In re 43d Avenue, Borough of Queens, City of New York

• Decision Date: 28 December 1939
• Citation: 24 N.E.2d 841,282 N.Y. 42
• Parties: In re 43d AVENUE, BOROUGH OF QUEENS, CITY OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

282 N.Y. 42

24 N.E.2d 841

In re 43d AVENUE, BOROUGH OF QUEENS, CITY OF NEW YORK.

Court of Appeals of New York.

Dec. 28, 1939.

Appeal from Supreme Court, Appellate Division, Second Department.

Proceeding in the matter of the application of the City of New York relative to acquiring title to real property required for opening and extending 43d Avenue (Grout Avenue-Percy Street) from 57th (4th) Street to 63d Street (Trimble-Greenpoint Avenue) etc., in the Borough of Queens. From an order of the Appellate Division, Second Department, 256 App.Div. 982, 10 N.Y.S.2d 351, in which reargument was denied in the Appellate Division in 256 App.Div. 1100, 12 N.Y.S.2d 356, which modified an order of Special Term, the City of New York appeals. The Harbro Holding Company, Inc., is respondent.

Affirmed.

FINCH, J., dissenting. William C. Chanler, Corp. Counsel, of New York City (Julius Isaacs, Lewis Orgel, and Reuben Levy, all of New York City, of counsel), for appellant.

A. Albert Bennin and I. Joel Komarow, both of New York City, for respondent.

RIPPEY, Judge.

Condemnation proceedings were brought by the city of New York to acquire certain lands for opening and extending Forty-third avenue from Fifty-seventh street to Sixty-third street in the borough of Queens. Damage Parcel No. 12 was included within the lands condemned and an award of $1,500 was made by Special Term to the mortgagee and a nominal award of one dollar to the fee owner of the property. The Appellate Division, upon appeal, modified the Special Term order by providing ‘that when the City pays the award to the mortgagee Harbro Holding Co., Inc., it shall have en equitable lien therefor upon the mortgaged premises not taken, by way of subrogation to the rights of the mortgagee, to the extent of the amount of the award,’ and, as so modified, affirmed. The city alone is appealing to this court.

Title to Damage Parcel No. 12 vested in the city on November 2, 1927. The award was made on December 1, 1937. Trials and appeals intervened since the commencement of the proceeding on April 14, 1927.

On February 28, 1928, the Halbro Holding Company, Inc., became the owner by assignment of a mortgage dated October 19, 1925, of the face value of $18,000 for which it paid the sum of $10,000. On February28, 1928, the assignee released to the Woodris Realty Corporation eight lots in the tract for a consideration of one dollar, although the mortgage provided for payment of $1,000 upon release of each interior lot and $1,500 for the release of each corner lot covered by the mortgage, aggregating a total of $9,000. The Woodris Realty Corporation had become owner of nineteen lots in the tract on December 30, 1927. On April 11, 1929, the Woodris Realty Corporation conveyed a total of thirteen lots to the Halbro Holding Company, Inc.

At the time of that transfer any lien which might have existed by virtue of the mortgage on Damage Parcel No. 12 had been extinguished by virtue of the vesting of title in the city. Administrative Code of City of New York, L. 1937, Ex.Sess., ch. 929, s B15-37.0; Matter of Braico, 235 App.Div. 132, 256 N.Y.S. 483; affirmed, 260 N.Y. 625, 184 N.E. 120;Matter of City of New York, Boscobel Ave., 242 App.Div. 392, 275 N.Y.S. 1;Gates v. De La Mare, 142 N.Y. 307, 312,37 N.E. 121;Deering v. Schreyer, 171 N.Y. 451, 64 N.E. 179. The nominal award to the owner was correct, since private street easements existed against the property prior to the time of the vesting of title in the city. That, however, did not affect the lien of the mortgage upon the property taken. Matter of City of New York, Braddock Ave., 278, N.Y. 163, 15 N.E.2d York, Braddock Ave., 278 N.Y. 163, 15 N.E.2d

The city contends here that its right to subrogation has been repaired since, subsequent to the date of vesting, the mortgagee released for a nominal consideration from the lien of its mortgage various lots as above stated, relying upon Matter of City of New York, Braddock Ave., supra, but the city overlooks the fact that the decision in that case was based upon an equitable necessity to prevent unjust enrichment on the part of the owner. Here, although the stockholders of the corporation to which the lots were released are the same as the stockholders of the Harbro Holding Company, Inc., the most that the city could ask for would be a reduction of the balance remaining due on Harbro's mortgage in accordance with the schedule contained in the release clauses of the mortgage. The court took that fact into consideration in making the award. Harbro was in no way unjustly enriched and the doctrine of subrogation should not have been applied in this case. Nevertheless, it was applied, and the Harbro Holding Company, Inc., is not appealing. The city may claim the right of subrogation as to the lots not taken which the lower court has given it up to the full amount of the award and the city is not in any manner prejudiced by the modification by the court below. The award has been unanimously affirmed and is sustained by the evidence. There is no point that the city can urge here warranting any reversal or modification of the order appealed from.

The order appealed from should be affirmed, without costs.

FINCH, Judge (dissenting).

Upon this appeal the liability of the city to pay an award to a mortgagee for the taking of part of certain mortgaged premises is disputed for the reason that, since the vesting of title in the city the mortgage has been satisfied.

The facts, in so far as necessary to present the decision, are as follows:

On November 2, 1927, the city of New York condemned, for purposes of a street, and the title then vested to a certain strip of land already burdened with private street easements. This strip wa a portion of a tract upon which a mortgage had been executed in 1925. The easements were created by the subsequent grantee after the mortgage. On December 30, 1927, the Woodris Realty Corporation acquired the fee of a portion of the tract not taken by the city. On February 28, 1928, Harbro Holding Company, respondent, became the holder of the mortgage, and on April 11, 1929, Woodris conveyed the fee to Harbro. The fee and the mortgage were thus united in Harbro. The sole stockholders of each corporation are two brothers, who own a one-half interest each in the two corporations. During the interim between February 28, 1928, and April 11, 1929, Harbro, for a nominal consideration, had released from the mortgage lien certain lots which, according to the mortgage agreement, were to have been released upon payment of $1,000 for ordinary street lots, twenty feet by ninety feet, and $1,500 for corner lots of the same size.

The decision of Special Term entitled Harbro, as assignee of the holder of the mortgage on title vesting day, to be paid the value of the fee of the street taken by the city, up to the amount of the indebtedness remaining under the mortgage. In arriving at this amount the justice at Special Term apparently reduced the amount of the mortgage indebtedness by the sums which the mortgagee would have received had the latter enforced the terms of the mortgage in releasing the lots as above indicated. Thus the city was not aggrieved by the alleged fraudulent releases. The easements in the street created by the mortgagor subsequent to the mortgage were properly held not to affect the rights of the mortgagee. On appeal to the Appellate Division, that court modified the order of Special Term by granting the city a lien by way of subrogation to the position of the mortgagee but subordinate to the right of the mortgagee, upon payment of the award. Matter of City of New York, Braddock Ave., 278 N.Y. 163, 15 N.E.2d 563. It appears from the opinion of the Appellate Division that the effect upon the position of the city of the alleged satisfaction of the mortgage subsequent to title vesting day, was not passed upon for the reason that the court held that all rights...