring the Hudson Mortgage Company to be brought in as a party defendant to this action. The rights, interests, and equities of all of the parties claiming an interest in the mortgaged premises, and the respective priority of their liens thereon, should be settled and determined, before any judgment of foreclosure and sale is entered. Commercial Trust Co. v. Peck, 135 App. Div. 732, 119 N. Y. Supp. 946; Metropolitan Trust Co. v. Tonawanda R. R. Co., 43 Hun, 521, affirmed on opinion below 106 N. Y. 673, 13 N. E. 937. Otherwise, the sale becomes a mere speculation, both as to what is sold and what is purchased.
The foregoing views are in no way in conflict with what' was held in Jacobie v. Mickle, 144 N. Y. 237, 39 N. E. 66, Brush v. Levy, 54 App. Div. 296, 66 N. Y. Supp. 700, and Lester v. Seilliere, 50 App. Div. 239, 63 N. Y. Supp. 748. In the Jacobie Case the holder of a prior mortgage was made a party defendant, and the complaint alleged the existence of such prior mortgage, and in the prayer for relief asked that the amount due thereon be ascertained and first paid out of the proceeds of sale. The owner of the prior mortgage suffered default. The judgment rendered followed the prayer for relief, and it was held that the holder of the prior mortgage was concluded by the judgment, and could not thereafter maintain an action to foreclose his mortgage.
In the Brush Case the action was brought to annul a lease made by plaintiff to defendant, upon the latter's alleged false representation that she had acquired title to a prior lease of the premises covering a portion of the demised term. It was held, that the prior lessee would not be made a party against the will of the plaintiff, in order to allow the defendant to litigate differences arising between her and such prior lessee as to what rights defendant took under a bill of sale and sublease executed to her by the prior lessee, in which the plaintiff had no interest.
All that was held in the Lester Case was that where adjoining parcels of land, owned by different persons, were occupied as a single parcel for hotel purposes, and the department of public works furnished water to the hotel with the knowledge of the different owners, the charge for which became a lien on the entire property, the owner of one parcel might, without first paying the entire charge, maintain an action in equity against the owners of the other parcels to obtain an apportionment thereof.
The order appealed from is right, and should be affirmed, with $10 costs and disbursements.
CLARKE and SCOTT, JJ., concur.