Court Opinion

ID: 5481841
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:57:35.995912+00
Date Added: 2024-06-11T08:33:37.687900
License: Public Domain

Froessel, J.
(dissenting). This is an action to foreclose a mortgage on real property. The answer pleads the defense of the Statute of Limitations and by way of counterclaim seeks affirmative relief canceling the mortgage sought to be foreclosed. The Official Referee who heard and determined the matter held that the statute operated as a bar. A unanimous Appellate Division reversed, made additional findings, and granted plaintiff judgment. The facts are virtually undisputed.
Defendant Essa Shohfi and plaintiff are husband and wife. They were married in 1911. On December 29,1925, she acquired title to the property in suit in her own name. On January 23, 1929, she conveyed said property to her husband, taking back a bond and purchase-money second mortgage for $10,000. In prior litigation between the parties this was held to be part of “an equitable exchange ”. At the time, the property was also incumbered with a first mortgage of $13,500, reduced by payments to $12,000. The husband paid interest on the purchase-money mortgage to and including July 23, 1933. Instead of paying the principal and the remaining six months’ interest, *378both of which became due on January 23, 1934, during the depth of the economic depression, he reconveyed the property to his wife, subject to the first mortgage of $12,000 and said purchase-money mortgage of $10,000, the deed providing that the second mortgage was not to merge in the fee. On the basis of those documents, she was a mortgagee in possession.
The wife was undisturbed by the husband in that possession and ownership of both mortgage and fee titles until February 20, 1947, when he instituted an action claiming that he owned a half interest in the fee of said property, and thus acknowledged that she owned the other half. For reasons which do not appear in the record before us, the Official Beferee in said action, on a theory quite different from that pleaded in the husband’s complaint, but which is not reviewable here, and after finding that “ both have been in error in their testimony ”, directed the wife to convey her whole interest to him, “ subject to the purchase money mortgage of $10,000.00 ”, and to account for the income.
An interlocutory judgment was thereupon entered providing that the husband was entitled to have said premises reconveyed “ subject only to the mortgage ” now sought to be foreclosed, adding the following language which does not appear in the decision: “ no adjudication being made as to the amount, if any, due or owing upon said mortgage ” (emphasis supplied). It further directed the wife to deliver a deed to said premises “ subject to free and clear [sic] of all encumbrances except the said mortgage ”, and to account for “ the rents, issues and profits ”. It should be noted that the wife in the meantime had paid off the first mortgage of $12,000. She thereupon delivered the deed accordingly, “ subject to ” said $10,000 mortgage. On the subsequent accounting, the Official Beferee declined to pass upon the credit sought for interest and amortization on said mortgage upon the ground that no such question was before him, concluding with the significant statement: “ Moreover, the judgment entered herein, which expressly stated that no adjudication was made as to the amount due and owing on this mortgage, directed that the reconveyance be subject to the mortgage and the deed executed pursuant to the judgment stated that it is subject to this mortgage for $10,000.00.” (Emphasis supplied.)
*379Final judgment was entered accordingly. No appeal was taken by either party from the interlocutory, judgment, and the husband alone appealed unsuccessfully from another branch of the final judgment which is not material here (276 App. Div. 869).
Under these circumstances, we are of the opinion that the unanimous determination of the Appellate Division below was correct in this case. As we read both opinions and both the interlocutory and final judgments of Judge Close in the prior action, the validity,of the mortgage in question was recognized, and only the amount due or owing was left open. It is quite apparent that in respect of this property he intended to restore the parties to their 1934 position, before the husband reconveyed to the wife, so that he would have the fee title and she the mortgage, less any amount paid thereon.
The Statute of Limitations affords no presumption of payment ; it does not destroy the obligation nor render it illegal or otherwise invalid (Hulbert v. Clark, 128 N. Y. 295). Nor does it affect the amount due or owing, which amount is undisputed here and is the only matter left open in the prior litigation. The statute merely bars the remedy in appropriate situations and is not operative if waived, if the debt be acknowledged, or if defendant’s conduct estop him from relying thereon.
In the prior action the husband did not question the validity of this mortgage. The court did not declare it invalid or unenforcible. By accepting the deed, as grantee, subject to the mortgage pursuant to the judgment in his own action, the husband, who had personally made this mortgage, acknowledged the unpaid indebtedness, which is all the wife now seeks. As already noted, his failure to appeal to correct the direction that he take subject to the mortgage, if he felt himself aggrieved, must be deemed consent thereto. Consent or acquiescence is not involuntariness. Nothing turns on the circumstance that he acquired title through a judgment rather than by a direct purchase from an individual seller (Cottle v. County of Erie, 57 App. Div. 443, 448-450, affd. 173 N. Y. 591; Horton v. Davis, 26 N. Y. 495; Central Nat. Bank v. Hazard, 30 F. 484).
We have repeatedly asserted and held that a grantee may not question the validity of a mortgage to which he specifically takes subject in a deed (Freeman v. Auld, 44 N. Y. 50; Bennett v. Bates, 94 N. Y. 354; McConihe v. Fales, 107 N. Y. 404; Wilson *380v. Ford, 209 N. Y. 186, 200; Matter of Oakes, 248 N. Y. 280 [see p. 284 for comment on Bennett v. Bates, supra, and Purdy v. Coar, infra]; Purdy v. Coar, 109 N. Y. 448; Cottle v. County of Erie, supra; Morrill Realty Corp. v. Rayon Holding Corp., 254 N. Y. 268, 275 [see pp. 275-276 for comment on Bennett v. Bates and Purdy v. Coar, supra]; Horton v. Davis, supra). Clearly the intention of the wife in making the 1948 transfer to her husband was not to convey the entire interest in the property, but to subject it to the $10,000 mortgage, and any other view would disregard reality. The court so decreed. The husband acquiesced in the judgment and accepted the deed expressly subject to this particular mortgage. No rights of third parties had intervened. Accordingly, the doctrine asserted and applied in the cited cases is clearly applicable here.
Moreover, the principle of estoppel, referred to in the foregoing cases, applies with special force under the facts disclosed by this record, and as found by the trial court and the Appellate Division. As already noted, for thirteen years the husband permitted his wife to remain unmolested in her possession and ownership of both fee and mortgage, and with respect to any accounting. Surely, under these circumstances, and during this period, she could not be expected to go through the idle ceremony of paying interest to herself, or to foreclose a mortgage to obtain a fee title which she already had. In 1947, he acknowledged her ownership, in writing and under oath, to the extent of a one-half interest, did not question this mortgage, and claimed that she was to hold the property ‘ ‘ for the benefit of both ’ ’. As owner or co-owner, as well as mortgagee, she could agree to waive the interest on her own mortgage, as she alleged in her complaint she did, and as defendant expressly admits in his answer. In the light of the husband’s solemn written verified acknowledgment of her co-ownership, and the wife’s election as such co-owner and mortgagee to waive the interest, we have what to all intents and purposes is tantamount to payment of at least one half the interest if not the whole, to the date of said acknowledgment, the verification date of his complaint in the prior action, to wit: February 20, 1947. This action was commenced December 12,1949.
After the institution of the 1947 action, and during the trial thereof, defendant reversed his position; for the first time he *381claimed full ownership and that plaintiff was merely his managing agent. In the meantime the $12,000 mortgage had been paid off, and, by concealing his real position for all these years, he sought to defeat the second mortgage by the Statute of Limitations. He would thus secure return of the property, free and clear of $22,000 of mortgage incumbrances, subject to which he had conveyed to his wife. To allow this claim to prevail would, to say the least, put a premium upon the husband’s vacillating and dilatory behavior. Surely the wife could not know that she was his managing agent between 1934 and 1947 when the husband himself did not know or assert it until 1947 or 1948, and indeed claimed the contrary as late as 1947. Under these circumstances a clear case of estoppel was made out.
While the precise situation before us does not seem to have been presented to our court before, and we are not unmindful of the fact that the Statute of Limitations is not open to discretionary change by the courts, the prevailing rule throughout the country and followed in our lower courts permits the doctrine of estoppel to be invoked in appropriate cases, by reason of defendant’s conduct, to prevent him from relying on said statute (53 C. J. S., Limitation of Actions, § 25, and cases therein cited; Clarke v. Gilmore, 149 App. Div. 445; Dodds v. McColgan, 229 App. Div. 273; Speciale v. Sciascia, 263 App. Div. 901; Safrin v. Friedman, 96 N. Y. S. 2d 627, affd. 277 App. Div. 1138; see, also, Lightfoot v. Davis, 198 N. Y. 261; Imperator Realty Co. v. Tull, 228 N. Y. 447; Freeman v. Auld, McConihe v. Fales, Wilson v. Ford, Purdy v. Coar, Horton v. Davis, Cottle v. County of Erie, cited supra). And an estoppel in pais, like an estoppel of record, need not be pleaded (Feinberg v. Allen, 208 N. Y. 215).
The principle of equitable estoppel4 ‘ prohibits a person, upon principles of honesty and fair and open dealing, from asserting rights, the enforcement of which would, through his omissions or commissions, work fraud and injustice ” (Rothschild v. Title Guar. & Trust Co., 204 N. Y. 458, 464; Selzer v. Baker, 295 N. Y. 145, 149; 3 Pomeroy on Equity Jurisprudence [5th ed.], p. 180, see, also, §§ 816-821, 965; Gorowits v. Blumenstein, 184 Misc. 111. “ The plaintiff [defendant here] seeks the aid of equity and must submit to the condition that he do equity himself ’ ’; Grosch v. Kessler, 256 N. Y. 477, 478).
*382Finally, even if the findings of fact made below with respect to estoppel were inadequate, as appellant contends, we are nevertheless justified, for the purpose of affirming (but not of reversing) the judgment appealed from, to look to the record to see if there is any evidence to sustain plaintiff’s case (see Helgar Corp. v. Warner’s Features, 222 N. Y. 449, 455; Ogden v. Alexander, 140 N. Y. 356), and we find that there is such evidence.
The judgment of the Appellate Division should be affirmed, with costs.
Lewis, Dye and Fuld, JJ., concur with Loughran, Ch. J.; Froessel, J., dissents in opinion in which Conway and Desmond, JJ., concur.
Judgment accordingly. [See 303 N. Y. 902.]