King v. Pelkofski

• Decision Date: 13 December 1965
• Citation: 24 A.D.2d 1003,266 N.Y.S.2d 61
• Court: New York Supreme Court — Appellate Division
• Parties: Rose KING, Plaintiff-Appellant, v. Joseph PELKOFSKI, also known as Joseph B. Pelkofski, Defendant, and Genevieve Pelkofski, also known as Genevieve F. Pelkofski, and Elwood's Lawn & Garden Center, Inc., Defendants-Respondents.

Page 61

266 N.Y.S.2d 61

24 A.D.2d 1003

Rose KING, Plaintiff-Appellant, v. Joseph PELKOFSKI, also known as Joseph B. Pelkofski,

Defendant, and Genevieve Pelkofski, also known as

Genevieve F. Pelkofski, and Elwood's

Lawn & Garden Center, Inc.,

Defendants-Respondents.

Supreme Court, Appellate Division, Second Department.

Dec. 13, 1965.

Weissman, Levenbron & Stern, Huntington, for appellant; John J. Boyle, New York City, of counsel.

Robbins, Wells & Walser, Bay Shore, for respondents; Richard W. Walser, Bay Shore, of counsel.

No brief or appearance for respondent Elwood's Lawn and Garden Center, Inc.

Before CHRIST, Acting P. J., and BRENNAN, RABIN, HOPKINS and BENJAMIN, JJ.

MEMORANDUM BY THE COURT.

In an action to foreclose a mortgage on real property and to foreclose a chattel mortgage given as additional security against certain chattels-located in the building on the premises, the plaintiff appeals from an order and judgment of the Supreme Court, Suffolk County, entered April 27, 1965 upon the court's decision after a nonjury trial, which: (1) directed the entry of judgment in favor of the defendant Genevieve Pelkofski; (2) adjudged that said defendant has an interest in said real property, chattels and fixtures superior to any interest of the plaintiff; and (3) directed that the plaintiff's notice of pendency (as amended) be cancelled of record.

Judgment reversed on the law, without costs, and matter remitted to the Supreme Court, Suffolk County for the entry of judgment in accordance herewith. The findings of fact are affirmed.

In our opinion, the learned Trial Judge properly determined that a valid trust was created by the instrument dated August 4, 1961, and that consequently the defendant Joseph Pelkofski was without power or authority to execute a mortgage on the real property which was the subject of the trust. Although the trust agreement empowered trustee Pelkofski to sell, it was silent as to mortgaging. The law is well settled in New York, as in the great majority of the courts in the United States, that the mere fact that a power of sale is conferred upon the trustee by the trust instrument is not sufficient to confer upon him a power to mortgage (Bostwick v. Hall, 191 App.Div. 610, 181 N.Y.S. 793; Potter v. Hodgman, 81 App.Div. 233, 80 N.Y.S. 1056, affd. 178 N.Y. 580, 70 N.E. 1107; 2 Scott on Trusts, § 191), except as it may be specifically given by court order or statute.

It is our further opinion, however, that, insofar as the proceeds from the loan made by the plaintiff to Mr. Pelkofski and secured by the mortgage in issue were used to satisfy and discharge of record the prior mortgage held by The National Bank of Kings Park and a lien against the subject property, the plaintiff is entitled to be subrogated to the rights of the prior mortgagee under the well-established principle of equitable assignment by subrogation (The Thrift v. Michaelis, 259 N.Y. 302, 181 N.Y. 580; Home Owners' Loan Corp. v. Tobin, 175 Misc. 316, 23 N.Y.S.2d 451). The doctrine of equitable subrogation is dependent upon the facts and circumstances of the particular case and is founded upon principles of natural justice and equity (Pittsburgh-Westmoreland Coal Co. v. Kerr, 220 N.Y. 137, 115 N.E. 465). In this case, the interest of the defendant Genevieve Pelkofski in the trust property was subject and subordinate to the mortgage lien of The National Bank of Kings Park. The defendant has no superior intervening equity in the property which would be adversely affected by subrogating plaintiff to the prior mortgagee's rights. Moreover, even though the mortgage executed by Mr. Pelkofski was ineffective for the purpose of security, the proceeds of the loan were used to discharge a prior incumbrance and the plaintiff is entitled to be subrogated to the lien of the incumbrance so discharged (cf. Ingram v. Jones, 10 Cir., 47 F.2d 135, 140). Equity will preserve for the benefit of the plaintiff the senior incumbrance which she caused to be discharged.

Moreover, under the facts here present, which permit of the application of the equitable doctrine of subrogation, we further conclude that the plaintiff is also...