Ellsworth v. . Lockwood

42 N.Y. 89, 1870 N.Y. LEXIS 25

• Court: New York Court of Appeals
• Decided: March 18, 1870
• Status: Published

Opinions

Sutherland J.

The referee found that the deed of Brady and wife, to Mott, was given to secure Mott for his indorsement of the $500 note of the plaintiff.

It was therefore a mortgage in equity. (McBurney v. Wellman, 42 Barb., 390; Hodge v. In. Co., 4 Selden, 416; Laws of 1822, p. 262, § 3.)

The referee found, that when the $500 note fell due, Mott was charged as indorser, and being sued was compelled to pay it, and did pay it, with costs.

The referee found, that the advancing of the $300, by Hudson to Mott, and the giving the note therefor by Mott to Hudson, and the making of the indorsement on the Banker & Hudson contract, was one transaction, and was intended to operate as a payment to the extent of $300, on account of Mott’s indorsement and payment of the $500 note, and that subsequently (31st of May, 1851), the plaintiff and Mott looked over, in regard to the moneys paid by Mott, by reason of his indorsement of the note, and that there was found due to Mott $288.35, after allowing the $300 advanced by Hudson to Mott, and that the plaintiff then paid the $288.35, and the same was indorsed, &c.

The complaint alleges that the plaintiff paid the $300 to apply on the note conditionally, and that afterward he paid the $288,35, the balance due on the note, after deducting the $300, and that he has the note in his possession.

Mott is a party defendant, but puts in no answer.

It appears from the plaintiff’s evidence, that after the payment of the $288.35, he got the note from Lockwood’s attorney.

In view of the foregoing facts, I cannot doubt that Mott should be regarded as having accepted the transaction found by the referee, as to the payment of the $300, and the balance of $288.35, as payment by the plaintiff of the amount which he had been compelled to pay as indorser, and as having consented that 'the plaintiff should thereby take his position and rights as junior mortgagee.

The fact found by the referee, that after Ketchum and Joslyn got into possession, Brady and wife quit-claimed to the plaintiff the equity of redemption and all rights of action, &c., should not, under the other facts found by the referee, be regarded as impairing or at all affecting the rights and position of the plaintiff as junior mortgagee. It is plain, that it was not the intention of the plaintiff by the acceptance of that quit-claim, to merge his equitable mortgage, and it is plain that it may have been for his interest to keep his equitable mortgage alive.

.1 think, therefore, that the- plaintiff, when, through McGregor, he made the repeated offers to pay the amount due on the defendant Lockwood’s prior mortgage, with costs, and demanded an assignment of that mortgage and of the accompanying bond, should be regarded as having done so, in the position, and -with the rights of a junior mortgagee.

The referee finds, that on one occasion, after the commencement of proceedings to foreclose Lockwood’s mortgage, Lockwood told the plaintiff that all he wanted was his money, and that he was willing to assign his bond and mortgage on being paid the amount due him and .costs of foreclosure; but the referee finds further, that subsequently on two occasions, on the day first fixed for the sale, and on the day to wliiclv the sale was postponed, though the plaintiff, through McGregor, was prepared to pay the amount due on Lockwood’s mortgage with costs and expenses, and. offered to do so, if Lockwood would give him an assignment of his bond and mortgage, yet that Lockwood, though he did not decline .to receive the money and satisfy or extinguish his mortgage, did decline to receive it and assign his bond and mortgage.

. The first important question presented by the appeal is, was the plaintiff entitled to an assignment of Lockwood’s bond' and mortgage, upon payment of the mortgage debt and of the costs and expenses of the foreclosure proceeding?'

A junior mortgagee or judgment creditor has a right to protect his lien or interest, by paying a prior mortgage due and payable, and if he does pay it, he succeeds by subrogation, on settled principles of equity, to the rights and'interests of such prior mortgagee in the lands, as security for the amount so paid, without any assignment or act óf transfer, by or on the part of the prior mortgagee. .(2 Story’s Eq., § 1024; Brainard v. Cooper, 10 N Y., 356; Silver Lake Bank v. North, 4 John. Ch., 370; Dale v. McEvers, 2 Cow., 118; McLean v. Towle, 3 Sandf. Ch., 119; Burnett v. Denniston, 5 John. Ch., 35.) In the last .cited case, it will be noted, that the chancellor did not decree an assignment of the mortgages, though an assignment was requested by the plaintiffs, when they tendered the amount due on the mortgages.

The equitable right to pay and discharge the mortgage debt, after forfeiture, by the terms of the mortgage contract, is called, and is, the right of redemption.

The subrogation or substitution, by operation of law, to the rights and interests of the mortgagee in the land is on and by redemption; and redemption is payment of the mortgage debt, after forfeiture by the terms of the mortgage contract; so that, really, the subrogation or substitution, by operation of law, arises, or proceeds on the theory that the mortgage debt is paid. If the holder of a bond and mortgage assigns them to a party claiming a right to redeem, the latter is subrogated, hy the. assignment, to the mortgage debt and mortgage security, and to the instruments evidencing such debt and security, and there is no room or occasion for subrogation by operation of law.

A bill or action to have a bond and mortgage assigned to the plaintiff, is not, and cannot be viewed, as a bill or action to redeem. The right of redemption, and of subrogation by law, is inconsistent with the right to an assignment of the debt, and of the evidence of the debt, so far, or inasmuch, as the assignment assumes the continued existence of the debt, and the subrogation by law, assumes its payment.

I have made these very elementary remarks, which may, perhaps, seem somewhat out of plací, in view of what was said by a learned judge, in Pardee v. Van Anken (3 Barb., 536, 537, &c.), to the effect, that the right of the plaintiff in that case to compel an assignment of the mortgage, sprung directly from his right of redemption. See, also, the very able opinion of Judge Woodruff, in Jenkins v. Continental Insurance Co. (12 How. Pr. R., 66), in which it seems to have been assumed by the learned judge throughout, that the right to compel an assignment of the prior bond and mortgage flowed from the right of redemption.

The law seems to have been settled in England, for some time, that, though a surety, on paying the debt of his principal, is entitled to the full benefit of all collateral securities which the creditor has taken and held as additional security for Ms debt, and to an assignment of such collaterals, if an assignment is necessary or convenient to give the surety such full benefit, yet that the surety is not entitled to, and cannot compel an assignment of the debt, or of the instrument by which it is evidenced. (1 Story’s Eq., §§ 499, 4995b; Copis v. Middleton, 1 Turner & Russ., 224, 231; Hodgson v. Shaw, 3 Myl. & Keen, 190, 192; Craythorne v. Swinburn, 14 Vesey, 159.)

For instance, if, when the bond of the principal and surety is given, a mortgage is also given by the principal to the creditors, as additional security for the debt, I understand the law to be settled in England that, upon payment of the debt by the surety, though he is entitled to an assignment of the mortgage, yet he is not entitled to an assignment of the bond:

In this State, as the result of the reported cases, I think the law may be said to be that the, surety on payment of the debt is entitled, not only to an assignment or effectual transfer of all such additional collaterals taken and held by the creditor, but also to an assignment or effectual transfer of the debt and of the bond or other instrument evidencing the debt. See Speiglemyer v. Crawford (6 Paige, 257); King v. Baldwin (2 John. Ch., 554); Hayes v. Ward (4 John. Ch., 123); New York State Bank v. Fletcher (5 Wend., 85); Mathews v. Aiken (1 Comst., 595).

Ie the instance above put, of a bond with surety, and an additional security by the mortgage of the principal, I understand the result of the reported cases in this State to be that ■the surety, on paying the bond, would be entitled to an assignment of both bond and mortgage.

If the party, in a position or with an interest which gives ' him a right .to redeem a mortgage, is also in effect surety, or can be regarded as surety for the* mortgage debt, then, on paying the mortgage debt, he is entitled to an assignment, not only of the mortgage, but also' of any bond or other instrument evidencing the debt. (Averill v. Taylor, 8 N. Y., 51; Johnson v. Zink, 52 Barb., 396; Cherry v. Monro, 2 Barb. Ch., 618; Speiglemyer v. Crawford, 6 Paige, 257.)

In Pardee v. Van Anken (3 Barb.), before cited, though the learned judge held, in the first instance, that the right to the assignment sprang directly from the right of redemption, yet he, in the second instance, held that the junior mortgagee, claiming the right to redeem, was to be regarded in the light of a surety, and held that he had a right to the assignment on that ground.

In Niagara Bank v. Rosevelt (9, Cowen, 409), there was no question as to the respondents’ right to redeem as judgment creditors; but the question was, how much they ought to pay to redeem; whether they should be allowed $3,000 advanced in moneys, and goods before assignment to the bank.

The question, whether the respondents were entitled to an assignment, or whether an assignment was necessary to enable them to enforce the mortgage as a security for the amount which they should pay to redeem, does not appear to have been litigated. It is probable that the bank was quite willing to assign, upon payment of the amount which it should be determined the respondents should pay to redeem.

Upon the whole, I do not think it can be said to be the law of this State, that the right to redeem a mortgage, that is, the right to compel the holder of it to accept or receive payment of it, after it is due and payable, carries with it the right, upon such redemption, to an assignment of the mortgage and of the bond or other instrument evidencing the mortgage debt, or of either, unless the redeeming party has the position of surety, or can be regarded as surety for the mortgage debt. As in the principal case, it is impossible in any way to regard the plaintiff as surety for the payment of Lockwood’s bond and mortgage, my conclusion is, that he was not entitled to an assignment of. them at the times he, through MacGregor, demanded it.

The next and remaining important question presented by this appeal is, had Lockwood, the mortgagee, or Perine, who conducted the proceedings on the day of sale for him, the right, under the circumstances, to put up and sell the whole mortgaged premises together as one tract or parcel \

The mortgage by description covered 281 acres of land, as one tract or body, excepting thereout, by description, three parcels, containing in the aggregate about 102 acres.

The referee finds that, on the day of sale, after the plaintiff, through MacGregor, had offered to pay the amount due on Lockwood’s mortgage and the costs of foreclosure, if he would give him an assignment of his bond and mortgage, and the refusal to give such assignment, the plaintiff requested Periné to put up the premises in parcels, and required that no more should be sold than would satisfy the mortgage debt and costs of foreclosure, and offered to bid the amount of the mortgage debt and costs for a certain, then designated, portion of the premises, containing about fifty acres; that this request was repeated through MacGregor; that Ferine refused to put up the premises in parcels, and declared that he would sell the whole together, as advertised; and that Ferine then put up the premises together, as advertised, for sale, and after crying them, they were sold and struck off to the defendants, Joslyn and Ketchum.

It appears, that the published notice of the foreclosure sale was, that the mortgage would be foreclosed by a sale of the mortgaged premises, omitting the words, “or some part thereof.” (See 2 Kev. Stat., 545, § 3.)

The inference from the evidence and the findings of fact is, that at the time of sale, Joslyn and Ketchum were, and had been, sometime before, in the occupation of the mortgaged premises, occupying the same severally, in distinct tracts or parcels, under the Ferine contract with them.

It does not appear, nor does the case furnish any ground for supposing, that the designated fifty acres was not so situated, as to have "been conveniently capable of being sold, described, and conveyed as a distinct tract or parcel. The only reason given by Ferine for refusing to put up and sell the designated fifty acres, as requested, is that to be inferred from his declaration, “ that he would sell the whole together as advertised.”

The case furnishes no other alleged reason or ground for not selling the premises in parcels as occupied in severalty by Joslyn and Ketchum.

In my opinion, under these circumstances, it cannot be said that the mortgagee, Lockwood, had a right to put up and sell the whole of the mortgaged premises, as one body or tract, as he did through Ferine his attorney. It cannot be said that he had a right to sell any more of the mortgaged premises, than was sufficient to satisfy his mortgage and the costs. (Jencks v. Alexander, 11 Paige, 619; Tiernan v. Wilson, 6 John. Ch., 411; Hewsen v. Deygert, 8 John., 333 ; Mohawk Bank v. Atwater, 2 Paige, 61, 62.)

The offer of the plaintiff to bid for the designated fifty acres sufficient to satisfy Lockwood’s mortgage debt and costs, if made in good faith, which the findings of the referee will not permit us to doubt, shows that it was a needless sacrifice of the plaintiff’s interest as the grantee of the equity of redemption, and as a junior equitable mortgagee, to sell the whole premises as one tract or body, there being nothing in the case to show that the designated fifty acres were not so situated as to be conveniently capable of being sold, described and conveyed as a distinct parcel or tract.

There is nothing in the statute regulating the foreclosure of mortgages by advertisement (2 R. S., 545 to 548), which interfered at all with the right and duty of Lockwood, under the circumstances, to have first put up and sold the designated fifty acres, if (as we must presume in this case) they could conveniently have been sold, described and conveyed as a distinct tract or parcel.

The power of sale in the mortgage authorized a sale of any part or parts ” of the mortgaged premises.

The statute referred to provides (2 R. S., 545, § 3) that the notice' of the foreclosure • sale shall be a notice, that the mortgage will be foreclosed “by a sale of the mortgaged premises, or of some part thereof.”

The sixth section of the statute, regulating the sale (2 R. S., 546, § 6), provides “if the premises (evidently at the time of sale and irrespective of the description of them in the mortgage) consist of distinct farms, tracts or lots, they shall be sold separately, and no more farms, tracts or lots shall be sold, than shall be necessary to satisfy the amount due on such mortgage at the time of the first publication of notice of sale, with interest and the costs and expenses allowed by law.”

Considering the express words and the plain and most equitable purpose of this provision of the statute, and the' express request of the plaintiff to have the premises put up and sold in parcels, and the situation and occupation of the premises so far and as they are shown by the case, I cannot see how, notwithstanding what was said by a very learned judge in Lamerson v. Marvin (8 Barb., 9), and which seems to have been recognized and approved, in Griswold v. Fowler (24 Barb., 135), we can say, that under the circumstances, Lochwood was justified in putting up and selling the whole of the mortgaged premises together, as one body or tract.

But it is not necessary to put our decision of this case on this provision of the statute, for I think, independently of this provision, considering the repeated offers of the plaintiff to bid for the designated fifty acres an amount sufficient to satisfy Lockwood’s mortgage debt and costs, that, under the circumstances, and so far as they are disclosed by the case, the judgment should be reversed and a new trial ordered upon the broad principle of equity, which has been referred to.