Saposnick v. Kenig

• Decision Date: 07 April 1936
• Citation: 121 Conn. 253,184 A. 584
• Parties: SAPOSNICK v. KENIG.
• Court: Connecticut Supreme Court

184 A. 584

121 Conn. 253

SAPOSNICK v. KENIG.

Supreme Court of Errors of Connecticut.

April 7, 1936

Appeal from City Court of Hartford; Edwin M. Ryan, Judge.

Suit by Harry Saposnick against Aaron Kenig to foreclose a mortgage wherein a cross-complaint asking for a foreclosure was filed by the defendant and the original complaint withdrawn. From a judgment entered in favor of the defendant, fixing the amount of the debt at $3942.25, defendant appeals.

Error and cause remanded, with directions.

Argued before MALTBIE, C.J., and HINMAN, BANKS, AVERY, and BROWN JJ.

Josiah H. Peck and Reuben Taylor, both of Hartford, for appellant.

Isidor E. Finkelstein, of Hartford, for appellee.

AVERY Judge.

The facts in this case are not in dispute, and as far as are necessary for determination of the question of law involved may be briefly stated as follows: David Kaplan and Michael Strouch owned jointly the real estate in question (property at 1833 Park street, Hartford) which was subject to a first mortgage to a bank in the amount of $15,000, and a second mortgage in the amount of $9,750 owned by the defendant Kenig. Kaplan and Strouch were the makers of the note which evidenced this debt. Strouch sold his undivided one-half interest to Kaplan, and the latter executed and delivered to Strouch a note for $15,950 secured by a mortgage on the property. At the same time, Kenig released the second mortgage on the real estate, but the note which the mortgage secured remained outstanding, and in lieu of the security which the defendant released, Strouch assigned the mortgage and note of $15,950 to the defendant as security for the defendant's note of $9,750.

A default having occurred in the payment of the $9,750 note, then considerably reduced in amount, Kenig brought an action in the superior court against Kaplan and Strouch and two others who had received from Strouch assignments of his remaining rights in the $15,950 mortgage, and secured a judgment which in terms foreclosed the defendants of any right to redeem that mortgage and note. Kenig thereafter brought a foreclosure action in the city court of the city of Hartford on the $15,950 mortgage, making the owner of the equity of redemption and certain subsequent mortgagees parties defendant and secured judgment determining the debt to be $11,123.67 and fixing law days for the various defendants, none of whom redeemed. The plaintiff, Saposnick, held a mortgage on the property subsequent to the $15,950 mortgage but was not made a party to the foreclosure action in the city court. Later, he brought this action against Kenig for foreclosure of his mortgage, but Kenig filed a cross-complaint seeking foreclosure of the $15,950 mortgage against Saposnick, and it appearing that the latter mortgage was a prior incumbrance to Saposnick's mortgage, he withdrew the complaint and the action was tried on the cross-complaint. The trial court entered a judgment of foreclosure in favor of Kenig but fixed as the amount of the debt the balance due upon the $9,750 note, which, with certain other charges, amounted to $5,532.74. The sole issue on this appeal of Kenig arises out of his claim that the amount of the debt should be based upon the sum remaining due upon the $15,950 mortgage instead of the amount due upon the $9,750 note.

An assignment of a mortgage may be made as collateral security for a loan. First National Bank v. National Grain Corporation, 103 Conn. 657, 665, 131 A. 404. Such an assignment may be in effect a mortgage of a mortgage. 2 Jones, Mortgages (8th Ed.) § 1049; Graydon v. Church, 7 Mich. 36, 57; Cutts v. York Mfg. Co., 18 Me. 190, 201. On the other hand, it may in legal effect be a pledge, and whether in a given case the transaction is to be considered as a mortgage of a mortgage or a pledge is to be determined by the purport and substance of the contract and the intent of the parties. Jones Collateral Securities (3d Ed.) § 9; Dungan v. Mutual Benefit Life Ins. Co., 38 Md. 242, 253.

In the case of a pledge, the principle is well recognized that the pledgee ordinarily can retain from the proceeds of the property pledged only a sum sufficient to repay him together with such amount as he may reasonably have been required to expend in keeping and caring for the property pledged. If he recovers more, he will hold the surplus as trustee for the parties entitled thereto. Continental Credit Co. v Fly, 91 Conn. 553, 562, 100 A. 434; Windsor Trust Co....