Schenectady Savings Bank v. Ashton , 206 A.D. 345 ( 1923 )

Van Kirk, J.:

In Schenectady Savings Bank v. Ashton (205 App. Div. 781) we held that the Schenectady Holding Co., Inc., was not entitled to an assignment of the bond and mortgage, which were due when the action to foreclose the mortgage was begun; that the foreclosure action was being prosecuted by the nominee of the person indebted upon the bond; that whatever right the Schenectady Holding Co., Inc., had to an assignment of the bond and mortgage was subordinate to the right of the mortgagor; and the mortgagor, not being released from his indebtedness upon the bond, had the right to have the foreclosure continued in order that reimbursement might be had from the proceeds of sale of the mortgaged premises. Since this decision the assignee of the bond and mortgage has released the mortgagor and obligor on the bond from his indebtedness. Leave was thereupon granted to discontinue the action. Thereafter the two orders appealed from were granted, (1) dated July 17, 1923, and (2) an order modifying the same, dated September 8, 1923. The first order directs an assignment of this mortgage to appellant on paying the amount due thereon with other conditions. The second order allows Ashton, the grantee of the mortgaged premises, to pay the mortgage.

The appellant raises but two questions: (1) as to the first order that it should not be required to “ pay for an assignment of the mortgage herein a sum in excess of the amount on deposit with the Schenectady county treasurer;” (2) as to the second order that “ Edward B. Ashton is not entitled to pay off the mortgage in question.” No other question is presented or considered.

First. It is conceded by the appellant that, if an assignment of the bond and mortgage to it is permitted, the defendant Ashton should be released from his personal obligation upon the bond, which he assumed upon taking title to the real estate. In order to make the original tender, the appellant borrowed $150,000 at six per cent. When its tender was refused it deposited this money with the county treasurer of Schenectady county, where it draws three per cent interest. The county treasurer’s fees for receiving the deposit amount to $750, and Ms fees when the deposit is withdrawn will be a like amount. If the Schenectady Holding Co., Inc., be permitted to have an assignment of the bond and mortgage, the foreclosure action being discontinued without costs as directed in the order appealed from, it must pay the amount of principal and accrued interest due at the time. This amount will be secured to it by the mortgage. But the appellant claims that, since it is paying six per cent and receiving but three per cent upon the moneys it borrowed to make its tender, and also has been compelled to pay and must pay $1,500, fees of the county treasurer, it should be reimbursed in these amounts. It borrowed this money and incurred the expense of depositing it with the county treasurer mistaking its rights, and the expense of this mistake cannot justly be charged to another. But it urges that, shortly after the decision of this court above cited, its board of directors passed a resolution authorizing the release of the obligor from his liability upon the bond, and that the excess of interest charged since that time at least should be recovered by it. At the time this resolution was passed, the Schenectady Holding Co., Inc., was not the owner of the bond and mortgage and, therefore, could not release the obligor. The obligor was released by the Adirondack Trust Company on June 27, 1923. The appellant has not been exposed to expense for interest upon its borrowed money by any illegal or wrongful act upon the part of the obligor upon the bond, or of his nominee, the Adirondack Trust Company, or its assignor, the Schenectady Savings Bank, and such expense cannot be charged against either of these. It is suggested that the opposition to the order directing an assignment of the bond and mortgage to this appellant was due to the failure to release the original obligor and that some fault may attach to him or his nominee because he did not so inform this appellant. The appellant was not in position fco release the obligor until it became the owner of the mortgage. It could agree, or perhaps assure, that it would release him when it became the owner by assignment. We think that tender of release, or such assurance as the appellant could give, should have been made at the time the tender of the amount due upon the mortgage was made as a preliminary to procuring an assignment of the bond and mortgage. And we should recall that upon the argument of the former appeal the obligor consented that the action be discontinued if he were released from his liability but his opponents did not approve.

Second. There is now an action pending, brought by the Schenectady Holding Co., Inc., against Edward B. Ashton, in substance seeking judgment that Ashton purchased the real estate as trustee of the appellant and that the title really passed to it, he at that time being its president and thoroughly acquainted with its affairs; and alleging among other things that he could not, being an officer of appellant, profit by the transaction. The merits of this action cannot be tried upon this motion and we cannot anticipate what new relations or obligations the result of the action may introduce between the parties. If the appellant shall take an assignment of the bond and mortgage and shall release Ashton from his assumed liability for the mortgage debt, his interest in the payment of the mortgage rests upon his ownership of the mortgaged property. This presents the question involved in the action brought against him by the Schenectady Holding Co., Inc., the decision of which we cannot anticipate. For this reason we think the order permitting him to pay the mortgage should not now be made.

The second order we conclude should be reversed.

The first order appealed from should be modified by striking out the 2d, 3d, 4th and 5th paragraphs thereof, beginning with the word “ Ordered,” and substituting in the place thereof the following: Ordered that the Adirondack Trust Company, of Saratoga Springs, N. Y., and Eugene E. Hayden be and hereby are directed to immediately execute to the defendant, the Schenectady Holding Co., Inc., a good and sufficient assignment of the mortgage and accompanying bond described in the complaint in this action; that said assignment be delivered to the Schenectady Holding Co., Inc., upon payment of the amount due for principal and interest thereon at the day of delivery and upon condition that the Schenectady Holding Co., Inc., immediately upon such delivery of the assignment shall deliver to Edward B. Ashton, or the Adirondack Trust Company, a proper release of the personal liability of Edward B. Ashton upon the mortgage debt; upon making such payment and delivering such release the title of the Schenectady Holding Co., Inc., to the said mortgage and the accompanying bond shall be complete, and the said Adirondack Trust Company shall thereupon deliver to the Schenectady Holding Co., Inc., its officers or attorneys, the said mortgage, with the accompanying bond, together with all assignments thereof, insurance policies, abstract of title and other papers which accompany said mortgage and which they hold with said mortgage and bond. And it is further ordered that the treasurer of Schenectady county on demand pay to the Schenectady Holding Co., Inc., the money heretofore deposited by it with him with all interest accumulated thereon after deducting his lawful fees. And it is further ordered that the Adirondack Trust Company and Eugene E. Hayden be and each is hereby restrained from assigning or in any wise disposing of the said bond and mortgage, except in compliance with this order, within thirty days from the date hereof. As so modified, the order should be affirmed.

H. T. Kellogg, Hasbrouck and McCann, JJ., concur; Cochrane, P. J., not voting.

The second order, dated September 8, 1923, is reversed on the law and facts, and the motion is denied, without costs. The first order, dated July 17, 1923, is modified as stated in the opinion herein, and as modified affirmed, without costs.