Casserly v. Witherbee

• Decision Date: 11 March 1890
• Citation: 23 N.E. 1000,119 N.Y. 522
• Parties: CASSERLY v. WITHERBEE et al.
• Court: New York Court of Appeals Court of Appeals

119 N.Y. 522

23 N.E. 1000

CASSERLY

v.WITHERBEE et al.¹

Court of Appeals of New York.

March 11, 1890.

Appeal from supreme court, general term, first department.

Action by Bernard Casserly as receiver of the Port Henry Steel & Iron Company, Limited. A demurrer to the complaint was sustained at special and general terms, and plaintiff again appeals.

Henry Bacon, for appellant.

Chester B. McLaughlin, for respondents.

EARL, J.

In his complaint the plaintiff alleges that in June, 1887, in an action in the supreme court against the Port Henry Steel & Iron Company, Limited, he was duly appointed the permanent receiver of that company; that he duly qualified, and was then acting, as such; that the defendants were copartners in business, and during the year 1886 the iron company became indebted to them in the sum of $17,086.84; that, on the 10th day of August in that year, it executed to them chattel mortgages on ‘all buildings, machinery, erections, tools, fixtures, and appliances, hoisting engine, and all machinery and apparatus connected therewith, placed by it upon the premises known as the ‘Cedar Point Furnace,’ and land adjacent, together with all scraps of iron owned by it, and in its possession, at Port Henry, New York;' that the mortgages, by their terms and conditions, became due and payable on or before the 1st day of January, 1887, and, the amount secured by them not having been paid, on the 10th day of January, 1887, the defendants took actual possession of the property described in them, and thereafter caused a sale to be made thereof at auction, at which they bid in the same for the sum of $1,000; that the sale was irregularly made and unfairly conducted, and no portion of the property was visible, in sight or in view of the person or persons attending the sale; that all the property was put up for sale in a lump, and sold together, at the request of the defendants, although they well knew that the property could be sold separately, and greater sums realized therefor, if sold in parcels; that none of the officers of the corporation were present at the sale; that, ever since the property was taken by defendants, they have claimed to be the legal owners thereof, and still hold and retain the same, except that since the sale they have sold some portion thereof, realizing from such sale between the sum of ten and fifteen thousand dollars; that, at the time the property was taken by defendants and sold, the value of the same was about $60,000, and the indebtedness due from the defendants to the corporation on the mortgages did not exceed the sum of $20,000; that the defendants claim to be creditors of the company for the balance of the indebtedness secured by the mortgages after deducting the sum of $1,000, amounting to $18,281.59, with interest from August 10, 1886. And the prayer for judgment is as follows: ‘Wherefore, by reason of the premises, the plaintiff demands the judgment and decree of this court that said defendants account to the plaintiff herein for the true and full value of the property so taken and sold by them at the time the same was so taken, retained, and sold as hereinbefore stated, and that the value thereof, so to be ascertained, be applied in payment and extinguishment of the debt secured by said mortgages referred to, and that plaintiff herein have judgment against said defendants for the balance, together with such other and further relief in the premises as may be just and equitable, with the costs and disbursements of this action.’ The defendants demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The judge at special term sustained the demurrer on the ground, as appears from his opinion, that the plaintiff should have alleged in the complaint a tender of the amount confessedly due and unpaid upon the mortgages; and the judgment of the special term was sustained by the general term, as appears from its opinion, because the plaintiff omitted to show ‘either a tender of the amount conceded to be due to the defendants, or an offer to pay that amount upon its being ascertained and established at the trial.’

The plaintiff, as receiver of the iron company, occupies its place in this action, and has the same right to maintain the action that it would have had if no receiver had been appointed. After default in the payment of the mortgages at law, the title of the defendants became absolute, and they were the general owners of the property mortgaged. Thereafter the mortgagor could maintain no action whatever, at law, against them. All that remained to it was a right of redemption, which could only be enforced in an equitable action. Charter v. Stevens, 3 Denio, 33;Stoddard v. Denison, 38 How. Pr. 296;Bragelman v. Dane, 69 N. Y. 69. The fact that, upon the sale by the defendants under the mortgages, they became the purchasers, does not of itself render the sale void. Olcott v. Railroad Co., 27 N. Y. 546; Edmiston v. Brucker, 40 Hun, 256; King v. Walbridge, 1 N. Y. Supp. 11;Elliott v. Wood, 45 N. Y. 71;Hall v. Ditson, 5 Abb. N. C. 198. But the other facts alleged in the complaint show that the sale was void, or, if not void, that it was certainly voidable; and it could be vacated, and set aside, if necessary, as part of the relief in this action. A...