Rochester Savings Bank v. Stoeltzen & Tapper, Inc.

176 Misc. 147, 26 N.Y.S.2d 713, 1941 N.Y. Misc. LEXIS 1625
CourtNew York Supreme Court
DecidedApril 7, 1941
StatusPublished
Cited by4 cases

This text of 176 Misc. 147 (Rochester Savings Bank v. Stoeltzen & Tapper, Inc.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rochester Savings Bank v. Stoeltzen & Tapper, Inc., 176 Misc. 147, 26 N.Y.S.2d 713, 1941 N.Y. Misc. LEXIS 1625 (N.Y. Super. Ct. 1941).

Opinion

Van Voorhis, J.

Plaintiff sues for interest upon a bond secured by mortgage under the ruling in Johnson v. Meyer (268 N. Y. 701). The answer to which this motion is addressed contains five affirmative defenses. Those numbered “ second to fifth ” inclusive are stricken out on authority of the decision of this court of even date (176 Misc. 140) disposing of similar defenses in the answer of the defendants Link. The Mulrees’ first ” defense is not pleaded by the Links and is that by reason of particular facts they did not under any circumstances assume payment of the obligation.

This defense concedes that the Mulrees accepted a deed of the premises from Conrad G. Thompson containing an assumption clause. Defendants Mulree assert that under familiar law they are not liable upon their covenant of assumption unless their grantor was similarly obligated. Thompson’s source of title when the Mulrees contracted to purchase from him was a deed containing an assumption clause from Joseph H. Oberlies, who had purchased at the foreclosure sale of a second mortgage. After the sale, and on June 20, 1922, Oberlies with others had given the bond in suit to the plaintiff for the payment of the indebtedness represented by the subsisting first bond and mortgage that had been given to plaintiff November 1, 1920, by Bertha and Adam Norwich. These facts, by themselves, would establish personal liability on the part of defendants Mulree as a result of their assuming from Thompson this obligation which he assumed from Oberlies. Further facts are alleged, however, which are claimed to alter the situation. Before defendants Mulree accepted a deed from Thompson, and after they had signed a contract of purchase, an -examination of the title disclosed that notice‘of the foreclosure sale at which Oberlies bought had not been given in accordance with the requirements of statute. The Mulrees rejected the conveyance tendered by Thompson upon that ground. In order to remedy this defect and to induce the Mulrees to perform their contract for the purchase of the property, Thompson obtained a deed running to himself from the Norwiches on the theory that if the foreclosure sale was void, they, as the owners of the equity of redemption, were still the owners of the premises. He also obtained releases from the second mortgage and all subsequent liens and incumbrances. When the deal was closed with the Mulrees, Thompson had thus become grantee under two conveyances, one from the purchaser at the foreclosure sale, and the other from the owners of the equity of redemption. [149]*149The former deed stated that Thompson assumed and agreed to pay the mortgage indebtedness now in suit; the latter deed contained no such provision. It is contended that his title was acquired solely under the latter conveyance, and that the former, containing the assumption clause, was a nullity. Thompson was the immediate grantor of defendants Mulree, and, if he never assumed the mortgage debt, they could not assume it regardless of the language of their deed. (Vrooman v. Turner, 69 N. Y. 280; Seaver v. Ransom, 224 id. 233; Union Trust Co. of Rochester v. Allen, 239 App. Div. 661; Genesee Valley Nat. Bank & Trust Co. v. Bolton, 248 id. 530.)

Thompson’s exemption from liability is based entirely upon the alleged invalidity of the sale to Oberlies in the action to foreclose the second mortgage.. If this sale was void, Oberlies, under the pleadings, had nothing to transfer to Thompson, who did not become bound by a covenant of assumption in a deed for which the consideration wholly failed. (Dunning v. Leavitt, 85 N. Y. 30; Crowe v. Lewin, 95 id. 423, 427; Loeb v. Willis, 100 id. 231, 235; Wager v. Link, 134 id. 122, 125.) The foreclosure sale was void and of no effect if, as is alleged, the requirements of the Civil Practice Act (§§ 986, 712) determining the method of giving notice of sale were not complied with. (Welhaven v. Kohn, 257 App. Div. 744; affd., 282 N. Y. 705; Olds v. City of Jamestown, 280 id. 281; Bamonte v. Ocean Beach-Fire Island Co., 222 App. Div. 676; affd., 248 N. Y. 642; Eckman v. Meli, 255 App. Div. 925; City of Albany v. Goodman, 203 id. 530.)

The court is aware of decisions in which foreclosure sales that have not been advertised according to statute have been referred to as voidable rather than void. (Bechstein v. Schultz, 120 N. Y. 168; Pawlak v. Gruszecki, 124 Misc. 447; Hedley, Inc., v. Loomis, 116 id. 605.) Such statements must be regarded as having been overruled by the cases hereinbefore cited holding such sales to be void, notably Olds v. City of Jamestown. As is pointed out in Lane v. Johnson (283 N. Y. 244) in discussing the Olds case, the omission to advertise the sale according to law is a jurisdictional defect in that it cannot be corrected nunc pro tunc, either by order of the court, or by a curative act of the Legislature, without divesting retrospectively property rights of persons interested in the real estate; otherwise ratification, by converting an invalid sale into a binding one, would summarily foreclose the owners and junior lien holders of their rights and estates in the land. Vested rights cannot be impaired retroactively without denying due process of law. It is true that the right of due process is in such cases for the protection of property interests of parties affected, and, like most other constitutional rights, can be surrendered voluntarily. (Musco [150]*150v. United Surety Co., 196 N. Y. 459.) That means more than that the sale is valid unless set aside, which is what is signified by voidable. It means that it is void ab initio and can become valid only by positive action of the parties in the nature of a grant. There must, at least, Be a voluntary abandonment of the safeguards surrounding the sale that have been established by statute for their protection. Upon this motion there is no occasion to decide whether the parties are precluded from contesting the regularity of the sale as a result of its confirmation by the-court (Cf. Bechstein v. Schultz, supra) or by reason of any other proceedings taken in the second mortgage foreclosure action, inasmuch as nothing of the sort is pleaded. On the basis of the Mulrees’ answer, the title which was acquired by them from Thompson came to Thompson through the conveyance from the Norwiches, containing no assumption clause, and did not emanate from Oberlies whose grant was a nullity. The covenant of assumption in the deed from Oberlies failed for lack of consideration, and the defendants Mulree, irrespective of the form of their conveyance, could not assume an obligation for which their grantor was not liable.

It has been argued in behalf of plaintiff that a covenant of assumption of a mortgage will be upheld although contained in a deed which transfers no title unless the grantee (in this case, Thompson) has been evicted by title paramount or has attorned to the holder of the title paramount. (Peabody v. Kent, 213 N. Y. 154; Curtiss v. Bush, 39 Barb. 661.) These conditions have been fulfilled according to the allegations of the Mulrees’ answer.

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176 Misc. 147, 26 N.Y.S.2d 713, 1941 N.Y. Misc. LEXIS 1625, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rochester-savings-bank-v-stoeltzen-tapper-inc-nysupct-1941.