Court Opinion

ID: 5226233
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:45:30.898789+00
Date Added: 2024-06-11T08:27:35.632729
License: Public Domain

McLaughlin, J. :
It is unnecessary to state the facts since they are set forth in the opinion of Mr. Justice Laughlin. The authorities there cited, as it seems to me, when applied to the conceded facts, require an affirmance of the order. The trustee in bankruptcy is entitled to know just how much there is due upon the first mortgage, otherwise he is not in a position to bid intelligently at the sale. It is alleged that while the first mortgage is nominally for $300,000, it is in fact for, and there is only due, $260,000. Under such circumstances, the action being in equity, the court was justified in requiring the plaintiff to bring in the Hudson Mortgage Company, to the end that the whole controversy respecting the liens upon the land in question might be settled. I do not see how full and complete justice can be done to all of the parties unless this course be adopted.
In Sutherland v. Lake Superior, etc., Co. (1 Cent. L. J. 127) the court, speaking of the propriety of making a prior lienor a party, said: “It is not enough that a court of equity causes nothing but the interest of the proper party to change owners. Its decree should terminate and not instigate litigation. Its sales should tempt men to sober investments and not to wild speculations. Its process should act upon known and definite interests and not upon such as admit of no medium of estimation. It has the means of reducing every right to certainty and precision and is, therefore, bound to employ those means in the exercise of its jurisdiction.” While this case was reversed in the United States Supreme Court (sub nom. Jerome v. McCarter, 94 U. S. 734), on the ground that the *142facts, as found, did not show the existence of any doubts concerning the validity and extent of the prior liens, nevertheless it approved of the rule, saying: “And so, when there is substantial doubt respecting the amount of the debts due prior hen creditors, there is obvious propriety in making them parties that the amount of the charge remaining on the land after the sale may be determined, and that purchasers at the sale may be advised of what they are purchasing.”
To permit a sale so long as the amount due on alleged prior liens remains uncertain is to deprive would-be purchasers of knowledge enabling them to bid intelligently; in other words, if the trustee in bankruptcy, in order to protect his lien, bids at the sale, he must either assume that there is due the Hudson Mortgage Company $300,000, or else take his chances in subsequent litigation having for its object the reduction of that lien to $260,000. This is a position which a court of equity ought not to compel him to take. Hull justice can be meted out to all of the parties by requiring the Hudson Mortgage Company to be brought in as a patty defendant to this action. The rights, interests and equities of all of the parties claiming an interest in the mortgaged premises, and the respective, priority, of their liens thereon, should be settled and , determined, before any judgment of foreclosure and. sale, is .entered. (Commercial. Trust Co. v. Peck, 135 App. Div. 732; Metropolitan Trust Co., v. Tonawanda, etc., R. R. Co. 43 Hun, .521; affd. on opinion below, 106 N. Y. 673.) Otherwise the sale becomes a mere speculation both as tq what is spld. nnd vfhqt is purchased. , The foregoing views aro in no Yf&j, m conflict wiftl wbaf, Wfts; held in Jacobie v. Mickle (144 237),; Brush v. Levy (54 App. Div. 296), and Lester v. Seiliere,..,(50 id. 339).; , In. the, Jacobie case the holder ,qf a .prior mortgage Wjas:m.adp..a.party defendant and the ^qmplamt, alleged the existence of ¡speh prior mortgage and in,the.fprayer for .relief, asked that the¡anrqrm.t.. due thereon be a^r|^ed;..of. sale. The owner, of the prior mortgage enffgrect default. The j udginent rendered jfollowed, the prayer, for; relief, .and s.if, w^-s,, held that the holder .of ¿the prior mortgage was conclud ed by the judgment and could, .not, thereafter "’^maintain ¡an,,action,, tq., foreclose his mortgage., ... , ... . . *143In the Brush ease the: action was brought to annul a lease made by plaintiff to defendant upon the latter’s alleged false representation that she had acquired title to a prior lease of the premises covering a portion of the demised term. It was held that the prior lessee Would not be made a party against the will of the plaintiff. in order to allow the defendant to litigate differences arising between her and such prior lessee as to what rights defendant took under a bill of sale and sub-lease executed to her by the prior lessee, in which the plaintiff had no interest, All that was held in the Lester case was that where adjoining parcels of land, owned by different persons, were occupied as a single parcel for hotel purposes, and the department of public works furnished water to the hotel with the knowledge of the different owners, the charge for which became a hen on the entire property, the owner of one parcel might, without first paying the entire charge, maintain an action in equity against the owners of the other parcels to obtain an apportionment thereof.
The order appealed from is right and should be affirmed, with ten dollars costs and disbursements.
Clarke and Scott, JJ.,. concurred; Ingraham, P. J., and Laughlin, J., dissented. .