Court Opinion

ID: 5483277
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:02:02.267061+00
Date Added: 2024-06-11T08:33:38.962303
License: Public Domain

Dye, J.
In this condemnation proceeding instituted by the City of New York to acquire title to certain lands necessary for Harlem Eiver Drive, so-called, the claimants, Jay Coogan, Gardiner Coogan and Sarah Jessie Coogan appeal by permission of this court from an order of the Appellate Division, First Department, which unanimously affirmed an order of the Supreme Court, New York County, adjudicating that claimant-respondent, Alfred J. Bohlinger, Superintendent of Insurance of the State of New York, as Liquidator of the New York Title and Mortgage Company, is the owner in fee simple absolute of certain damage parcels involved in the proceeding and therefore entitled to the condemnation award therein.
The appellant, Jay Coogan, appeals from the aforesaid order insofar as it determines the ownership of damage parcels 2, 3 and 6 while the appellants, Gardiner Coogan and Sarah Jessie Coogan appeal from the order only insofar as it determines the title to damage parcel 6. The damage parcels in question are shown on the City’s Exhibit 10 as damage parcels 2, 3 and 6 and consist of property lying in the block between West 155th Street and West 156th Street, Eight Avenue and Harlem Eiver Drive — ■ damage parcel 6 being the bulkhead rights along the river.
When the proceeding was instituted both the Superintendent of Insurance and the Coogans made claim to ownership of the property in question, the Superintendent claiming damage parcels 2, 3 and 6 among others not involved in this proceeding, the appellants, Jay Coogan, Gardiner Coogan and Sarah Jessie Coogan claiming title to damage parcel 6 and appellant Jay Coogan also claiming title to damage parcels 2 and 3.
The claim of Jay Coogan originally included damage parcels 4 and 5 as well, title to which is claimed by the city. At the trial, however, it was agreed to leave the determination of title to damage parcels 4 and 5 to the time of fixation of the award.
Up to 1919, Harriet J. Coogan, the mother of the appellants, Avas the undisputed owner of damage parcels 2, 3 and 6 and of adjoining property. In 1919, the Eighth Avenue Eailroad Company (hereinafter “ Eailroad ”) instituted a condemnation proceeding to obtain title to damage parcels 2, 3 and 6 for use as a power plant and a car barn. An order was entered granting Mrs. Coogan the sum of $439,762.20 for the property. The *452Railroad then entered into possession of the premises and used them for railway purposes until May 31, 1935, when it ceased operations by order of the Federal District Court.
While in possession the Railroad executed certain instruments affecting the property as follows:
At the time of the condemnation order it gave a mortgage; for the sum of $280,000 to the Columbia Trust Company, purporting to cover the fee of the property. Thereafter, in December, 1926, the Railroad attempted to convey the fee by full covenant and warranty deed to Railways Realty Corporation.. Railways Realty at this time executed a $150,000 purchase-money second mortgage of the fee to the Railroad and the entire premises were then leased by Railways Realty to the Railroad.
In May, 1932, the Irving Trust Company, successor to the Columbia Trust Company, assigned the $280,000 original mortgage to the New York Title and Mortgage Company and in August, 1933, the title company was placed in rehabilitation by order of the Supreme Court. A subsequent order dated July 15, 1935, directed the Superintendent of Insurance to liquidate it.
As previously noted, the Railroad ceased operations on May 31, 1935. Thereafter, on June 10, 1936, the Superintendent of Insurance entered into possession on an assignment of rents and profits, so-called, from Railways Realty and on December 18, 1936, the Superintendent, for $52,002.95, purchased a tax lien from the City of New York covering, among others, the: present damage parcels 2 and 3 but not damage parcel 6, the bulkhead rights along the Harlem River. The taxes covered, by the lien had, we assume, accrued prior to the Superintendent’s entry.
In 1939, the Superintendent commenced an action to foreclose (1) the original mortgage made by the Railroad to the Columbia Trust Company, and (2) the tax lien purchased from the city. Mrs. Coogan was named a party defendant and appeared therein by her attorneys but filed no answer. Judgment of foreclosure and sale was executed and a referee’s deed given to the Superintendent on March 5, 1941.
The Superintendent’s present claim to a valid fee title is based upon: (1) the 1919 condemnation as successor in interest to the Railroad; (2) the foreclosure of the mortgage made by *453the Railroad to Columbia Trust Company; (3) the foreclosure of the tax lien, and (4) adverse possession.
The present appellants are the heirs of Mrs. Coogan. Their claim of title is based upon the following contentions: (1) that the condemnation in 1919 granted the Railroad only an easement; (2) that the mortgages given thereon were only on an easement and could not affect the fee title; (3) that the foreclosure of the tax lien did not cut off Mrs. Coogan’s title because the Superintendent, as mortgagee in possession, had no right to purchase the tax lien, and (4) that the Superintendent was not in possession adversely for the period required by section 37 of the Civil Practice Act.
Special Term sustained appellants’ first two contentions but held that (a) the foreclosure of the tax lien cut off Mrs. Coogan’s title as to damage parcels 2 and 3; and (b) that, in any event, the Superintendent of Insurance and his predecessors in title had been in adverse possession for longer than the statutory period. An order determining title to be in the Superintendent was accordingly entered and, as previously noted, has been affirmed in the court below.-
Under subdivision 2 of section 8 of the Railroad Law, in substance in effect at the time of the condemnation proceeding in 1919, the land acquired by the Railroad in that proceeding was to be “ held and used only for the purposes of the corporation during the continuance of the corporate existence ”. This has been construed as granting a railroad only an easement in property taken by condemnation which terminates when the railroad ceases operation and abandons the use of the property (Miner v. New York Central & H. R. R. R. Co., 123 N. Y. 242; Roby v. New York Central & H. R. R. R. Co., 142 N. Y. 176; Hudson & Manhattan R. R. Co. v. Wendel, 193 N. Y. 166), and the Railroad could accordingly convey or mortgage only its interest in the property.
In 1939, however, the Superintendent foreclosed the tax lien on parcels 2 and 3 which he had acquired in 1936, six months after entering into possession. Mrs. Coogan was served in that action and appeared therein by competent counsel but did not answer or move with respect to the rights she now asserts in the property. Under ordinary principles of res judicata, the *454heirs of Mrs. Coogan are barred from asserting a claim their predecessor in title could have made then regarding the validity of the tax foreclosure and their interest in the property (Goebel v. Iffla, 111 N. Y. 170; Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N. Y. 304).
On the merits as well, Coogan’s present claim in respect to the tax foreclosure does not appear to be well taken. It is contended that the Superintendent, as a mortgagee in possession, was under a fiduciary obligation to pay the taxes and could not therefore purchase a tax lien or foreclose thereon. To this there are two answers.
Under Ten Eyck v. Craig (62 N. Y. 406), relied on by the appellants, the most a mortgagee in possession is required to do is to pay taxes out of the income of the property. He need advance no money of his own. Here the proof shows that the Superintendent did not go into possession until June, 1936. Less than seven months after that and while the income derived from the property was negligible, the city auctioned off the unpaid tax lien. The Superintendent thus was forced to purchase the tax lien out of other moneys in order to protect his interest in the property. While appellants argue that the Superintendent eventually received sufficient income from the property to pay off this amount, the record indicates that, from 1936 when the Superintendent took possession until 1952 when the city took title, the property had a net deficit of $98,138.71.
Furthermore, according to appellant’s own theory, the mortgage was — at most — a mortgage upon an easement. Under such a view, the Superintendent’s fiduciary obligation, if any, would, as we see it, extend only to the mortgagor and not to the owner of the reversion, the Coogans, strangers to the mortgage.
Finally, if the mortgage became a nullity in 1935 when the railroad ceased operations, then the Superintendent was not a mortgagee in possession when he purchased the tax lien and he accordingly had every right to purchase the lien on foreclosure.
This brings us to the question of the effect of the railroad’s ceasing operations in 1935 and the Superintendent’s claim to title by adverse possession. This claim affects all three parcels of land while the tax lien foreclosure determination only affects title to parcels 2 and 3. Accordingly, the Superintendent’s *455claim to title to damage parcel 6, the bulkhead rights, must depend on this ground alone.
As previously noted, the fee title remained in Mrs. Coogan after the 1919 condemnation, the Railroad acquiring only an easement therein which, by statute, was good only while the land was “ held and used * * * for the purposes of the corporation during the continuance of the corporate existence ” (Railroad Law, § 8, subd. 2). Accordingly, as long as the Railroad was in existence and continued to use the property for railway purposes, it was in possession in subordination to Mrs. Coogan’s title and could not be adverse even though it was mistakenly claiming title to the fee in hostility to the Coogans (Lewis v. New York & Harlem R. R. Co., 162 N. Y. 202; Kip v. New York Central R. R. Co., 260 N. Y. 692, affg. 236 App. Div. 654, affg. 140 Misc. 62).
However, on May 31, 1935, the Railroad ceased operations by court order and its physical property was sold. The parties have, in fact, stipulated that damage parcels 2, 3 and 6 ceased being used for railroad purposes on that date. The Coogans were thus entitled on that date to take possession of the property (Heard v. City of Brooklyn, 60 N. Y. 242; Miner v. New York Central & H. R. R. R. Co., 123 N. Y. 242, supra; Roby v. New York Central & H. R. R. R. Co., 142 N. Y. 176, supra). Having failed to do so for longer than the statutory period of fifteen years (Civ. Prac. Act, §§ 37, 39), it follows that they are bound by the adverse possession of the Superintendent and his predecessors in title.
Appellants rely on Roby v. New York Central & H. R. R. R. Co. (supra) in support of their claim that their right to re-enter did not accrue until they had actual notice that the railroad had ceased using the property. That case is not, however, authority for that proposition and the holding there is only that in that case there was no showing that the railroad had abandoned its use of the property for a public purpose. Here, however, the proof shows that the Railroad ceased operations and its assets were ordered sold on May 31, 1935. „
Finally, it appears that the Superintendent himself occupied the property adversely to the Coogans for more than fifteen years after the railroad ceased operations. The Superintendent came into possession in June, 1936, and operated and rented *456it. While his possession was originally with consent of Railways Realty which claimed a fee title to the premises, it was hostile to the claim of the appellants as the Superintendent claimed possession as a mortgagee of the fee. While it was probably true that the Railroad could not properly give such a mortgage, this did not affect the right of the Superintendent, who claimed, under a written instrument, to hold adversely to the Coogans (Civ. Prac. Act, § 37). To hold otherwise would, in effect, make it impossible to establish adverse possession upon the basis of a written instrument if it developed that the grantor’s title was less than a fee. Here the Superintendent and his predecessors in title, Railways Realty, had been in open, notorious, continuous and exclusive possession of the property since 1935, when the railroad ceased operations, claiming an absolute right thereto based upon written instruments.
The order appealed from should be affirmed, with costs.