Court Opinion

ID: 5186117
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:48:41.956282+00
Date Added: 2024-06-11T08:26:45.276375
License: Public Domain

Cullen, J.:
The action is brought to foreclose a mortgage executed by the defendant Mary Hendricks to the respondent, the defendant McGowan, which was transferred by the respondent to the plaintiff by a written assignment wherein the respondent covenanted that the sum of $750 was due on the mortgage and guaranteed the payment of the same. The other defendants, including the mortgagor and the owner of the equity of redemption, interposed no defense, but the respondent, against whom a judgment of deficiency was asked, answered, alleging that the original consideration of the mortgage was the sum of $500 loaned by him to the mortgagor; that the mortgagor prior to the assignment had repaid to him, the respondent, the amount of said loan, and that at the time of the assignment *462to the plaintiff the plaintiff know there was nothing due on the bond and mortgage. The issues thus raised were referred for trial, and the referee found the facts as alleged by the defendant, and rendered judgment in his favor, dismissing the complaint as against him.
We are at a loss to understand how the facts set forth in the answer constituted any defense to the plaintiff’s claim against the respondent. An assignment itself, unless limited, would constitute an implied warranty on the respondent’s part that the bond and mortgage was a valid security. Beyond this, the respondent expressly covenanted that a certain sum was due on the mortgage and guaranteed the payment of that sum. The covenants of the respondent, both express and implied, estop him from asserting the invalidity of the mortgage. Surely one who had indorsed a forged note would be liable on his indorsement. The respondent does not deny this proposition, but his claim is that though he may be liable to the plaintiff on his guaranty, that liability must be enforced in an action at law and not in this foreclosure action, because a judgment of foreclosure can be rendered only where there is a valid mortgage. It may be that if the plaintiff had failed to obtain judgment for the foreclosure of the mortgage he would have been necessarily remitted to a new action against the respondent on his guaranty. (Loeb v. Willis, 22 Hun, 508.) But the difficulty with the respondent’s claim is simply this: The plaintiff has succeeded in obtaining a judgment for the foreclosure of the mortgage because the only persons to whom the defense of the invalidity or payment of the mortgage was available, the owners of the equity of redemption or others having liens on the land, have raised no such issue. Should the plaintiff proceed in his foreclosure without seeking judgment against the respondent, he would risk the hazard of losing altogether his claim against him through a possible refusal by the court to allow him to bring a new suit. (Vanderbilt v. Schreyer, 91 N. Y. 392; Equitable Life Ins. Society v. Stevens, 63 id. 341.) It may be urged that the plaintiff may abandon his foreclosure suit and thus retain his absolute right to proceed against the respondent on his guaranty. But the plaintiff can be put to no such election. He received from the respondent what purported on its face to be a valid mortgage, and which the respondent warranted to be such. He is entitled to the benefit of both securities — the mortgage and *463the guaranty •—■ and he cannot be deprived of either, as against the respondent, because- the latter’s warranty was false.
The judgment appealed from should be reversed and a new trial granted before a new referee to be appointed at Special Term, costs to abide the final award of costs.
All concurred.
Judgment reversed and new trial granted before a new referee to be appointed at Special Term, costs to abide the final award of costs.