Reynolds v. . Park

53 N.Y. 36, 1873 N.Y. LEXIS 366

Opinion

Grover, J.

The mortgage to O. T. Chamberlain upon the Hunter street property was given prior to the commencement of the action by Knapp v. Edgerton and wife. This mortgage was a valid lien at that time, and the party holding it not having been made a party to that'action, the lien was not affected by the judgment therein rendered. Mrs. Edger-ton then held the title to the Hunter street property now. owned by the plaintiff, subject to the lien of that mortgage, and also the Sophia street property, since owned by the defendant, which was, at that time, unincumbered. The action by Knapp was brought to charge both parcels with the payment of two judgments, theretofore recovered by him against the husband. It was decreed in the action that the conveyances under which Mrs. Edgerton acquired title to both parcels were fraudulent and void as against the judgments of Knapp, and the land therein described was adjudged to be the property of the husband as of the date of such conveyances, and, as such, subject to the judgments. And it was further adjudged that all the lands, or so much as might be necessary, be sold separately at public auction, by a referee named in the judgment for that purpose, pursuant to the directions therein given. This judgment has never, in any way, been executed or impaired, but has ever since and still continues in full force to the extent of the money unpaid thereon, except in so far as it may have been satisfied by operation of law, by the assignment thereof to the defendant while he was the owner of the Sophia street property, and by the subsequent sale and conveyance of that property by him. These facts, I think, operated as a satisfaction in favor of the Hunter street property to the extent that the Sophia street property was bound to contribute, if anything, to the payment of the judgment in exoneration of that property. The Knapp judgment must, I think, be held as conclusively establishing that all the property was equally liable to the payment of the judgment, as to all parties since acquiring title from either Hr. or Mrs. Edgerton, and that their equities as between each other cannot be affected by showing that, in the mode by which Mrs. Edger-ton acquired title, she had a right, to have one portion of the property first sold, in exoneration of the remainder. If any such right existed, it should have been set up and provided for in the action brought by Knapp. We have seen that the defendant, as assignee of the Knapp judgment, can collect from the Hunter street property such portion only of -the judgment as shall remain, after deducting therefrom any amount that the Sophia street property is required to pay" for the relief of the former. This brings us to the facts that have occurred since the judgment in the Knapp suit, which must determine the equities of the parties. The Chamberlain mortgage has since been foreclosed without making Knapp, at that time still owning the judgments, a party, and the plaintiff has acquired title to the Hunter street property under this foreclosure. We have seen that the lien of the Chamberlain mortgage was paramount to that of the Knapp judgment. The latter was therefore a Hen only upon the' equity of redemption, and by the omission to make Knapp a party, the foreclosure in no manner affected his rights or the -lien of his judgment; as to this, the foreclosure was a nullity. (Brainard v. Cooper, 10 N. Y., 356 ; Gage v. Brewster, 31 N. Y., 218.) The Hen, therefore, continuéd upon the equity of redemption.

It appears, from the opinions given at General Term, that this foreclosure of the Chamberlain mortgage was held by one of the learned judges to have operated as an alienation of the property by Mrs. Edgerton as of the date of the Chamberlain mortgage, and so operating the Sophia street property became primarily liable upon the Knapp judgments by the application of the well settled principle that where property subject to an incumbrance has been sold in parcels at different times, and it becomes necessary, to satisfy the incumbrance, to sell a part of such land, the sale must be in the inverse order of alienation. This principle is founded upon the obvious equity that the lands still owned by the party who ought to discharge the incumbrance shall be first applied thereto before resorting to the land granted, and that a purchaser of a part of the land may enforce this equity against all the residue retained by the debtor at the timó of the conveyance to him. It was correctly held by the learned judge that a mortgage was an alienation pro tanto within the principle, and would be so held, so far as necessary to protect the security intended by the mortgage. But to present a case for the application of the principle, it is necessary that there should have been a conveyance of some interest embraced in the incumbrance. This is not true as to the Ohamberlain mortgage. That was paramount to the lien of the Knapp judgment, and never in any respect subject to it, consequently the giving of this mortgage prior to the judgment could not be a conveyance by Mrs. Edgerton of anything embraced in the incumbrance. We have already seen that the omission to make Knapp a party to the foreclosure made that proceeding void as to the lien of the judgment. As to this lien there has been no foreclosure, and the equity of redemption still remains subject to it. The Special Term held that the defendant had the right to redeem from the Chamberlain mortgage. That remaining a mortgage as to his lien, perhaps he has this right as to the mortgage; but the plaintiff, by the purchase at the foreclosure sale, Mrs. Edgerton having been a party, acquired not only the right of the mortgagee but also her equity of redemption, thereby becoming the owner of the fee, subject to the lien of the judgment upon that equity. This equity of redemption cannot be taken from him by redeeming from the mortgage. This brings us to the question of the liability of the Sophia street property to contribute to the payment of the judgment. We have seen that the judgment in the Knapp suit subjected this and her interest in the Hunter street property to an equal liability in this respect. After the recovery of this judgment, Mrs. Edgerton, the owner of the Sophia street property subject to the lien, gave a mortgage thereon to Mr. Woods, which was subsequently foreclosed without making Knapp a party in the action. We have seen that the giving a mortgage upon a part of the incumbered land is an alienation of the interest to an extent sufficient to protect the security. It follows, that Mrs. Edgerton owning the equity of redemption in the Hunter street property and the Sophia street property, subject to the lien of the judgment upon both, by giving the mortgage to Woods created an equity in his favor to have the judgment satisfied out of her remaining interest in both parcels, being an equity of redemption in each. The Woods mortgage was foreclosed, and the property sold and purchased by the defendant at the foreclosure sale on the 10th day of December, 1861. Knapp not having been made a party the foreclosure did not affect the lien of the judgment, but it extinguished the title of the mortgagor. It was in effect an alienation by her of all her title to the premises. She still was the owner of the equity of redemption of the Hunter street property, and the purchaser of the Sophia street property at the foreclosure sale was entitled in equity to have this equity of redemption first applied to the satisfaction of the judgment before resort was had to the land purchased by him. The Chamberlain mortgage upon the Hunter street property was not foreclosed until May 13th, 1863, some three years after the foreclosure of the Woods mortgage. The lien of the judgment upon the former was not affected by the foreclosure, Knapp' not having been made a party. The equity of redemption in this is primarily liable to the payment of the judgment. The plaintiff is entitled to what is due upon the Chamberlain mortgage. The defendant is next entitled to payment of the judgment. The plaintiff is entitled to the surplus, if any. This result will "be effected by selling'the premises upon the execution issued upon the judgment. ■ .

The judgment of the Special, and that of the General Term must be reversed, and ■ the complaint dismissed without costs to either party.

All concur.

Judgment accordingly.