Court Opinion

ID: 5367808
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:56:00.117189+00
Date Added: 2024-06-11T08:29:58.514971
License: Public Domain

Untermyer, J.
(dissenting). I do not agree that the rents received from the mortgagor by the Metropolitan Life Insurance Company became its absolute property either in law or in equity. They were paid to the Metropolitan as further security for the mortgage to be used at its option only for the payment of taxes or the interest on the mortgage, or both. For any surplus that remains after payment of the taxes and any arrears of interest the Metropolitan must account.
The owner who has paid excessive taxes is entitled to the refund even after he has parted with title to the property. (Tax Law, § 296.) The taxes on which the refund is now payable were paid by the Metropolitan, as mortgagee, with funds of the relator derived from the operation of property of which the relator was the owner. The relation of the parties and the special purpose for which the fund was held constituted the Metropolitan the agent of the owner in paying the taxes. (Guaranty Trust Co. v. City of New York, 108 App. Div. 192; Ætna Ins. Co. v. Mayor, 7 id. 145; affd., 153 N. Y. 331.) Subsequently, when the Metropolitan acquired the premises from the relator for $2,500, it expressly released the relator from all arrears of interest on the mortgage. Accordingly, there is no existing indebtedness to which the refund of taxes can be applied by the Metropolitan. It is true that the Metropolitan had the option to use the funds received from the relator either in payment of taxes or the interest then due on the mortgage, but it exercised that option by applying them to the payment of the taxes and thereafter released the relator from the payment of any arrears of interest. The situation then was the same as if the relator had paid in full both the interest and the- excessive taxes and there had been a *136subsequent refund. If the taxes had been paid on the reduced assessment, there would have been a surplus applicable to the arrears of interest then due which presumably would have increased the value of the relator’s equity and might have resulted in the payment of a larger consideration for the property.
The order should be modified to the extent appealed from by the relator and affirmed on the appeal of the Metropolitan Life Insurance Company.
Order, in so far as it directed payment of part of the refund to the owner, reversed, and in all other respects affirmed. Settle order on notice.