Riesgo v. Glengariffe Realty Co. , 101 N.Y.S. 832 ( 1906 )

Ingraham, J.:

This action was brought to foreclose a second mortgage upon certain premises owned by tbe Glengariffe Realty Company, the mortgagor. There were made parties defendant to this action James F. A. Clark and others, as survivors of the firm of Clark, Ward & Co., in liquidation, as persons having, or claiming to have, some interest or lien upon the mortgaged premises, which had accrued subsequent to the lien of the mortgage, and was subject and subordinate thereto. This complaint contained the usual allegations, including that required by section 1629 of the Code of Civil Procedure, which was as follows: “ That no other action has been had for the recovery of the said sums secured by the said bond and mortgage or any part thereof.” These defendants, James F. A. Clark and others, as surviving partners, interposed an answer admitting the making, execution and delivery of the bond and mortgage to secure its payment, alleging that they had no knowledge or information sufficient to form a belief as to certain other allegations of the complaint in regard to the payment of interest upon the prior mortgage, and "denied- that there was due to the plaintiff the sum of $100,000, and denied knowledge or information sufficient to form a belief as to there being due to -the plaintiff various other sums of money which complaint alleged that the plaintiff had paid as interest on prior mortgages and insurance; admitted that the defendants Clark and others had, or claimed to have, some interest in or lien upon the said mortgaged premises; and then, as a separate defense, alleged that the answering defendants obtained a judgment on the 21st day of September, 1901, against one J. Edward Addicks, which judgment was duly filed in the office of the clerk of the county of Flew York on May 20, 1905 ; that there was due and unpaid upon that judgment upwards of $193,000. Subsequently these judgment creditors commenced an action in the Supreme Court of the State of FTew York to have certain real property situated' in the county of "Flew York declared to be the property of the judgment debtor, Addicks, and the lien of the said judgment impressed thereon, and the said property sold and applied to the satisfaction of the said judgment, and that the mortgaged premises described in the complaint were a part of ■ the premises included in that mortgage; that tlie, said premises are equitably the property of the said-Ad dicks, and were held in the name' of the defendant Glengariffe Realty Company for the purpose of hindering, cheating and defrauding ■creditors ; a further defense that this mortgage was fraudulent and void as against these defendants, and that the mortgage is usurious and void. The answer also contained an allegation of lack of knowledge and information sufficient to form a belief as.to the truth of the allegation of tlie complaint, that no other .action had been brought to foreclose this mortgage or to recover the amount due upon the bond. The action being at issue, it came on for trial at the Special Term on tlie 9th of January, 1906, when the counsel for the' defendants submitted an affidavit that he was engaged in .the trial of a case in another branch of the court, and that lie would be engaged in such trial' for the remainder of the week, and for that reason-lie asked for a postponement of the trial of the case. ' This motion was denied, and the plaintiff thereupon called a witness who testified .that he was an attorney and counselor at law and represented the plaintiff in loans made by them. The bond and mortgage were then introduced in evidence, and the witness testified that he was .present at" the time the mortgage was given, and that $100,000 was at that time advanced by the plaintiff to the Glengariffe Realty Company. At this point Mr: Cleveland, who was counsel for the appellants, appeared and stated that since the thirteenth of November he had been continuously engaged in the trial of a- case. In answer to á question by the court, he stated that lie would probably be engaged for two days more, stating to the court that he would be very likely able to get off from the other trial on the following day or the day after. Counsel .for the plaintiff opposed an adjournment upon the ground that there was another installment of interest upon the first mortgage which would become due on the first day of February, which the plaintiff would be required to pay if there was an adjournment of the case. The court then stated to the counsel that' if he would, say that he would be prepared to go on with the trial of the case the next-day the court would pass the case, and counsel said that he would endeavor to do so, When the court said : “ If you will not undertake to enter into that understanding the. inquest may now proceed.” This being assented to, the court stated that the trial would stand over until the next day, the case to be considered on trial to be taken up the next morning. The next morning Mr. Cleveland again appeared and made an application to further adjourn the case, as he could not leave the other trial in which he was engaged. The court stated that in view of what had happened the day before, he did not think the case should be further delayed. There was some further discussion between counsel and the court about a proposed amendment to the answer of these defendants, plaintiff’s counsel apparently making no objection to the proposed amendment, but the counsel for the other defendants objecting, the court denied the motion to amend the answer, to which there was an exception. Whereupon Mr. Cleveland stated “ I .propose to take no further part in this trial,” and left the court room, and the court proceeded with what was-called an inquest which the plaintiff had commenced the day before. Evidence was then offered proving that the plaintiff had paid six months’ interest and also insurance; that the defendant had paid nothing on account of the principal of this mortgage, but had paid $5,000, one year’s interest, on the 15th of March, 1905; that lie had made a computation of interest upon the amounts which were due and that the net amount of principal due, after deducting all payments, was $99,138.89, which, with the interest paid on the. former mortgage and the insurance and interest thereon,-make a total of $107,808.50; and tile defendants offering no testimony, the court directed a judgment of foreclosure and sale.' From this judgment the defendants have appealed.

It is doubtful whether the defendants have a right to appeal from the judgment entered under these circumstances. After the application of defendants’ counsel to adjourn the trial and for an amendment was denied, he withdrew from the trial, and it proceeded without him. But assuming that they have a right to appeal, as no exception was taken to the evidence, the only question presented is raised by the exceptions to the conclusions of law which were subsequently taken by these appealing defendants, and by the exception to the fourteenth finding of fact which found that no' other action had been had for the recovery of the sums secured by'the said bond and mortgage or any part thereof, upon the ground that' there was no evidence to support it.-

We think that the court was justified in refusing fo postpone the trial.. The day that the case was first on for trial, the attorney for these defendants entered into an implied agreement with the court that he would appear on the next daynnd continue with the trial without objection. The trial was considered commenced to be com tinned on the next day. -.When the case was-called on. the following morning the counsel was bound by his agreement and was bound to make arrangements • to continue the trial, or if he could not do so because of his engagements, to procure other counsel to represent liis clients. The court was also justified in refusing to entertain the motion to amend the answer upon the trial. ' The action had been at issue for some time. The answer had stood as the answer of the defendants until the. case was about - to be called for trial, and if counsel had desired to -stay the trial until after his motion was heard and decided, he should have made the proper application to stay the proceedings at the Special Term.

-The only question, therefore, that requires any consideration is whether the allegation of the complaint that no other action had been commenced to recover- the amount due-upon this bond and mortgage was required to be proved in the face of "a denial of. knowledge or information sufficient to form a belief as to- that fact. By the bond given' by • the mortgagor it acknowledged itself indebted-to the plaintiff in the sum' of $100,000. It gave to the plaintiff a mortgage upon its real property to' secure the payment of that sum. Whether or not the plaintiff had instituted any other action for the recovery of the sum secured by the said bond and mortgage was no part -of the plaintiff’s cause of action, -which was upon the bond and the mortgage to secure the payment of the amount due on the bond. Whether or not the' plaintiff had realized from any source any money which could be applied to reducé the amount secured by this bond and mortgage, was an affirmative defense ; so that it cannot be said that this allegation .constituted any part of the ■ plaintiff’s cause of action. Section 1629 of the Code of Civil Procedure pro.vides'that The complaint, in an action to foreclose a mortgage upon real property,, must -state, whether any other action has been brought to-recover a,ny part of the mortgage debt, and, if so, whether any part thereof has been collected.” This allegation is not made a part of the plaintiff’s cause of action by any provision of the Code. It does not seem that a mere denial of knowledge or information sufficient to form a belief by the defendants of that allegation, when inserted, raises an issue, so that the plaintiff must prove the fact alleged before being entitled to judgment, especially where a defendant withdraws from the trial of the case. The fact that at the time of the execution of the bond and mortgage the amount secured thereby was actually paid to the mortgagor and that the plaintiff had received on account of the principal a small sum of money which was credited and that the balance was due upon the mortgage proved the plaintiff’s cause of action, and upon that proof, in the absence of any defense offered by the defendants, the plaintiff was entitled to judgment. I do not understand that the existence of a former proceeding to recover the amount secured to be paid by a bond and mortgage would of itself be a defense, and this provision of the Code seems to require the insertion of such an allegation in the complaint for the information of the court upon tlie trial, and not to raise an issue which by the mere denial of the allegation would require the plaintiff to prove the negative of an affirmative defense. It would seem to be analogous to those cases where a formal allegation is required in a complaint, but of which no proof is required upon the trial, like an allegation of a breach of a contract to pay a sum of money,’ where it is essential that the plaintiff should allege a breach of the contract of which he complains; but a denial of that allegation does not put the facts in issue. (See Lent v. N. Y. & M. R. Co., 130 N. Y. 504.) A consideration of the language used in the Code shows clearly the object of this provision. The complaint must state whether any other action has. been brought to recover any part of the mortgage debt, and, if so, whether any part thereof has been collected, the clear intent being to compel the plaintiff to allege in the complaint the facts to. show that no part of the mortgage has been collected; but the mere maintenance of a former action not being a defense, the failure of the plaintiff to prove that no action had been commenced would .not be a ground for refusing to award the plaintiff a judgment. If the complaint had alleged that an action had been' brought .on the bond but nothing had been recovered, the complaint would not have been demurrable nór would such an allegation in an answer be a defense; but I think the proof upon the trial was sufficient to justify the. finding that no action had been commenced in.which any sum had been collected which was applicable, to the payment of the amount due on tlié mortgage. The evidence was that the amount specified in the bond had been actually paid to the mortgagor1 when the mortgage was executed; that the plaintiff had received a sum of money, a' part of which was applicable to the payment of the principal of the bondthat the mnly sum that had been paid by the mortgagor to the plaintiff was the sum of $5,000, of which $4,138.89 was payable for interest and $861.11 was credited oh the principal, leaving a net amount of principal due, after allowing that deduction, of $99,138.89. This was direct proof that the plaintiff had received nothing on account of the principal, except this sum of .$861.11, which was credited upon the principal and for the balance of the principal, less that amount, with the other payments to which the plaintiff was entitled to judgment, judgment was awarded. It seems to me, therefore, that this proof was sufficient .to sustain the finding that no other proceeding had been instituted to collect the amount due upon this bond and mortgage from which anything had been received which could be credited thereon, and that upon this the plaintiff was entitled to judgment. ¡No case has been cited upon the construction to be given to section 1629 of' the .Code, as it does not appear that such a claim., has ever been before made.

It follows that the judgment appealed from must be affirmed, with costs.

Patterson, McLaughlin, Clarke and Houghton, JJ., concurred.

Judgment affirmed, with costs. Order filed.