Miles v. Fralich

18 N.Y. Sup. Ct. 561

• Court: New York Supreme Court
• Decided: September 15, 1877
• Status: Published

Opinion

Learned, P. J.:

The mortgage from Cox to Miles was for the purchase-money. It excepts the hemlock bark on the premises, with such privilege to procure the bark as is contained in a conveyance of the premises by Miles to Cox. Although that conveyance is not produced, it is evident that Miles reserved to himself, on the sale, the hemlock bark; and the mortgage only repeats the reservation.

In the mortgage, Cox covenanted that the premises should not be reduced in value by the removal of any of the timber, until the value should have been paid in installments of the purchase-money. This covenant shows (if any proof were needed) that the exception of the bark was not an exception of the timber; and that Cox had a right, under the conveyance, as owner, to remove the timber, except so far as he restricts himself by this covenant. There is nothing peculiar in the effect of this covenant. Courts restrain mortgagors in proper cases, even without such covenants, from diminishing the security to the injury of mortgagees. (Ensign v. Colburn, 11 Paige, 503.)

After the execution of this mortgage, the mortgagor conveyed a •part of the lands to Engert. In this conveyance he reserved all the hemlock trees and bark, with the right of ingress and egress to procure the same at the convenience “ of the owner thereof.”

Subsequently he conveyed the rest of the lands to Fralich, excepting and reserving the hemlock bark, and also all the hemlock timber, “ except such parts as the party of the first part may see fit to leave, and timber sufficient to build a thirty by forty barn.”

Thus, after this conveyance, the mortgagor Cox owned none of the mortgaged property, except the hemlock timber; while Engert and Fralich owned the land, but not the timber.

Subsequently, on the 12th of July, 1869, the assignee in bankruptcy of Cox, the mortgagor, sold this hemlock timber, subject to the mortgage aforesaid. It was bought by the plaintiff for the firm of Miles & Miles, of which he was a member. The plaintiff, at this time, knew of the purchase of the land by Engert and Eralich, and of their possession thereof.

The learned justice who tried the case finds that the price was $1,000. But there seems to be no evidence on that point, except that the plaintiff is proved to have said that he had released his mortgage on the timber for $1,000, and had indorsed that amount on the mortgage. If, however, as is proved and not denied, the sale by the assignee in bankruptcy was made subject to the-mortgage, a releasing of the mortgage on the timber for $1,000 was not a payment of that price to the assignee on the sale.

The plaintiff subsequently sold the timber for more than enough to satisfy the mortgage; even if we deduct from the avails the $1,000 which the plaintiff credits on the mortgage, as above stated.

Now, it is a familiar principle that when a mortgagor has conveyed a part of the mortgaged property and retains another part, the latter must first be applied to pay the debt, for the exoneration of the previous purchasers from him.

We need not inquire how this rule could, in every case, be applied to a reservation of timber on a sale of land. Because in the present instance not only did Oox, the mortgagor, reserve the timber on the sale to Engert and Eralich; but his assignee in bankruptcy sold it as a thing distinct from the land, and the plaintiff bought it in the same manner. He cannot say, therefore, that the timber could not be thus severed. For he assumed to purchase the timber as distinct from the land. Furthermore, he bought the timber subject to the mortgage. Thus he acknowledged that the timber was subject to the mortgage, and he knew that Engert and Fralich had bought and were in possession of the land.

Having, therefore, subsequently sold the timber thus purchased for more than the amount of the mortgage, the avails of such sale must first go to satisfy this mortgage, for which it had become the primary fund.

Furthermore, as the plaintiff bought the timber subject to the mortgage, he is presumed to have paid only its value, less the lien of the mortgage, and such a purchase again makes the timber the primary fund for the payment of the mortgage. As the plaintiff owned the mortgage. And bought the timber subject to the mortgage, this operated as a, satisfaction of the mortgage; without reference to the amount for which the plaintiff subsequently sold the timber.

The answer of the plaintiff to these familiar doctrines is that the mortgage was never a lien on the timber, because the hemlock bark had been reserved. This is not the true construction of the mortgage. The bark was probably reserved by Miles in his conveyance to Cox. But, 1. The covenant by Cox not to remove the timber shows that he was the owner, and that the timber was a part of the mortgage security. 2. The sale by the assignee and the purchase by the plaintiff, subject to the mortgage, shows that the timber was so subject. 3. The release'by the plaintiff of the timber from the mortgage shows that he claimed that the timber was subject to the mortgage.

For the reasons above stated the judgment must be reversed and a new trial granted, costs to abide the event.

Boardman, J., concurred. Bookes, J., dissented.

Judgment reversed and new trial granted, costs to abide event.