Dempsey v. Johnson

142 A.D. 226, 126 N.Y.S. 944, 1911 N.Y. App. Div. LEXIS 287

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: January 13, 1911
• Status: Published

Opinion

Smith, P. J.:

In 1890 Michael J. Dempsey gave to his wife' a mortgage' for $2,500 upon certain real estate. This mortgage was assigned to the firm of Johnson & Murray as security for an' indebtedness existing and also' for moneys thereafter to be loaned. Thereafter the real estate was sold at public auction and was bid in by one Richardson in behalf of Johnson & Murray, who in turn had agreed to bid in the property for the benefit of plaintiff’s wife. The price paid upon said sale by Johnson & Murray was included in a note given by plaintiff’s wife to them, to which the mortgage was also held as a collateral pledge. The real estate was turned over to Mrs. Dempsey. Thereafter the note against Mrs. Dempsey was put into judgment, execution issued and a part thereof realized, but there remained unpaid on the judgment between $400 and $500. After the sale on execution Johnson & Murray transferred the property to the defendant Guiles, and also transferred the indebtedness and the mortgage held in collateral pledge therefor. The consideration paid was the sum of $644. At the time of the transfer Mrs. Dempsey was in possession and Guiles had full notice of her claim of right in the property. Mrs. Dempsey died, and this plaintiff, representing her estate, has brought this action to redeem this mortgage, asking to have the rents and profits of this real estate applied upon the indebtedness from plaintiff’s intestate to defendant Guiles and the mortgage thereafter foreclosed. The Special Term has authorized the redemption of the mortgage upon the payment of the amount paid by Guiles therefor, together with interest from 1890. The contention of the plaintiff is that this, amount which he should be required to pay for the redemption of said rqprtgagé should be reduced by such rents and profits as Guiles had received from the property for the time during which he has had possession thereof.

It would seem clear that Richardson and Johnson & Murray purchased this property as agents for Mrs. Dempsey, and she, having paid the moneys which were paid for such purchase, had the equitable title to the property. With the equitable title to the property in her, Johnson & Murray or Guiles, their assignee, had a lien by reason of the mortgage which they held under collateral pledge, and after having taken possession of that property Guiles in equity stood in the position of mortgagee in possession, and as such should be required to account for the rents and profits of the property in-payment of any claim which he migth hold against Mrs. Dempsey in her lifetime for which the mortgage was held as collateral.

It is true that Guiles was required to pay fifty dollars to Mrs. Dempsey to get possession of the premises, but if a mortgagee persuades the mortgagor to give up possession of the mortgaged premises upon a consideration, that does not alter the obligation of the mortgagee to hold the property for the benefit of the mortgagor and apply the rents and profits upon the mortgage. It is true that this transaction occurred many years ago, but no question is made on this appeal as to the Statute of Limitations. The plaintiff has been part of the time in the State Hospital at .Utica, and no laches are pleaded, as a defensé to the plaintiff’s cause of action.

The judgment should, therefore, be modified so as to require the plaintiff to account for the rents'and profits over and above expenses from the time possession was taken, and with authority to the plaintiff to redeem upon, payment of the amount found due the estate of Mrs. Dempsey after .the application of such rents and profits. Plaintiff may apply for a referee to take and state this account.

. All concurred, except Houghton, J., who voted for affirmance.

Judgment modified as per opinion, and as modified affirmed, with costs to the appellant. ’