Belden v. Slade , 33 N.Y. Sup. Ct. 635 ( 1882 )

Hardin, J.:

Plaintiff, a judgment creditor of William Witty, is entitled to redeem of Mrs. Banks, so far as she is the assignee of the five mortgages executed by Witty upon the lands described in the complaint. (Brainard v. Cooper, 10 N. Y., 356, opinion of Gardiner, J.; Gage v. Brewster, 31 id., 218; Peabody v. Roberts, 47 Barb., 91; Benedict v. Gilman, 4 Paige, 58; Reynolds v. Park, 53 id., 36; Ross v. Boardman, 22 Hun, 527.)

Not having been made a party to the Tremain foreclosure the plaintiff’s rights as a judgment creditor were not cut off by that foreclosure, and Slade, as assignee, was the purchaser at that foreclosure sale, and as such purchaser, acquired in equity the rights of an assignee of the Tremain mortgage to the extent of the debt then due upon that mortgage and the decree of foreclosure.

After payment of the moneys called dividends, Slade, as assignee, became in equity an assignee of the mortgages'upon which he paid them pro ta/nto the payments, and by his conveyance to Mrs. Banks, in equity such mortgages were assigned to her, and she is entitled to receive the amount paid therefor by Slade, with interest, less -the rents and profits received by her out of the mortgaged premises which she possessed as mortgagee under the covenants and assignments so passing to her.

A mortgagor cannot redeem without paying what is really due, •and when a mortgagee buys in an incumbrance, he shall be allowed •as against the mortgagor all that is due upon it, though he bought it for less. But it is otherwise if the heir or trustee of a mortgagor buys in an incumbrance, as against subsequent incumbrancers and creditors, in which case he can only be allowed what he has paid for an incumbrance. (2 Barb. Oh. Pr. [Rev. ed.], 199, and two cases cited in note jo.)

But she acquired more than the rights of an assignee of such mortgages, when she took the title from Slade as assignee, and paid him $3,300 for the premises.

Slade, as assignee, held the equity of redemption in the premises •before and at the time of the sale upon the Tremain decree of foreclosure, which he took from Witty the debtor, subject, it is ti'ue, to the lien of the five mortgages and the plaintiffs judgment. (Winslow v. Clark, 47 N. Y., 261.) To the Tremain foreclosure, Slade, as assignee, was not made a party, and such title was not thereby cut off, and in equity, it may be said he held such legal title independent of the rights acquired at the foreclosure sale. The equitable rights were not merged in the legal title. (Franklin v. Hayward,, 61 How., 45; Payne v. Wilson, 74 N. Y., 354.)

While he cannot question the validity of the Tremain mortgage, and while he doubtless would be estopped from setting up a title in the premises as against his grantee, he is not as to the plaintiff here, estopped.

Nor is his grantee, Mrs. Banks, left to stand as against the plaintiff upon the equitable interests which she takes as assignee of the mortgages which come to her through the Tremain foreclosure and the conveyance of Slade. Plaintiff has never sold the equity of redemption. He is not entitled to a conveyance thereof from the defendant Mrs. Banks, no more than he would have been while it remained in Slade, as assignee, the plaintiff’s judgment debtor.

It may be assumed that so much of the money paid by Mrs. Banks to Slade, as assignee, as was required to pay for the equitable rights held by him in virtue of the mortgages acquired by him, was paid therefor, and that the balance was paid to Slade to acquire the equity of redemption held by him, which he acquired directly from Witty, the bankrupt, through the proceedings in bankruptcy.

To obtain such balance it may be assumed Slade gave such title, and his covenants of warranty to Mrs. Banks. Thus she has acquired the legal title from Slade, and the equitable rights which he acquired as purchaser at the Tremain sale, and by means of the several payments which he made to acquire the mortgages.

So far as the report and judgment in this case require Mrs. Banks to convey to the plaintiff the title which she thus acquired, independent of the equitable interests in the mortgages, they do injustice to Mrs. Banks. They leave her only a right of action against Slade upon Ms covenant of warranty to recover so much of the purchase money paid by her as remains unrestored by realizing what was paid by Slade for the mortgages, and paid to her as in liquidation of her rights as assignee of the mortgages.

Besides, if she is required to part with such title to the plaintiff ■and he be allowed to acquire it as “ the owner thereof,” as stated in the sixth finding of law, the defendant is required to part with it without any adequate compensation, and the plaintiff is allowed to acquire it without any judicial sale thereof or equivalent compensation.

If she be compelled to execute “ all such conveyances and acquitances as may be necessary properly to carry out and enforce the decree ” which declares, viz., “ that the plaintiff shall he vested with all the title conveyed to the said Almira E. Banks by said defendant Slade, free and clear from all liens and incumbrances,” then the plaintiff would acqmre the legal title without any sale by judicial proceedings either upon his execution against the debtor or by virtue of any foreclosure having validity against the former or present owner.

He has come into a court of equity, asking equity and he should be required to do equity. (2 Fonbl. Eq., B. 2, chap. 3, § 9, and note 3 to Story’s Eq., § 1023.)

Such a result ought not to be accomplished in the name of equity. The mortgage foreclosure was no more effectual upon the equity of redemption than upon the rights of plaintiff as judgment creditor. (Van Slyke v. Shelden, 9 Barb., 278; 22 Hun, 527; Winslow v. Clark, supra.)

The legal title of the mortgagor passed to his assignee Slade, and as Slade was not a party to the foreclosure as assignee, he had the legal title and it was competent for him to pass that legal title, together with the equitable interests he acquired in the lands in virtue of becoming an assignee of the Tremain mortgage by means of the purchase at the sale as against the plaintiff here, and he transferred such equitable interests, as well as the legal title to Mrs. Banks. (Trimm v. Marsh, 54 N. Y., 599.) That the plaintiff could sell upon his judgment and execution, and Mrs. Banks might become a purchaser thereof. (Trimm v. Marsh, supra.) Hntil a sale it remains in Mrs. Banks, and in virtue of it she would be entitled to redeem from any sale which the plaintiff can make upon his judgment. It is a valuable title which ought not to be divested in a summary mode. (Farrell v. Parler, 50 Ill., 274.)

It was said in Bolles v. Duff (43 N. Y., 474) that in general strict foreclosures are regarded as a severe remedy, as they transfer the title without any sale; and Judge Peokham added in that case, “ they are now rarely pursued or allowed in this State, except in cases where a foreclosure has once been had and the premises sold, but some judgment creditor or person similarly situated not having been made a party, lias a right to redeem. As to him, a strict foreclosure is proper.”

In the case in hand we have attempted to show that the legal title has not been sold, and the defendant Banks holds it unforeclosed and she is entitled to hold it until divested in the mode prescribed by statute for enforcing judgments and mortgages by foreclosure or sale upon execution, especially as no reason is given for asking the intervention of a court of equity to interpose and compel her to convey it to a lienor.

In Brainard v. Cooper (10 N. Y., 349) it is stated that the plaintiff there held a lien which would expire before a sale by execution could be made effectual. “ His sole remedy was by redemption.” Not so here.

It was held in Pardee v. Van Anken (3 Barb., 534) that every person who has any right to, or interest, or lien upon the lands embraced in a mortgage which is liable to be foreclosed, is entitled to ■ a redemption, and that the owner of the fee of the equity of redemption redeems the land itself; and the decree in such cases directs the mortgagee to convey all his right and title to the premises to the redeeming party. “The owner of a junior indumbrance redeems not the premises, strictly speaking, but the senior incumbrance, and he is entitled not to a conveyance of the premises, but to an assignment of the security.”

In that case it was held further, that a satisfaction would not afford adequate relief, and that an assignment should he made of the prior mortgage.

The learned judge who delivered the opinion in that case said the right to an assignment “ springs directly from the general right of redemption.” (Dauchy v. Bennett, 7 How., 375.) Johnson, J., in alluding to Pardee v. Van Anken (supra), says the right to an assignment- does not spring from the right to redemption, but “rather from the necessity of the assignment to the protection of some right in the person redeeming;” and then he adds that to entitle a party to an assignment he should show that such an assignment is necessary to protect such title or funds in his hands. And Johnson, J., adds: That before a sale upon judgment the creditor had a mere lien, and had they then come to redeem would have redeemed the prior incumbrance, and not the premises. (7 How., 378.)

The rule laid down in these two cases is applicable here,,and shows that the report and decree are erroneous in requiring a conveyance by Mrs. Banks of the premises to the plaintiff, who has only a judgment lien upon them. (Salmon v. Allen, 11 Hun, 32.)

It is well settled that a party having a subsequent incumbrance when he redeems need not pay costs of a foreclosure ineffectual as to the party redeeming. (Vroom v. Ditmas, 4 Paige, 526; Benedict v. Gilman, Id., 58; Vanderkemp v. Shelton, 11 id., 28; Peabody v. Roberts, 47 Barb., 91; 81 N. Y., 218.) It is equally well settled that a party thus redeeming should pay costs of the suit to redeem, unless the defendant improperly resists the right to redeem. (Vroom v. Ditmas, supra; Raynor v. Selmes et al., 52 N. Y., 582.) We find no evidence in the case of any improper resistance by the defendants, Mrs. Banks and Slade, and we therefore see no ground upon which the referee, within settled rules, should have charged upon them the costs of the redemption suit. (Benedict v. Gilman, supra; Willard’s Eq. Jur., 449.)

Judgment reversed, and a new trial ordered before another referee, with costs to abide the event.

Smith, P. J., and Haight, J., concurred.

So ordered.