Minneapolis Trust Co. v. Mather

• Citation: 73 N.E. 987,181 N.Y. 205
• Parties: MINNEAPOLIS TRUST CO. v. MATHER.
• Decision Date: 11 April 1905
• Court: New York Court of Appeals

181 N.Y. 205

73 N.E. 987

MINNEAPOLIS TRUST CO.

v.MATHER.

Court of Appeals of New York.

April 11, 1905.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by the Minneapolis Trust Company against Helen Mather. From a judgment of the Appellate Division (85 N. Y. Supp. 510,90 App. Div. 361) affirming a judgment for defendant, plaintiff appeals. Reversed.

The first cause of action in the complaint is upon a promissory note made by the defendant to the order of the plaintiff, and the second is for commissions for rents collected, compensation for services performed, and moneys advanced by the plaintiff for the defendant. The plaintiff's demands are practically uncontroverted, but the answer sets forth several affirmative defenses and a counterclaim which raise the real issues in the case.

The material facts found by the referee are substantially as follows: In December, 1886, the defendant sold to one Whitney certain lands in the ‘Whitney rearrangement of Bellevue Addition to Saint Paul,’ Minn., and took in part payment of the purchase price 10 promissory notes, with five collateral mortgages aggregating $20,100. In October, 1889, the defendant left these notes and mortgages with the plaintiff for collection, and in March, 1891, the plaintiff also took charge of other property in Minnesota belonging to the defendant. In December, 1890, the plaintiff loaned to the defendant $5,000 upon her note for that amount, taking as security therefor an assignment of the Whitney notes and mortgages above referred to. This assignment, although absolute on its face, was simply intended as collateral security for the payment of the $5,000 note. This note was renewed from time to time, and, being unpaid in July, 1896, the plaintiff commenced an action to recover the amount thereof with interest, and also the amount of an open account, the items of which consisted of commissions for collecting rents and of moneys advanced by the plaintiff for the use and benefit of the defendant. At the time when the defendant executed and delivered to the plaintiff the $5,000 note above referred to, the Whitney notes were overdue, the interest thereon for a year remained unpaid, and there were large arrears of taxes on the property covered by the collateral mortgages. Great difficulty had been experienced in collecting anything on the Whitney notes, and considerable correspondence had passed between the plaintiff on the one hand and the defendant and Mr. Atwater, her attorney, of Minneapolis, on the other hand, as to the best course to pursue in the effort to collect the same. As the result of this correspondence, and in June or July, 1894, defendant's attorney, Atwater, instructed the plaintiff to foreclose the Whitney mortgage as soon as possible, ‘bid in the property for somewhere near its present value, and take judgment against the makers of the notes for any deficiency there might be.’ Pursuant to these instructions, and on July 16, 1894, the plaintiff commenced foreclosure by advertisement under the statutes of Minnesota, and this proceeding eventuated in a sheriff's sale of the lands on September 5, 1895. The plaintiff bid in the property for the sum of $24,434.90, which was the full face value of the notes and accrued interest, together with the costs and expenses of foreclosure, instead of bidding it in ‘for somewhere near its present value,’ as instructed by Mr. Atwater. This deviation by the plaintiff from the instructions given it by the defendant's attorney has resulted in the present controversy.

Upon the trial the learned referee awarded judgment in favor of the plaintiff upon the note executed by the defendant and for the amount of the open account, which, together with interest, aggregated the sum of $6,699.31. As above stated, these items are undisputed. But he also allowed the full amount of the defendant's counterclaim, which resulted in an affirmative judgment in her favor for the sum of $17,250.05, with interest. The claim of the defendant, as set forth in her affirmative defenses and counterclaim, was that the plaintiff, at its own option and volition, under the authority contained in the Whitney mortgages and the assignment thereof, and without request or direction from the defendant, foreclosed these mortgages and bid in the lands for the full amount thereof and costs; that the plaintiff bid off and purchased said lands for its own use and benefit, and thus took title thereto in its own right, free and clear of any claim of the defendant; that the plaintiff gave defendant no notice of said foreclosure proceedings and sale, and did not make her a party thereto, but prosecuted and perfected the same in its own way, and for its own use and benefit; that the mortgagor, Whitney, had conveyed the premises to the grantee, who had assumed to pay the mortgages; and that the plaintiff had failed and neglected to enforce personal liability of Whitney or his grantees. Upon these allegations the defendant asked for an accounting and an affirmative judgment of $14,000, with interest from September 5, 1894, which was the date of the sale in the foreclosure proceedings.

The referee's findings in respect of these affirmative defenses and counterclaims are that on June 30, 1897, Whitney conveyed the mortgaged premises to one Van Dyke, who assumed the payment of the notes and mortgages; that certain persons, named Sumbardo and Horr, had thereafter purchased the mortgaged property, or some part thereof; that the defendant was not made a party to the foreclosure proceedings above referred to, and had no notice thereof until after the sale under the same had been completed; that the land conveyed by the mortgages was something less than 20 acres, and was worth at the time of the sale about $20,000; that the aggregate amount due and payable on the Whitney notes and mortgages on September 5, 1894, was $23,949.36; that the plaintiff commenced no suit against Whitney or his grantees, and made no attempt to collect the notes and mortgages either from Whitney, Van Dyke, or the subsequent grantees; that the plaintiff's officers did not know Whitney, had never seen him or had any business with him, and that there was no evidence that the plaintiff or any of its officers had ever heard of Van Dyke, or that the mortgaged premises had been conveyed to him; that the plaintiff was negligent in the collection of said notes and mortgages and in causing the mortgaged premises to be sold at the full amount due thereon, thus releasing the said Whitney and Van Dyke from all personal liability in respect thereto. Upon these findings of fact the referee found as matter of law that the plaintiff had converted the pledged securities and must account to the defendant for the value thereof. He fixed the value of the securities as of September 5, 1894, at $23,940.36, and, after deducting therefrom the sum of $6,699.31 due upon the note and account set forth in the complaint, he awarded judgment in favor of the defendant for the difference, which was the sum of $17,250.05, with interest from the date of the foreclosure sale.Thomas Thacher and Selden Bacon, Jr., for appellant.

M. H. Merwin and Joseph Nellis, for respondent.

WERNER, J.

Upon the facts found as above stated, the two principal questions that survive the judgment of affirmance in the Appellate Division are (1) whether there is any evidence to support the findings of fact; and (2) whether the conclusions of law are warranted by the facts as found. The...