Case Name: Metropolitan Mutual Savings and Loan Association, Appellant, v. Jacob Smith and Magdalena Smith, his Wife, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900-06
Citations: 52 A.D. 632
Docket Number: 
Parties: Metropolitan Mutual Savings and Loan Association, Appellant, v. Jacob Smith and Magdalena Smith, his Wife, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 52
Pages: 632–633

Head Matter:
Metropolitan Mutual Savings and Loan Association, Appellant, v. Jacob Smith and Magdalena Smith, his Wife, Respondents.
Judgment reversed and new trial ordered, with costs to the appellant to abide the event, • unless the defendant stipulates in accordanee with the requirements of the opinion in the case, in which event the judgment as thus modified is affirmed, without costs of this appeal to either party.— Appeal by the* plaintiff from a judgment of the Supreme-Court, entered in the clerk’s office of Erie county on the 16th day of October, 1899, decreeing a foreclosure and sale of the premises described in the complaint.—

Opinion:
Laughlin, J.:
The action is brought to-foreclose a mortgage executed by the defendants to the plaintiff on the 25th day of August, 1898. The questions presented by the appeal are: (1) Is the amount specified, in the decree the full amount due ana owing on the mortgage? and (2) was the award of -costs to the defendants justified? Plaintiff is a mutual savings and loan association, incorporated pursuant to the provisions of chapter 122 of the Laws of 1851. .The defendant Jacob Smith became a member of the-plaintiff association on the 22d day Of August, 1898, agreeing to take twelve shares of common stock, class "A." On that day he-filed with the plaintiff an .application in writing for a loan of $1,200 on said shares* upon which he had made no payment, and offered as security the premises described in the complaint, which were subject to the-lien of a mortgage for §800 and interest thereon from June first", that year. The loan. was allowed, and the substance of the agreement, which was evidenced by the applicatian, an assignment of the stock executed by Jacob Smith,.and a bond and mortgage exeouted by him and the defendant Magdalena Smith, his wife, bearing date the 22d day of August, 1898, was as follows: The bond and mortgage were to secure the payment of the sum of $1*200 and interest, but the association was to advance only $400, reserving the remainder to protect itself against said mortgage for $800, upon which, provided the member lived up to his contract obligatian, the association was to pay the interest as the same fell due, and, at the maturity of the stock, or when there should be sufficient to the credit of the stock to warrant such action, the association was to pay off the prior mortgage; in case the member defaulted in making any payment of interest, dues or premium, the assignment of stock was to become absolute at the election of the association, and all credits to the stock might then be appropriated by it to the payment of any indebtedness owing by the member, including costs of foreclosure; and in case of such default for three months, the-association might at its option declare the-whole amount due; the member was to pay all necessary expenses of procuring the loan,, which were to be deducted from the amount, loaned, and" was to pay promptly on the= third business day of each month, commencing with the month of -August, 1898, until the maturity of the shares, and until sufficientmoneys should be to the credit thereof in dues paid and profits apportioned to pay the principal and all fines and fees, monthly dues of twenty-five cents on each of said shares, a similar amount for premium bid for-the loan and interest on the $1,200 in monthly installments. The action was commenced on the 9th day of March, 1899: ' The complaint alleges that the member defaulted in all monthly payments after October 3,1898, down to and including March 3,1899, but. that he paid the monthly payments of $12 each for the months of August,. September and October, 1898; that plaintiff has elected, pursuant to the assignment, to, and has declared said assignment of stock absolute, and has canceled the shares and appropriated all credits thereto upon the amounts due on the loan; that plaintiff advanced $400 on the loan, for which amount, together with interest, dues and premium on the whole amount secured by the mortgage plaintiff demands judgment. The answer denies that plaintiff advanced $400. This issue of fact was properly presented and fully litigated upon the trial, and we find no error in that regard. The defendant Jacob Smith received checks from the association payable to his, order for the full amount of $400. One of these checks was for the sum of $186.39. The evidence shows that this check was delivered to him at the office of plaintiff's attorney on the 1st day of September, 1898, and that he indorsed and redelivered it to plaintiff's representative as requested. It was conceded by the pleadings and on the trial that of this amount the sum of $66.39 was a proper charge against the member for legitimate expenses, of procuring the loan and for dues, interest and premium on the loan for the first three months. The court has found that the remainder of the proceeds of this, check, being the sum of $120, was never delivered to the member. This finding is warranted by the evidence, and if the issue had been properly presented it might have defeated a foreclosure at this time, for it thus appears that the plaintiff retained from the loan more than sufficient to pay all that became due or owing to the plaintiff from the defendant, Jacob Smith, prior to the commencement of the action: but inasmuch as the trial court has seen fit to decree a foreclosure and the defendants have not appealed, that question is not presented. The decision was made as of October 12,1899, and the amount found due thereby for principal and interest is $311.70. The court, in its discretion, evidently on account of the fact that a large part of the loan was wrongfully withheld, awarded costs to the defendant. The balance thus found due and owing to the plaintiff is somewhat inaccurate owing to an error in the method of computing the same. The court did not allow plaintiff for the $36 deducted in advance from the check for $186.39, on account of dues, interest and premium for the months of August, September and October, 1898, but the propriety of this charge was conceded by the pleadings and admitted on the trial. The court also figured on eleven shares of stock, but there were in fact twelve shares. The complaint does not allege on what date plaintiff elected to declare a forfeiture of the shares, nor was any proof made on that subject, but we think it may be fairly inferred from the allegations of the complaint and the time of commencing the action that the forfeiture was declared as of the 3d day of March, 1899. The rights of the parties under the contracts must be determined as they existed on that day, in view of the action taken in declaring the forfeiture. Having declared a forfeiture of the stock, the association could no longer justly claim dues or premiums thereon, and having elected to reduce the loan to the amount advanced thereon and to terminate" its liability to pay interest on the $800 mortgage, or to pay the principal thereof, it could no longer collect interest on that amount! The $36 deducted from the loan paid the plaintiff in full to October 3, 1898. On the 3d day of •March, 1899, there was due and owing to plaintiff five monthly installments of $9 each for interest and premium on the $1,200, which, on that day, together with interest on each installment from the time it became due, aggregated $45.45. There was then also due and owing to plaintiff $3 for dues on said shares of stock which fell due on the 3d day of November, 1898, and $3 which fell due on the 3d day of December, 1898, together with interest thereon, aggregating $6.11. The dues subsequent to December 3,1898, were expressly waived on the trial. Plaintiff advanced to defendant on the loan the sum of $280, which, together with the amount of dues, interest and premium, as. hereinbefore stated, aggregated. $331.56. From this amount should be deducted $3.66, the interest to March 3,1899, on the $120 unjustly retained by plaintiff, leaving a balance of $327.90, from which should also be deducted $10, the accrued interest on the mortgage for $800. which equity requires, should be deducted since plaintiff is allowed interest on the whole • amount of $1,200 to March 3, 1899, leaving as a balance $317.90 due and owing to plaintiff by the defendant, Jacob Smith, on the 3d day of March, 1899, on account of said loan. The interest on this amount to the date of the decision is $11.60. It thus appears that there was owing to the plaintiff at the time of the decision the sum of $329.50 instead of $311.70, as found in the decision, which indicates an error of $17.80 to the prejudice of plaintiff, but if the defendant shall stipulate that.t-his correction may be made, there will be no .necessity for a new trial. If, therefore, defendant shall stipulate within ten days after service of a copy of the order herein that the amount found due and owing to the plaintiff, by the decision of the court and-the judgment entered thereon, may be increased by $17.80, as of the date of entry of the judgment, the judgment shall be so modified, and as thus modified affirmed, without costs of this appeal to either party, and defendant shall be given thirty days in which to pay the amount due, in default of which plaintiff shall have judgment of foreclosure and sale; but if defendant shall not so stipulate, then the judgment is reversed and a new trial granted, with costs to appellant to abide the event. All concurred.