Case Name: Buffalo Chemical Works, Resp'ts, v. Bank of Commerce in Buffalo et al., App'lts
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-06-20
Citations: 61 N.Y. St. Rep. 143
Docket Number: 
Parties: Buffalo Chemical Works, Resp’ts, v. Bank of Commerce in Buffalo et al., App’lts.
Judges: 
Reporter: New York State Reporter
Volume: 61
Pages: 143–145

Head Matter:
Buffalo Chemical Works, Resp’ts, v. Bank of Commerce in Buffalo et al., App’lts.
(Supreme Court, General Term, Fifth Department,
Filed June 20, 1894.)
Mortgages—Foreclosure—Injunction.
A mortgagee cannot be enjoined from foreclosing his mortgage by a junior judgment creditor on the ground that such proceeding will be prejudicial to his rights.
Appeal from an order appointing a receiver of the property of one of 'the defendants and restraining the other defendants from prosecuting any action against such defendant
George Clinton and Adelhert Moot, for app’lts; Seward A. Simons and John G. Milburn, for respt’s.

Opinion:
Bradley, J.
It may be that a leading purpose of the action is to restrain the defendant the bank of Commerce from proceeding to the foreclosure of its mortgages against the property of the Genesee Oil Works, Limited. At all events, as here treated, the main question is whether the plaintiff is fairly entitled to the order thus enjoining that defendant. The plaintiff is a judgment creditor of the Genesee Oil Works, Limited, to the amount of about $1,000. Execution issued upon the judgment has been levied upon the property of, that association; and, as appears by the complaint, it is the second lien by levy upon its property. The only one prior to it is that in behalf of another creditor for $19,-000. The executions in both cases are still held by the sheriff, and the only thing in the way of realizing from the property by sale of it upon such processes is the general assignment made by the association in trust for its creditors to the defendant Farnham. The plaintiff does not allege that the bank mortgages upon the real estate of the association are invalid. They are prior to the lien of the plaintiff's judgment, and whatever rights it has taken by the levy of its attachment and execution upon the mortgaged property are subordinate to the lien of those two mortgages. Therefore, presumptively, there is no support for the plaintiff's attempt to interrupt the proceedings or action of the defendant to foreclose them.
But it is said that this action is one in the nature of a bill of peace to prevent a multiplicity of suits. To entitle a party to maintain such an action, it must be clear that there is a right claimed or asserted which affects many persons who are made parties; and, for the support of an action of that character, it is essential that there be in the controversy some relation, interest or question common to the parties, and which may be settled or disposed of in the action. Then several may unite as plaintiffs, or one, against several as defendants. Brinkerhoff v. Brown, 6 Johns. Ch. 139; N. Y. & N. H. Railroad Co. v. Schuyler, 17 N. Y. 592; Nat. Park Bank v. Goddard, 131 id. 494; 43 St. Rep. 777. It may be seen that the creditors of the Genesee Oil Works had an interest in common in the question of the validity of its general assignment. In this question the defendant the Bank of Commerce concurred with the plaintiff, and alleged that the as signment was made with the intent to hinder, delay and defraud the creditors of the assignor; and the defendant, as a creditor, beyond and aside from the amount secured by its mortgages, may have an interest in being relieved from the effect of the assignment But, as both of the mortgages are prior in lien to the assignment, the security given by them is not in any manner affected by it; and as the liens and interests of the other parties, so far as relates to the mortgaged property are subordinate to the lien of the mortgages of the Bank of Commerce, there can be, in the legal sense, no interest of the other creditors in common or otherwise in conflict with that of the bank as such mortgagee. It is, however, alleged that, by the sale separately of the real estate covered by the mortgages and the personal property used in the business of the association for its purposes, the property, as a whole, will produce much less proceeds than would a sale of it all together or at one time. This may be so, and that is a question in which the other creditors have an interest in common. But is that a reason for denial to the mortgagee of its right to proceed in the foreclosure of its mortgages in the usual manner? Although our attention is called to no cases in which, for that reason, support has been given to such a proposition, it is unnecessary to hold that there may not be cases where relief of that character may properly be granted. A receiver may and generally will be appointed where a plaintiff has a cause of action, his recovery probable, and the benefit from recovery will be lost or greatly impaired unless a receiver is appointed. As the Genesee Oil Works is insolvent, and in view of the situation, the appointment of a receiver of its property and direction to sell it may, so far as relates to the property embraced within the general assignment of that association, be justified. Then the distribution of the proceeds may await the determination of the question whether it be made by the assignee, as directed in the assignment, or among the creditors, in the order of the levy of the attachments and executions, "or of the liens of their judgments. This may rest upon sound reason. But none, well sustained, is seen for shutting off the right given to the bank, by its mortgages, to enforce the prior lien of them by foreclosure, and thus place it in a position where it may be compelled to enter into a contest for the proceeds to which it may be entitled. It certainly would be a remarkable case, and require a necessity which does not exist in that under consideration, which should enable those having subordinate interests in property to obtain relief which would deny to a creditor having the senior specific lien the right to execute it in the manner provided by law. By the contract incident to his mortgage, and recognized by law, the right of a mortgagee on default in payment is to proceed to judicial sale of the property covered by it, if he is entitled to judgment to that effect; and, if he is not, the infirmity or limitation of it as security is matter of defense, available to any party defendant or to any person who, having the right to defend, may become such party. Hall v. Fisher, 1 Barb. Ch. 53; Savage v. Allen, 54 N. Y. 458; Town of Venice v. Woodruff, 62 N. Y. 462.
The property covered by the mortgages must necessarily be sold separately; and, if the receiver has power or direction to sell the other property of the association, he, if deemed desirable, may do so at the time the sale is made, pursuant to the decree of foreclosure of the mortgages, and thus may be accomplished the result which it is claimed on the part of the plaintiff will be the most beneficial for the creditors of the association; or the receiver may be permitted to sell all of its property, subject to the lien of the mortgages, and without prejudice to the right of the bank to proceed to judgment of foreclosure and sale. Then, if so advised, the purchaser may be at liberty, before such judical sale, to redeem the mortgaged property from the lien of the mortgages by payment, and thus perfect his title. At all events, the mortgagee is entitled to the full benefit of the lien of his mortgages, with the right to make it available, without embarrassment from those having subordinate interests, otherwise than in the defense of the action brought to enforce it by means of judicial decree. The order appealed from, so far as it restrains, enjoins, or prevents the defendant the Bank of Commerce from prosecuting its or any action to foreclose its mortgages on the property of the Genesee Oil Works," Limited, and the sale thereof, pursuant to judgment which it may obtain, and so far as it authorizes or directs the receiver to sell the mortgaged property free from the lien of the mortgages, and so far as any of its provisions are consistent only with such authority, direction, or purpose, and designated to effectuate it, should be reversed, with costs; in other respects, affirmed, and modified accordingly.
All concur.