Court Opinion

ID: 5226234
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:45:30.903031+00
Date Added: 2024-06-11T08:27:35.634472
License: Public Domain

Laughlin, J. (dissenting):
This action was commenced in the month of December, 1911, to foreclose a third mortgage on premises known as Nos. 127-131 West Twenty-fifth street, borough of Manhattan, New York. The' Hudson Mortgage-Company, which the order requires the plaintiff to bring in as a party, is the owner and holder of a first mortgage, which was given to secure a building loan, and on its face it is for $300,060. Prentice, as receiver and trustee in bankruptcy, is the owner and holder of a fifth mortgage, given to the bankrupt to secure the payment of $13,000, and his object in applying for the order was to have the amount secured by the first mortgage, which he contests, determined in this action, to the -end that the bidders at the foreclosure sale will know precisely the. amount of the lens subject to which the property is to be sold.
*144The moving papers show, among other things, that the Hudson Mortgage Company brought an action, which is still pending, for the-foreclosure of its mortgage, alleging that the whole amount thereof was due and unpaid; that in that action an answer was interposed by this plaintiff, or one Wood, her assignor, through the attorney who. appears for the plaintiff in this action, claiming that the mortgage of the plaintiff in that action was a building loan mortgage, and that only the sum of $260,000 had been advanced thereon, and that, therefore, it was a lien only for that amount; that upon this partial defense being interposed, that action was allowed to stand, and was not brought to trial or noticed for trial until the October term, 1912; that Wood owned a second mortgage on the premises, of . which there remains due and unpaid $21,575, and interest from June 12, 1911, and the mortgage, to foreclose which this action is brought, upon which there is due and unpaid the sum of $20,000 and interest from the same date, and the fourth mortgage, upon which there is due and unpaid, with interest from the same date, the sum of $5,000; that he brought an action to foreclose the second mortgage, which evidently is still pending, and that in order not to bring two foreclosure actions in his own name he assigned the mortgage which is the third lien on the premises to the plaintiff, who was his stenographer, and evidently had no interest therein; that if a judgment of foreclosure and sale should be decreed herein, without bringing in the Hudson Mortgage Company and determining the amount of its lien, the bidders will be obliged to assume that the amount of said mortgage may be established at its face, whereas it may be subsequently decided, in the action to foreclose that mortgage, that it is a lien only to the, extent' of $260,000, in which event the purchaser on the foreclosure of this mortgage will profit by the difference; and that it is improbable that the premises will sell, subject to the Hudson •Mortgage Company’s mortgage as a $300,000 mortgage, for sufficient to enable the trustee in bankruptcy to receive any part of the indebtedness secured by the fifth mortgage, but that if the Hudson Mortgage Company is brought in as á party, and it shall be decided that its mortgage is a lien for $260,000 only, then it is probable that the premises will *145bring sufficient to pay a large part if not all of the indebtedness secured by the fifth mortgage. It does not appear otherwise than I have stated who were made parties defendant in the other foreclosure actions, but as the bankrupt or as the trustee in bankruptcy were necessary parties, it is to be presumed that they are before the court. The respondent' Prentice, as receiver and trustee, alleged in his answer that the first mortgage is a lien for only $260,000, and that after an answer was interposed in the action to foreclose it presenting that claim the plaintiff in this action, by collusion with the first mortgagee, brought this action with a view to cutting off the fifth mortgage before an adjudication could be had on that question.
It would not be proper to express an opinion with respect to the merits of the claim,, concerning the amount of the lien of the Hudson Mortgage Company’s mortgage, since that company is not before the court. Suffice it to say that the contention made in behalf of the trustee in bankruptcy appears to he made in good faith, and that the facts and circumstances, indicate that it may be well founded.
The learned counsel for the appellant contends broadly that the court is without power to compel the plaintiff to bring in the Hudson Mortgage Company, and it is further contended that the order should not have been made, even if it was within the jurisdiction of the court. It appears that the first mortgage was due, and that an action for its foreclosure was pending, which the plaintiff did not see fit to press. With the first mortgage due, if the mortgagee did not see fit to bring an action to foreclose it, or even with such an action pending a junior mortgagee on foreclosing his mortgage could make the first mortgagee a party, to the end that the property may he sold free and clear of all incumbrances or subject to the hen of the first mortgage, the amount of which would he adjudicated by the decree. (Metropolitan Trust Co. v. Tonawanda, etc., R. R. Co., 43 Hun, 521; affd., 106 N. Y. 673; Guilford v. Jacobie, 69 Hun, 420. See M'Gown v. Yerks, 6 Johns. Ch. 450; Emigrant Industrial Savings Bank v. Goldman, 75 N. Y. 127; Smith v. Roberts, 62 How. Pr. 196.) The respondent did not even ask *146to have the first mortgagee brought in with a view to having its lien satisfied,, hut only to have the attioimt thereof determined. It has been held by numerous ¡ decisions of the: Federal courts that it is proper to make the first mortgagee, a¡ party to a foreclosure of. a junior mortgage, even though his mortgage be -mot -due, for the purpose of, having - the amount of the, lien thereof i judicially determined,, to the end that bidders: may know precisely tbelámount: Of the lien, subject ; to, which they may he required- to take title: ó (Sutherland v. Lake Superior, etc., Co., 1 Cent. L. J. 127, 129, 9 Nat. Bank. Reg. 298, 305; 23 Fed. Cas. 459, No. 13,643; sub nom. Jerome v. McCarter, 94 U. S. 734; Caldwell v. Taggart, 4 Pet. 190 Parsons v. Robinson, 122 U. S. 112.) The appellant contends thatv; she is .not interested in . the: determination of the question raised by the respondent withr.esp.ect to the amount of ¡.the lien of the first mortgage, and . she ¡objects to - the delay of the trial of this action, incident to bringing in the first mortgagee: . It also, appears: that; the,attorney .for ¡the first mortgagee ¡ has;. stated, that his client objects to, and will coiitost hemg brought in to litigate the amount of its mortgage:- ..'.Theonly authority.!under our .practice for bringing in a party not named in the summons is section 452; of the Code of Civil Procedure,. which provides as Mlowgi:,rc;Thei court may determine: the ¡controversy, ¡as between the parties before it, where it can doiso without prejudice; to. the; rights Of . Others,, or by saving , their- rights;., but where a complete determination of the controversy cannot be had without the presence of other parties, the court must, direct them to be brought,,in- ■ i. And where a. .person,- nofca. party to. the action;,; has. an interest in the subject thereof,, or in real property,.-the ¡title, to? which may in. any manner he affected by the judgment,, ,©r: in: real: property for, injury ¡to which - -the ■ ¡complaint ¡demands reMef, and ¡makes application to the court to be made a party, it must direct him-to be brought in by the: proper amendment:??
Mo decision has been cited and -we have, found bone .construing these, provisions as- either requiring or authorizing the court to,-compel a ¡.plaintiff, finta, foreclosure action to bring" in a sénior mortgagee; against, ■ whom he demands .no -relief,. ,aS¡ a. party..,defendant,* ¡and, the, .weight:i of judicial - opinions; is, against such construction. (Jacobie v. Mickle, 144 N. Y. 237; *147Brush v. Levy, 54 App. Div. 296; Lester v. Seilliere, 50 id. 239.)
It follows that the order should he reversed and the motion denied.
Ingraham, P. J., concurred.
Order affirmed, with ten dollars costs and disbursements.