Court Opinion

ID: 3608079
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:53:00.627655+00
Date Added: 2024-06-11T14:07:29.951395
License: Public Domain

It is insisted that the judgment appealed from should not stand because a court of equity will not grant affirmative relief founded only on the Statute of Limitations, nor restrain the foreclosure of a mortgage for any reason without actual payment or an offer to pay the debt secured thereby.
It is a general principle that the Statute of Limitations may be used as a shield but not as a sword. The party attacked may use it to defend himself, but he cannot use it for aggressive action or as the means of getting property from the other party. Courts of equity, under ordinary circumstances, do not open their doors to a plaintiff who can produce no evidence in support of his claim for affirmative relief except the lapse of time and the Statute of Limitations.
In an early case in this court a vendee in possession of land for twenty years under a contract of sale sued in equity to compel the vendor to convey the legal title to him. While he alleged payment of the purchase money, he proved payment only of the first installment and relied on the presumption raised by the statute to enable him to get the land without payment of the balance. Thus he attempted to get property *Page 461 
without paying for it and his complaint was dismissed for want of equity. (Morey v. Farmers' Loan  Trust Co., 14 N.Y. 302.)
Lawrence v. Ball, reported in the same volume at page 477, was a similar case resulting in the same way.
These cases were followed and made the basis of the judgment rendered in Johnson v. Albany  Susquehanna R.R. Co. (54 N.Y. 416), where one Edgerton, after subscribing for twenty shares of the defendant's stock at the price of $2,000, paid $1,000 but did not pay five calls for installments of two hundred dollars each for the balance and an action was brought against him therefor. He interposed as a defense the Statute of Limitations, which was held good as to four installments, but judgment was entered against him for the last, which he paid. His assignee then brought an action to compel the defendant to issue its certificate for the twenty shares subscribed for, although eight of them had not in fact been paid for. He relied wholly on the presumption of payment arising from the statute, but was defeated upon the ground that such presumption was designed simply as a defensive weapon, or as a shield against attack and not as a method of acquiring property through affirmative action.
Matter of Willett (70 N.Y. 490) was similar in principle and was decided substantially without argument on the authorities already referred to. Other cases might be cited to the same effect but the foregoing are sufficient to show that while the statute may be used to defend, it cannot be used to attack, or to enable one person to take away the property of another by means thereof.
If the object of this action is to obtain affirmative relief simply, it should fail; but is that its real purpose? What are the facts? A mortgage for $400 on a farm worth $1,000 was allowed to run with no effort to collect it from October 13th, 1874, when the last payment fell due, until May 11th, 1895, when the mortgagor died, and yet seven years longer until the mortgagee died, and one year longer still when his administrator began a foreclosure by advertisement, claiming the *Page 462 
amount unpaid to be $938.75, which with the costs would equal the value of the property. Both mortgagor and mortgagee lived in the same county, yet the mortgagee allowed more than twenty years to elapse after the mortgage became due before the mortgagor died, and although he survived him seven years, he never attempted to collect the mortgage in any way. More than twenty-eight years had passed before the proceeding to foreclose was begun. If the administrator had sued the bond at law, or had commenced to foreclose the mortgage in equity, the Statute of Limitations could have been pleaded as an absolute defense. Perhaps for this reason he kept out of court altogether and sought to enforce the mortgage through the power of sale contained therein. What was the heir of the mortgagor to do under these circumstances in order to defend himself? He had not commenced the attack. The administrator was the aggressor, although doubtless from prudential motives he did not go into court. Nearly a generation had gone by since the last payment fell due. All the parties to the original transaction had passed away. The witnesses presumed to know whether the mortgage had been paid or not were dead, or incompetent to testify. There was no way to defend against the statutory foreclosure, directly, yet if the sale took place what would be the result? The statute provides that a sale "to a purchaser in good faith is equivalent to a sale pursuant to judgment in an action to foreclose a mortgage" in every substantial respect. (Code Civ. Pro. § 2395.) The affidavits of sale, when recorded, "are presumptive evidence of the matters of fact therein stated with respect" to the property sold. (Id. § 2398.) Thus, the proceeding to foreclose by advertisement is a substitute for a foreclosure by action and has the same effect so far as any question now before us is concerned. (Jackson v.Henry, 10 Johns. 184; Tuthill v. Tracy, 31 N.Y. 157.) It was simply another form of foreclosure resorted to, apparently, because no direct defense could be made thereto. Is it possible that a landowner can be deprived of his land by an attack out of court, which has the same effect as an attack in court with no opportunity *Page 463 
to defend himself? The plaintiffs were made parties to the proceeding under the statute, for notice was served upon them, yet they could not defend in the proceeding itself as the law does not authorize it. They could only defend themselves by going into court and asserting their defense there. It is true, as urged by the appellant, that they could give notice at the sale that the mortgage was outlawed, but the statute does not authorize it, yet it makes the affidavits presumptive evidence of a title equivalent to one obtained by a sale under foreclosure in equity. If a purchaser, in good faith, brought ejectment, how could the landowners defend against one form of sale any more than the other, when the statute pronounces each equivalent to the other? If they could not, the plaintiffs were without any direct means of defense against the attack made by the defendant.
But, assuming that notice given at the sale would be effective as to the purchaser, it would be no protection under the Recording Act against a grantee or mortgagee of the purchaser acting in good faith and without notice. There would be no effectual means of giving notice to them, for nothing in the nature of a lis pendens could be filed or recorded in the county clerk's office so as to notify all the world. It would be only by accident or through good fortune in learning of a proposed conveyance or mortgage that notice could be given in time, and if action was thus defeated once what assurance would there be that it could be defeated twice, or indefinitely while another generation was passing and witnesses to prove the notice were disappearing? Can one with a defense to a mortgage given him by statute be prevented from asserting it in any way, directly or indirectly, at the election of the mortgagee? Can the mortgagee by selecting one form of foreclosure or one method of attack, prevent an absolute defense given by law? Can one party to a contract control both the action and the defense?
I think that the plaintiffs did not commence this action by way of attack but simply for self-defense. With no remedy at law, bound and helpless against the attack made upon them *Page 464 
by the mere election of the defendant to foreclose by advertisement, their only means of defending themselves was to make their defense in a court of equity. Quite independently of the technical learning relating to a cloud upon title, or to the duty of paying the debt before asking affirmative relief, I think they had a right to thus defend themselves, for otherwise a mortgagee can nullify the Statute of Limitations and the mortgagor is powerless to prevent it. The plaintiffs did not go into court for affirmative relief in the ordinary meaning of that term. They did not go there to get the property of the defendant, but went solely for the purpose of defending themselves against the attack made by him. Equity looks at substance rather than form, and the substance of the matter is that the defendant was the assailant. As Chancellor KENT said in Jackson v. Henry
(10 Johns. 196): "The notice given by the advertisement is intended for the party as well as the world, and he has an opportunity to apply to chancery if he wishes to arrest the sale," in that case on the ground of usury, but is that a more equitable defense than the Statute of Limitations, so as to warrant a distinction? (Peters v. Mortimer, 4 Edw. Ch. 279.)
This is purely a defensive action, and unless the courts confess themselves unable to enforce the law, it should be sustained as the only practicable way of asserting a defense which the law gives. Ubi jus, ibi remedium, et boni judicisampliare jurisdictionem. In principle it is like an important case where the defense of the statute was made and a cloud upon title prevented by parties who went into a court of equity as plaintiffs and set up the Statute of Limitations as a defense to an attempt to sell real estate under a power contained in a will. (Butler v. Johnson, 41 Hun, 206, 210; 111 N.Y. 204, cited inO'Flynn v. Powers, 136 N.Y. 423, and Mellen v. Mellen,139 N.Y. 221.) In that case the Special Term had held that the plaintiffs were not entitled to a decree restraining the sale, because the statute was designed as a shield and could not be invoked in aid of affirmative relief. The General Term and the Court of Appeals, however, held otherwise, *Page 465 
and it was declared by Judge FOLLETT that the "action is prosecuted strictly in defense of the plaintiffs' title, seeking no affirmative relief as such against the defendant, except to prevent her from clouding their title. Suppose a statutory foreclosure of a mortgage be commenced, all rights of action being barred by the statute, would the owner of the fee be compelled to lie by and permit his title to be clouded by a sale and defend an action of ejectment brought by the purchaser? We think not. The statute of limitations may be used defensively by a plaintiff when, as in this case, he is without an adequate legal remedy."
When the case reached this court Judge PECKHAM said: "In taking proceedings under such circumstances to prevent the further action of the defendant, which would otherwise result in placing such a cloud upon the title to their property, we think the plaintiffs do not run counter to any principle or decision holding the general view that the statute of limitations can only be used as a shield and not as a sword. * * * Under such circumstances the bar of the statute is simply a defense to the affirmative and improper proceedings of the defendant, and is not an attack upon any right of a third person." The question was asked in that case whether the plaintiffs had the right to enter a court of equity and ask for an injunction to restrain the sale when the foundation of the right rested upon the proposition that there were no legal claims against the estate, and that, in turn, depended upon the barring of such claims by setting up the Statute of Limitations against them, and it was held that they could. In other words, a defensive action was sustained, founded solely on the Statute of Limitations, and that is this case.
I think the judgment should be affirmed, with costs.
GRAY, O'BRIEN and WILLARD BARTLETT, JJ., concur with CULLEN, Ch. J.; HAIGHT and WERNER, JJ., concur with VANN, J.
Judgment reversed, etc. *Page 466