Nutt v. Cuming

• Decision Date: 15 March 1898
• Citation: 49 N.E. 880,155 N.Y. 309
• Parties: NUTT v. CUMING.
• Court: New York Court of Appeals Court of Appeals

155 N.Y. 309

49 N.E. 880

NUTT

v.CUMING.

Court of Appeals of New York.

March 15, 1898.

Appeal from supreme court, appellate division, First department.

Action by Sarah Nutt against James R. Cuming and others. From an order of the appellate division (47 N. Y. Supp. 800) reversing an order of the special term affirming a report of a referee in surplus proceedings, Cuming appeals. Affirmed.

O'Brien and Bartlett, JJ., dissenting.

Henry Thompson, for appellant.

William L. Clark, for respondent.

HAIGHT, J.

On the 9th day of August, 1882, the defendant Cuming recovered a judgment against one Thomas Kerrigan, which became a lien upon real estate subject to the lien of a mortgage theretofore executed, bearing date the 14th day of January, 1882. On the 1st day of October, 1891, an action was brought to foreclose the mortgage, which resulted in the entering of the usual judgment of foreclosure and sale on the 13th day of January, 1892. The sale of the property under the judgment did not, however, take place until December, 1896, and after the expiration of 10 years from the entry of the Cuming judgment. The special term held that Cuming was entitled to have his judgment paid out of the surplus moneys arising on he sale. The appellate division reversed this part of the order, holding that the lien of the judgment had ceased to exist before the sale took place under the foreclosure judgment, and that, therefore, no lien in favor of Cuming was transferred to the surplus moneys.

It is now claimed that, the foreclosure judgment having been entered before the expiration of the 10 years from the entry of the Cuming judgment, the lien was, by operation of law, transferred to the surplus moneys that should arise upon the sale of the premises as of the day of the entry of the foreclosure judgment, and that from that time he was barred and foreclosed of all right, title, interest, or equity of redemptionin the mortgaged premises. We do not so understand the law. The judgment of foreclosure first determined the amount due upon the mortgage. It then provided for a sale of the premises at public auction by a referee appointed for that purpose, who was directed to execute and deliver to the purchaser a deed, and out of the moneys arising from the sale to pay the fees, expenses, taxes, and allowance to attorneys, and then the amount due upon the mortgage. The surplus arising from the sale it required to be paid over to the chamberlain of the city of New York, subject to the further order of the court. It then adjudged ‘that the defendants, and all persons claiming under them, or any or either of them, after the filing of such notice of pendency of this action, be forever barred and foreclosed of all right, title, interest, and equity of redemption in the said mortgaged premises so sold or any part thereof.’ It will thus be observed that under the provisions of the judgment the right, title, and interests of the defendants became barred and foreclosed, not upon the date of the entry of the judgment, but from and after the sale of the premises and the conveyance made thereunder.

The Code of Civil Procedure, after specifying the various steps necessary to be taken in the foreclosure of a mortgage, provides that ‘a conveyance upon a sale, made pursuant to a final judgment, in an action to foreclose a mortgage upon real property, * * * is as valid, as if it was executed by the mortgagor and mortgagee, and is an entire bar against each of them, and against each party to the action who was duly summoned, and every person claiming from, through, or under a party, by title accruing after the filing of the notice of pendency of the action.’ Section 1632. Here the legislature gives to the conveyance the same force and effect that is given by the judgment. One is in harmony with the other. Rule 64 of the general rules of practice provides that ‘on filing the report of the sale any party to the suit, or any person who had a lien on the mortgaged premises at the time of the sale, upon filing with the clerk where the report of sale is filed a notice, stating that he is entitled to such surplus moneys or some part thereof, and the nature and extent of his claim, may have an order of reference,’ etc. It is the lien existing at the time of the sale that is transferred to the surplus moneys arising therefrom. If, at that time, no lien exists, there is nothing which can be transferred to the fund. Judgments over 10 years old cease to be liens upon real estate, and, consequently, are not payable out of the surplus. Floyed v. Clark (Com. Pl.) 17 N. Y. Supp. 848;Fliess v. Buckley, 90 N. Y. 286;Bank v. Quackenbush, 143 N. Y. 567, 38 N. E. 728;Tufts v. Tufts, 18 Wend. 621;Graff v. Kip, 1 Edw. Ch. 619;Roe v. Swart, 5 Cow. 294.

A mortgage upon real property may be foreclosed and the lands sold under the statute without an action. An action may be maintained to bar and foreclose all persons claiming an interest or an equity of redemption, and for a sale of the lands for the purpose of paying the indebtedness due upon the mortgage. The chief object is the collection of the indebtedness, which can be effected only be a sale. A judgment entered in a foreclosure action is final for all purposes of review, but in other respects it is interlocutory. All of the proceedings for the sale, including the advertising of the notice and the confirmation of the sale, take place thereafter. The provision barring others of their interest in, or of their rights of equity of redemption in, the mortgaged premises, of necessity relates to the final concluding act-that of a sale of the premises. Until that time the mortgagee or the owner of the equity of redemption may redeem, and persons having judgment liens thereon may sell upon execution, notwithstanding the judgment; but, as soon as the sale is made, confirmed, and conveyance delivered, that provision of the judgment becomes operative and of full force, and the parties to the action are forever thereafter barred and foreclosed of all their right, title, interest, and equity of redemption.

The other questions involved were properly disposed of by the appellate division. The order should be affirmed, with costs.

O'BRIEN, J. (dissenting).

The question involved in this appeal is whether the owner of the equity of redemption or a judgment creditor is entitled to surplus money arising from a sale of real estate under a judgment of foreclosure of a prior mortgage. The referee and the special term have awarded the moneys to the judgment creditor, but the appellate division has reversed the order, and awarded them to the owner of the equity of redemption. The mortgage foreclosed was recorded January 14, 1882; the judgment was docketed August 9, 1882. The present owner of the equity of redemption purchased the premises from the mortgagor and judgment debtor September 26, 1882, subject, of course, to the prior mortgage and judgment. The plaintiff's action to foreclose her mortgage was commenced October 1, 1891, and final judgment was entered January 13, 1892. It is said that the sale on this judgment did not take place until nearly five years afterwards,-that is to say, in December, 1896,-though there is no proof in the record of that fact, or any finding that concludes the present judgment creditor. The ground upon which the learned court below reversed the special term and referee was that the judgment was more than 10 years old at the time of the sale, though it was much less than that when the foreclosure action was commenced and the judgment entered. It should be noted that the party to whom the surplus moneys were finally awarded by the court below, as owner of the equity of redemption, acquired his title subject to this very judgment, and, presumptively, was allowed to retain sufficient of the purchase price to discharge this judgment, so that in equity he has now in his hands the money of the debtor to pay the judgment, and he is not only allowed to retain it, but gets the surplus besides. This result certainly is not equity or justice, and the tendency of the mind is not to accept it very readily, but to inquire whether it is founded upon some fallacy or error. It seems to me that it is, and that it can be plainly pointed out. It consists primarily in the assumption that the respective rights of claimants for the surplus money are to be determined by the existence of a technical statutory lien at the time of the sale, which, as in this case, may have taken place years after the judgment which determined the action and the rights of the parties. There is no authority for that proposition, and it is not based upon reason or justice. There is no more reason or law for that than there is for saying that their rights depend upon the situation existing when the distribution of the surplus is made, or the proceedings for that purpose commenced, which likewise may be years after the sale. If the 10 years have then elapsed, the lien of the judgment has ceased, and the creditor is not entitled to share in the surplus, if it be true that, under the same circumstances, it ceased at or before the sale. The limitation of 10 years for the lien of a judgment upon land must have the same effect whether that period elapsed before the sale, or after the sale and before the proceedings for distribution. If the right of the judgment creditor to share in the surplus is lost in the one case, it must be in the other. In both cases the statutory lien is lost, and, on the principle of the decision now before us, the right to share in the surplus must be lost also. It is not perceived, therefore, why the sale is fixed as the time when the rights of the parties are determined. The sale is a mere executive or ministerial act, supplemental to and in execution of the judgment. It adjudges nothing that has not been adjudged before. It determines no rights affecting liens that have not been determined by the judgment. It simply carries the...