Sherman v. Foster

• Decision Date: 18 April 1899
• Citation: 53 N.E. 504,158 N.Y. 587
• Parties: SHERMAN v. FOSTER et al.
• Court: New York Court of Appeals Court of Appeals

158 N.Y. 587

53 N.E. 504

SHERMAN

v.FOSTER et al.

Court of Appeals of New York.

April 18, 1899.

Appeal from supreme court, general term, Third Department.

Action by Arthur W. Sherman against Charles A. Foster and others to foreclose three mortgages. From a judgment of the special term for plaintiff, defendants George Roberts and Howard C. Pearsall, subsequent judgment creditors, appealed to the general term, which affirmed the judgment (36 N. Y. Supp. 1133), and said defendants again appeal. Affirmed.

This action was commenced on the 12th of December, 1894, to foreclose three mortgages given to the plaintiff by Charles A. Foster upon his dwelling house in the village of Glens Falls. The first, dated December 22, 1891, was collateral to a bond in the penalty of $14,000, conditioned for the payment of $7,000, and interest, in one year from date. The second, dated March 28, 1892, was collateral to a bond for $2,000, conditioned for the payment of $1,000, and interest, in one year from date. The third, dated December 28, 1893, was collateral to a bond in the penal sum of $15,000, conditioned for the payment of $4,000, and interest, within one year from date, and also to indemnify the plaintiff ‘against all liabilities, costs, and damages which he might sustain as surety for’ said Charles A. Foster, as administrator of the estate of one Oscar Briggs, upon the usual administrator's bond filed in surrogate's court. As collateral to said bond for $15,000, and upon the same condition, Charles A. Foster also executed and delivered to the plaintiff a chattel mortgage, dated December 28, 1893, upon the furniture and other chattel property in said dwelling house. Frances A. Foster, wife of the said Charles A., united with him in the mortgages upon the real estate only. The defendants George Roberts and Howard C. Pearsall were judgment creditors of Charles A. Foster,-the former for $179.84, and the latter for $443.77; each judgment having been recovered on the 13th of March, 1894, and docketed on that day in the county where the property mortgaged was situated. These judgments became liens upon the real estate next in order after the mortgages of the plaintiff. An execution was issued to the sheriff of the proper county on the former judgment July 7, 1894, and on the latter April 26, 1894; and in November following the sheriff levied on said real estate under the executions, which were renewed from time to time, and on the 13th of April, 1895, sold the same to said judgment creditors for the amount of their respective judgments and the expenses of the sale. On the 1st of June, 1894, said dwelling house and furniture were damaged by fire. There was insurance thereon at the time; the policies being payable in the first instance to the plaintiff, as mortgagee, as his interest should appear. The amount of the loss was agreed upon by Foster and the insurance companies at $12,887.13, of which $6,537.01 was for loss on the building and $6,350.12 was for loss on the personal property. After the amount of the loss had been thus settled, but before any of the money was paid over by the companies, it was agreed between the plaintiff and Foster, at Foster's request, that ‘the money when received from the insurance companies should be deposited in the bank in the plaintiff's name, and should not apply as a payment on the mortgages in the first instance; but that the plaintiff should allow a portion thereof to be used in paying debts owing by Foster to other parties, and that the balance of the insurance money not so used should apply as a payment on the mortgages,’ and that ‘Foster should give the plaintiff orders specifying to whom the money should be paid and the amounts.’ Subsequent to this agreement, and prior to August 24, 1894, the insurance moneys were paid to the plaintiff by the various companies, through drafts previously indorsed by Foster, and afterwards, upon orders given by Foster pursuant to said agreement, the plaintiff paid to various creditors of Foster $3,997.25 from the insurance money, of which amount $300 was used in paying taxes on the real property, and about $600 in repairing the building, so as to protect it from injury by the elements. On the 26th of November, 1894, another fire occurred, by which said building was again damaged, and at this time it was insured for $11,000; the policies being payable to the plaintiff as before. The insurance companies requested the plaintiff to unite with them in an appraisal of the loss, which he did, and the appraisers awarded $5,500; but Foster was not a party to the appraisal, as the insurance companies refused to permit it. The companies failed to pay any part of that loss, and in April, 1895, one Wait, claiming to have an assignment of those policies from Foster, sued the companies, making Sherman a party defendant, alleging that the loss by the fire was more than $11,000. The companies answered, claiming, among other things, that the policies were void, owing to the lien of said judgments and executions; and the actions are still pending. Early in 1895, Foster, as administrator of the Briggs estate, had an accounting before the surrogate, which resulted in a decree that he pay about $5,900 to the parties interested. He failed to do so, and, after an execution had been issued and returned unsatisfied, judgment was recovered against Sherman on the 22d of June, 1895, for $5,945.14, which he paid prior to the trial.

At the close of the evidence for the plaintiff, the defendants Roberts and Pearsall moved to dismiss the complaint on the ground that no cause of action had been proved, because the two mortgages that were due when suit was begun had been fully paid out of the insurance moneys; but the motion was denied, and exception taken. The defendants then went into their proofs; but at the close of all the evidence no motion for a nonsuit or to dismiss appears to have been made. The trial court, after finding the facts substantially as thus stated, found, as a conclusion of law, that ‘a portion of the insurance money from the first fire having been paid out by Sherman to creditors of Foster, at Foster's request, without notice to Sherman of the equitable rights, if any, of the defendants Roberts and Pearsall, and without any knowledge or information on his part that they had any rights, said defendants are not entitled to have the amount so paid out by Sherman charged against him as a payment upon his mortgage indebtedness.’ He found the sum of $9,842.87, which included $99 for insurance premiums paid by Sherman, due upon said bonds and mortgages, and directed the usual judgment of foreclosure for that amount. He also directed that the defendants Roberts and Pearsall, upon payment of the amount due the plaintiff, should be entitled to an assignment of all his securities, and that if the mortgaged premises did not sell for enough to satisfy the plaintiff's claims and the judgments of Roberts and Pearsall, they, or either of them, might apply at the foot of the judgment to be entered for such direction as they desired respecting the plaintiff's cause of...