Moulton v. Cornish

• Decision Date: 30 April 1893
• Citation: 138 N.Y. 133,33 N.E. 842
• Parties: MOULTON v. CORNISH.
• Court: New York Supreme Court

138 N.Y. 133

33 N.E. 842

MOULTON

v.CORNISH.

Supreme Court, New York County, New York.

April, 1893.

Appeal by defendant from a judgment of the General Term of the Supreme Court, Fourth Department, modifying and as modified affirming a judgment of the Special Term of that court.

The action was brought by Emily A. Moulton against Nehemiah N. Cornish for an account of what was due her as purchaser of a portion of the premises sold under the foreclosure of a mortgage held by her in an action to which the defendant, a junior mortgagee, had not been made a party; and to compel defendant to pay the amount that should be found due her, or in default thereof, that he and those claiming under him, be debarred and foreclosed of all right, title and equity of redemption in the mortgaged premises.

The further facts are fully stated in the opinion.

C. M. & G. E. Dennison, for respondent,

I. The judgment being interlocutory no appeal lies to the court of appeals (citing McKeown v. Officer, 127 N. Y. 687;Victory v. Blood, 93 Id. 650;King v. Barnes, 107 Id. 645;Raynor v. Raynor, 94 Id. 248;Walker v. Spencer, 86 Id. 162;Cambridge Valley Nat. Bk. v. Lynch, 76 Id. 516;Clark v. Brooks, 2 Abb. Pr. N. S. 385;Tompkins v. Hyatt, 19 N. Y. 534; Tilton v. Vail, 117 Id. 520).

II. The plaintiff was entitled to a strict foreclosure (citing Bolles v. Duff, 43 N. Y. 474;Kendall v. Treadwell, 14 How. Pr. 165;Thomas on Mort. 2d ed. § 1077; Benedict v. Gilman, 4 Paige, 58;Robinson v. Ryan, 25 N. Y. 320;Jackson v. Bowen, 7 Cow. 13;Winslow v. Clark, 47 N. Y. 261; Salmon v. Allen, 11 Hun, 29; Parker v. Child, 25 N. J. Eq. 41).

III. The purchasers of the other parcels were not necessary parties (citing White's Bank of Buffalo v. Farthing, 101 N.Y. 344). The objection should have been taken by demurrer (citing Ousterhoudt v. Supervisors, 98 N. Y. 239, as distinguished by White's Bank of Buffalo v. Farthing, above).

IV. That the effect of Code Civ. Pro. § 1626, which requires that “in an action to foreclose a mortgage upon real property, if the plaintiff becomes entitled to final judgment, it must direct the sale of the property mortgaged,” etc., is to abolish strict foreclosure is suggested by learned writers (citing Thomas on Mort. p. 731, § 1143; Wiltsie on Mort. p. 929, § 833).

V. All the purchasers under the foreclosure of plaintiff's mortgage should be parties to a suit to cut off defendant's rights (citing Bear v. American, etc. Co., 36 Hun, 400; Osterhoudt v. Supervisors, 98 N. Y. 239.

E. J. Richardson ( Samuel Keeler, attorney), for appellant.

I. The provisions of the judgment were harsh, inequitable and unusual (citing Abb. Forms, No. 1798; Wiltsie, M. F. 923, 925, § 5; Bolles v. Duff, 43 N. Y. 469;Walsh v. Rutgers Fire Ins. Co., 13 Abb. Pr. 40).

II. Code Civ. Pro. § 1626, requires a foreclosure judgment to direct a sale. If that section by its mandate does not abolish strict foreclosure, such foreclosure is clearly limited to unusual cases where such an action is the only remedy by which complete justice can be rendered to all the parties in interest (citing Jones on Mort. § 1538; Thomas on Mort. 390; Wiltsie on Mort. § § 826-833, and cases cited).

III. A strict foreclosure is not authorized where plaintiff is a purchaser at a sale in a defective foreclosure of a prior mortgage, known to be defective at the time and so announced at the sale; especially after the court had granted the plaintiff leave in the prior action to correct the defect by making the omitted party defendant.

MAYNARD, J.

In 1886 the plaintiff was the owner of a mortgage given to secure the payment of $8,650 and interest, upon three several lots of land in the town of Floyd, Oneida county, known as the “Klock,” “Eells,” and “Tavern” farms; and the defendant was the owner of a subsequent mortgage upon the same property, given to secure the payment of $2,500 and interest, which, with the assignments to him, were recorded in the Oneida county clerk's office.

On May 16th the plaintiff commenced an action in the supreme court for the foreclosure of her mortgage, but omitted to make the defendant a party thereto. This omission was not intentional, but the plaintiff was misled by an abstract of a search obtained from the clerk's office, from which it might have been fairly inferred that the defendant's assignment was one in a series of transfers, and that the title to his mortgage was in another, who was made a defendant, and who appeared from the abstract to be a subsequent assignee. If a full statement of the search, in the usual form, had been obtained by the plaintiff, the interest of the defendant in the mortgaged property would have correctly appeared. The action resulted in a judgment, entered December 27, 1888, decreeing a foreclosure of the plaintiff's mortgage, and a sale of the mortgaged premises by a referee, pursuant to the provisions of the Code and the practice of the court in such cases.

The premises were first advertised by the referee to be sold on March 2, 1889. Before that time the plaintiff discovered that the defendant was a necessary party to the complete foreclosure of her mortgage, and she procured the sale to be postponed until March 16th, and made a motion, at a Special Term held at Syracuse on that day, for an order granting her leave to amend the summons, complaint, lis pendens, and judgment in the action by inserting therein the name of this defendant, and adjudging and decreeing that he be forever barred and foreclosed of all right, title, interest, and equity of redemption in the mortgaged premises, or for such further order or relief as the court might deem proper to grant. Upon the hearing of that motion the court made an order, which was entered, and which has not been reversed or vacated, directing that, upon payment of $10 costs, the plaintiff might, if she so elected, open the judgment in the foreclosure suit and amend the summons, complaint, lis pendens, and all subsequent proceedings, by making this defendant a defendant in that action and inserting the necessary allegations for that purpose, and that the amended summons and complaint be served on him, and that he have the usual time to answer.

The plaintiff did not avail herself of the privilege afforded by this order, and on March 16, 1889, the referee proceeded to sell the mortgaged premises. At the opening of the sale, and before selling, the referee announced and read the conditions of sale, which were in the usual form, except the last paragraph, which was in these words: “(7) The property is sold free and clear of any and all rights of dower, charge, or lien upon the same, except that it is claimed by one Nehemiah N. Cornish [the defendant in this action] that he is the owner, by assignment, of a mortgage made by Ichabod C. McIntosh to Miriam M. Kellogg, covering the premises in question, dated February 1, 1878, to secure the payment of $2,500, which mortgage was recorded in Oneida county clerk's office, February 13, 1878, and is a second lien upon said mortgaged premises. Cornish has not been made a party defendant to this action.” The plaintiff bid off the property known as the “Tavern Farm,” and the referee on the same day executed to her a deed, and very soon thereafter she went into possession. The sale was confirmed on the 6th of April, and on April 9th this action for a strict foreclosure was brought. The other farms were bid off by other parties, who have not been made defendants in this action.

The plaintiff has recovered a judgment, which, as modified by the General Term, decrees: (1) That the defendant's mortgage is an existing lien on the lands purchased by plaintiff upon the foreclosure of her mortgage, and was not affected by such foreclosure, because not made a party to the action. (2) That, if the defendant desires to redeem the land bid off by the plaintiff upon her mortgage, he shall, within ten days from the service of a copy of the judgment, give the plaintiff notice of his desire and intent to do so. If such notice is not given within the time specified, it is ordered and adjudged that the defendant, and all persons claiming under him, do stand and be forever barred and foreclosed of and from all right, title, interest, and equity of redemption of, in, and to such premises, and all leins which he may have had thereon at the time of the commencement of the foreclosure action, by virtue of his mortgage or otherwise, are to be adjudged as cut off and foreclosed, and the plaintiff shall hold the title thereto free from such leins, and the defendant shall pay the costs of the action. (3) If the defendant gives notice of his intention to redeem within the time required, the plaintiff may apply on notice to the Special Term for the appointment of a referee to take and state the account of the plaintiff, and to determine her interest in the mortgage debt, as applicable to the lands bid off by her, and the referee's report shall be made up according to certain directions contained in the judgment, and shall fix and determine the amount the defendant shall be required to pay upon such redemption; and the amount so found due by the referee, with the interest thereon, shall be paid by the defendant within six months from the service of a copy of the report, and if paid within such time the payment shall operate as a redemption of the premises from the plaintiff's mortgage, and her title acquired at the sale shall become vested in him, and she shall, by a proper conveyance, convey the premises to him free and clear from the lien of her mortgage, and neither party shall have costs of the action. But, if the defendant fails to complete the redemption in the manner and within the time specified, it is ordered and adjudged that the lien of his mortgage is cut off and removed, and the plaintiff is deemed to hold the premises free and clear of such lien, and the defendant shall pay the costs of the action.

The material facts are not disputed, and we are of...