Court Opinion

ID: 5475496
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:54:06.528074+00
Date Added: 2024-06-11T08:33:28.547277
License: Public Domain

Ingraham, P. J.
Where the title to premises sold under foreclosure of a mortgage proves defective, there can be no doubt but that the purchaser is entitled to a return of the ten per cent paid by him on the purchase; as well as the expenses he has been put to in examining the title and interest on his deposit. The money paid to the referee is so paid as a deposit to insure the completion of the contract, and the referee has no right to use it for the expenses until the sale is completed. The referee has no claim on it for his expenses or fees, and must return it to the purchaser in full. He, however, is not liable for the auctioneer’s fees or interest. They must be obtained in some other way. Where the defect in the title existed previous to the foreclosure, and the property is afterward sold subject thereto, if there should be *442a surplus, there is no reason why such expenses and interest should not be paid out of the surplus money. The fault is not chargeable either to the purchaser or the plaintiff. In such a case the expenses of the first sale of the purchaser should be paid in the first instance out of the purchase-money on the second sale. The purchaser is protected because he cannot receive what was agreed to be sold, and the referee should be protected because, as an officer of the court, he has been acting under its direction.
"Where, however, the defect in the title is caused by the negligence of the plaintiff or his attorney, there is some doubt as to the propriety of throwing such expenses on the owner of the equity of redemption.
In Morris v. Mowatt (2 Paige, 586), which case the justice who made the order appealed from said was not applicable, the defect was in omitting to make judgment creditors parties, and in consequence the lien of the judgments remained.
The chancellor discharged the purchaser and ordered the costs and expenses to be paid out of the surplus. He said, “ as all parties have acted in perfect good faith in relation to this sale, the expenses must be paid out of the fund hereafter to be raised if a second sale takes place.” If no other way is "provided for the payment, the charge must fall on the complainant personally.
In the present case the defect was in not making the receiver of the bank a party. The equity of redemption was in him as receiver. Ho reason is given why he was not made a party. Probably when the action was commenced his appointment was unknown.
I see no difference in these cases. It was necessary that an application to the court should be made to add these parties, and, if so, the plaintiff should have been required to pay these costs as a condition of allowing the amendment. If the order was ex parte, the defendant should have moved the court to make such payment a condition of the amendment. If we follow the case in 2 Paige, this motion should have *443been granted, and the referee’s expenses and those of the purchaser over and above the deposit should be paid out of the surplus moneys.
If the receiver thinks the plaintiff should pay these expenses he may move the court for such an order. That relief cannot be given on this motion.
The order should be reversed and the motion granted, with costs, and without prejudice to a motion by the receiver to compel the plaintiff to refund such moneys, if he is so advised.
Order reversed.