Beach v. . Cooke

28 N.Y. 508

• Court: New York Court of Appeals
• Decided: September 5, 1863
• Status: Published

Opinions

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] It is insisted by the defendant's counsel, that the plaintiff is not a bona fide purchaser of the mortgaged premises, and for that reason is incapable of maintaining this action. It is a sufficient answer to this position to say, that there is no finding of the referee, to the effect that the purchase by the plaintiff was not made in good faith; nor did the defendant's counsel ask the referee to find any such fact. All that appears in the report on the subject, is, that on the 15th day of June, 1853, Ephraim Beach conveyed the whole of the real estate described in the mortgage, by warranty deed, to the plaintiff. We must assume, from this finding, that the conveyance was made and received in good faith, and as we can review questions of law only, and not questions of fact, we are not required to look into the evidence to ascertain whether the referee would not have been justified in finding that the conveyance was obtained by the plaintiff in bad faith. The question of good faith, however, in the sense in which it is presented here, does not appear to me to be material, provided the plaintiff has, in fact, the legal title to the land covered by the mortgage. He claims no prior equity against the defendant on the ground of being a bona fide purchaser. He stands upon his rights as the legal owner of the lands, subject to the mortgage, and if he is such legal owner, he has a right to maintain an action to compel the discharge of the mortgage if it be fully paid; or to redeem the lands from its lien if it be not paid; and it is wholly immaterial in this respect, in what manner, or for what consideration, or with what object, he acquired the title. The holder of the mortgage has no interest in this question. I have, however, looked at the evidence, so far as it is disclosed in the case, and can discover no ground for impeaching the good faith of the purchase by the plaintiff. He gave a mortgage for $25,000 to the grantor, in consideration of the conveyance, and there is nothing to show that he was advised of any special object on the part of the grantor in making the conveyance, or that he knew of the existence of the mortgage in question.

It is next insisted on the part of the defendant that no case was made by the plaintiff entitling him to equitable relief. That the only appropriate judgment upon the facts, as finally established, was that directed by the referee, dismissing the complaint, and leaving the defendant at liberty to commence an action to foreclose her mortgage if she saw fit.

The plaintiff stated in his complaint, that he was the owner of lands encumbered, as appeared by the records in the county clerk's office, by a mortgage of $52,000, and many years' interest; that the mortgage was held by the defendant and was fully paid; and he prayed to have it discharged upon the records. By her answer, the defendant claimed that there was due to her, upon the mortgage $10,000, and interest from 1839. After a very tedious trial, lasting more than five years, it is established by the report of the referee, that the statements of the plaintiff were all true, except that a small sum, less than $1300, besides interest, remained due on the mortgage. It would certainly be a cause of reproach to the administration of justice, if on that state of facts the court could give no judgment except to dismiss the action, leaving the parties to repeat the same tedious process, in another form, before the controversy between them could be ended. The law, however, is not justly subject to any such reproach. Regarding this as an action quia timet merely, to remove the cloud of the mortgage from the plaintiff's title, upon the allegation that the mortgage was fully paid, it was entirely proper, when it appeared by the evidence that a balance remained unpaid, to grant the relief demanded by the plaintiff,conditionally, as was done by the court below. Judge Story, treating of the cancellation or delivery up of securities, says: "In all cases of this sort, where the interposition of a court of equity is sought, the court will, in granting relief, impose such terms upon the party as it deems the real justice of the case to require; and if the plaintiff refuses to comply with such terms, his bill will be dismissed. The maxim here is emphatically applied: he who seeks equity must do equity." (2 Eq. Jur. § 693; see also, §§ 705-707.)

The complaint, however, embraced not only the features of a bill quia timet, but also of a bill to redeem. The plaintiff alleged that the mortgage was paid, and demanded judgment that it should be canceled and discharged on that account; but it was also prayed that the balance, if any was due on the mortgage, should be ascertained and determined by the judgment of the court, and that the other demands of the plaintiff against the defendant should be applied to the payment of such balance, if sufficient for that purpose, and if not sufficient, then to the reduction thereof, and that the bond and mortgage, if thereby paid, be canceled and discharged, and that the plaintiff have judgment for the balance of his demands, if any; to which was added the general prayer for such relief as the nature of the case should require. The plaintiff, therefore, contemplated the possibility of a balance being found due on the mortgage, and demanded such relief as would be agreeable to equity, on that state of facts. There is no express general offer to pay any balance which might be found due, but it was held, under the former system of pleading, that such an offer, in a bill to redeem, was not necessary, (Quin v.Brittain, Hoff. 353;) and it is certainly not indispensable now. Were such offer necessary, it might fairly be inferred from the offer to pay the amount due by the application of the balance of other accounts. The case, therefore, was in form one in which it was proper to allow the plaintiff to redeem, and I can discover nothing in his position to render such redemption unjust or inequitable. The judgment, as modified by the Supreme Court, terminates the controversy between the parties in regard to the mortgage, whether the plaintiff complies with the conditions imposed upon him or not. If he fails to redeem within the time appointed, the dismissal of his complaint as the consequence of such failure, operates as a foreclosure of the mortgage. (Quin v. Brittain, supra; Bishop of Winchester v. Paine, 11 Ves. 199.)

The principal remaining question which requires notice, arises out of the admission of the testimony of the mortgagor, to show payment of the mortgage. The defendant having neither appealed from the judgment rendered upon the report of the referee, nor made any case on his part, it is questioned whether the exceptions taken by him are available in her behalf upon this appeal. As a general rule, exceptions taken by the prevailing party, on a trial, are not available in the subsequent proceedings, on an appeal from the judgment by the unsuccessful party, where the prevailing party has not also appealed. Indeed such exceptions under ordinary circumstances, do not properly constitute any part of the case, on appeal. Under the circumstances presented by this case, however, the defendant could not have sustained an appeal, whether the decision of the referee admitting the testimony now objected to was right or wrong. No appeal on her part could have raised that question, as she could appeal only from the judgment, and not from any decision of the referee, which did not affect the judgment; and the decision in question did not. She excepted to the testimony when it was given, but no use of it was made against her, and no judgment entered, by an appeal from which she could raise the question of the validity of her exception, until the judgment against her was pronounced by the Supreme Court, based upon the testimony thus excepted to. From that judgment she has appealed, and if the testimony was not legally admissible, it would seem to savor strongly of injustice, to deny to her the benefit of her exception. If it were necessary now to determine this question, I should hold, as at present advised, that the exceptions taken by the present appellant upon the trial, and appearing upon the record, are available to her upon this appeal. There will, however, be no necessity of deciding this question, if the court shall concur with me, in the conclusion to which I have arrived, that the testimony of the mortgagor was properly admitted.

The provisions of the statute, which were in force when the cause was tried, and which are relied upon, to sustain the objection to the testimony, are as follows:

"§ 398. No person offered as a witness, shall be excluded by reason of his interest in the event of the action.

§ 399. The last section shall not apply to a party to the action, nor to any person for whose immediate benefit it is prosecuted or defended. When an assignor of a thing in action, or contract, is examined as a witness, on behalf of any person desiring title through or from him, the adverse party may offer himself as a witness to the same matter in his own behalf, and shall be so received. But such assignor shall not be admitted to be examined in behalf of any person deriving title through or from him against an assignee, or an executor, or administrator, unless the other party to such contract or thing in action, whom the defendant or plaintiff represents, is living, and his testimony can be procured for such examination; nor unless at least ten days' notice of such intended examination of the assignor, specifying the points upon which he is intended to be examined, shall be given in writing to the adverse party." (Code of Procedure, as amended in 1851, §§ 398, 399.)

There is no ground whatever for the position that the witness was rendered incompetent by the first clause of § 399. He was in no sense a party to the action, nor was it prosecuted for his benefit. Whatever may have been the object, or the consideration, of the conveyance of the land, by him, he could not afterwards question the validity of such conveyance; and having no interest in land, and being released from liability upon his covenants, he could not be benefitted by the plaintiff's success. (Jackson v.Stevens, 16 John. 110; McCrea v. Purmort, 16 Wend. 460.) Neither could the record in this case, whatever its results, be made use of, for or against the witness, in an action on his bond. McLaren v. Hopkins, supra.)

The objection, based upon the other portion of § 399, is, I think, equally untenable. The conveyance of land, is not an assignment of "a thing in action or contract." (2 Bl. Com. 397; 1 Chitty's G.P. 99, note p.; Gillet v. Fairchild, 4 Denio, 82;Hudson River R.R. Co. v. Lounsberry, 25 Barb. 597.) The case was, therefore, not within the letter of the statute, and I am satisfied was not within the intention or object of its provisions. No inconvenience has ever resulted from the common law rule admitting the testimony of the grantor of lands as a witness under such circumstances, and I see no propriety in extending the statutory exclusion to cases not clearly embraced by its terms.

If the plaintiff had not abandoned the claim to recover the alleged balance of the assigned accounts, the testimony would undoubtedly have been inadmissible, notwithstanding the limitation placed upon its effect by the referee; because a considerable part of it bore directly upon the question of such balance, through the accounts which the witness proved. The referee could not, so long as the question of the general accounts was before him, render the receipt of such testimony rightful, by declaring that its application should be limited to another issue, in relation to which the witness was competent to testify. But this objection was removed when all claim to a recovery upon the accounts was abandoned. It has been questioned whether there was such an abandonment on the trial, but the report of the referee on that subject is conclusive here. The testimony of the mortgagor was therefore properly admitted.

It is insisted, that if the decision of the referee was in any respects erroneous, the Supreme Court should not have pronounced a final judgment on the appeal, but should have ordered a new trial. If any material error had occurred on the trial, or in the findings of fact by the referee, a new trial would doubtless have been necessary; but the only error appearing in the case, was in the judgment which he directed to be entered as the legal result from those facts. That error it was the province of the Supreme Court to correct; it has been corrected by the entry of the appropriate judgment, and that judgment should be affirmed, with costs.