Wheeler v. Swan

54 N.Y. Sup. Ct. 87, 16 N.Y. St. Rep. 552

• Court: New York Supreme Court
• Decided: January 15, 1888
• Status: Published

Opinion

Follett, J.:

Appeal from an order denying the appellant’s motion to have first, The First National Bank of Utica made a party defendant; and, second, the default of the appellant opened and his proposed answer reeeivéd as his answer in the action.

September 1, 1885, Otto E. C. Guelich executed his bond to Benjamin Ooon to secure the payment of $2,300, two years after date, with annual interest; and as collateral thereto, said Guelich and Elizabeth D., his wife, executed a mortgage upon real' estate then owned by said Otto E. O. Guelich. Said mortgagee advanced no part of the consideration, but September 2,1885, he assigned the bond and mortgage to this plaintiff upon the agreement between the plaintiff, the mortgagor and mortgagee, that the plaintiff was to loan the mortgagor the sum which the bond and mortgage were executed to secure. The mortgage and assignment were duly recorded September 2, 1885.

This action was brought to foreclose the mortgage, and Joseph R. Swan was made a party defendant because he held a lien upon the mortgaged premises which is subject to the alleged lien of the plaintiff’s mortgage. The mortgagor defends upon the grounds that the plaintiff refused to loan or advance any part of the consideration named in the bond and mortgage ; and that both instruments are void for want of consideration.

At the time of making the mortgage, Guelich procured Swan to indorse his promissory note for $1,Y00, payable ten days after date at the First National Bank of Utica, upon the assurance that Wheeler was to loan him the amount secured by the bond and mortgage, with which he would pay the note. The note was discounted. by the bank, was dishonored, and Swan was duly charged as an indorser; it still remains unpaid and is held by the bank. Swan was ignorant of the alleged defense of want of consideration, until after his time to answer had expired.

Whether the mortgage is valid, or invalid, depends upon the transactions which occurred between the mortgagor on the one part and the mortgagee and his assignee (this plaintiff) on the other part. If valid the plaintiff is entitled to recover the amount secured; but if it is invalid, the mortgagor is entitled to have the instruments surrendered and the mortgage canceled of record. Swan was not a party to these transactions, and he does not claim that the mortgagee or the plaintiff knew of his indorsement or the terms upon which he gave it. Assuming that the consideration of the mortgage had never been advanced, and that the mortgagor might have recovered the amount of the plaintiff in an action, or, compelled the plaintiff to have specifically performed his agreement, still this does not aid Swan, who is not the assignee of the mortgagor, and there being no privity by contract between the plaintiff and Swan, and the plaintiff not having perpetrated a fraud upon Swan, he has established no right to intervene in this action for the purpose of compelling the plaintiff to pay (if not already paid), the consideration of the bond and mortgage for the benefit of Swan or the bank. These views lead to an affirmance of the order.

The order is affirmed, with ten dollars costs and printing disbursements.

Martin, J., concurred; Hardin, P. J., not sitting.

Order affirmed, with ten dollars costs and disbursements.