Wade v. Miller

• Citation: 166 N.Y. 251,59 N.E. 825
• Parties: WADE v. MILLER et al.
• Decision Date: 12 March 1901
• Court: New York Court of Appeals

166 N.Y. 251

59 N.E. 825

WADE

v.MILLER et al.

Court of Appeals of New York.

March 12, 1901.

Appeal from supreme court, appellate division, Third department.

Suit by Mary J. Wade, as executrix, against Jane E. Miller and others. From a judgment of the appellate division (59 N. Y. Supp. 76) affirming a judgment of the special term in favor of defendant Miller, plaintiff appeals. Reversed.

Henry D. Merchant, for appellant.

Clarence W. Betts, for respondent.

MARTIN, J.

This action was to foreclose a mortgage given to secure the payment of $4,000. The complaint, in addition to setting up the usual facts in foreclosure, alleged that, simultaneously with the execution of the plaintiff's mortgage, two other mortgages were executed, with the understanding that none of the three should have preference over the others. It then described the other two mortgages, and alleged that the defendant Miller owned one, and the defendants Anna and William E. Smith, as administrators, were the owners of the other. Following was an allegation that all of the defendants, except as above set forth, have, or claim to have, some subsequent lien. The defendant Miller answered by specifically denying the allegation of the complaint that it was the understanding when the three mortgages were given that none should have precedence over the other, and alleged that she had no knowledge or information sufficient to form a belief as to whether the plaintiff's mortgage and the mortgage of the other defendants were given for a valuable consideration, nor whether there was any money due or to become due thereon. Intermingled with such denial, she alleged that it was mutually agreed that the mortgage held and owned by her should be first recorded, and should be deemed and treated as a first mortgage, and a prior lien to any of the others. She demanded judgment that her mortgage be adjudged and declared a prior lien as against all the parties to the action, and that it might be foreclosed. The plaintiff served no reply. Upon the trial the court awarded the defendant Miller the relief demanded in her answer, without taking any proof upon the issue raised by the denial of the allegations of the complaint. This decision seems to have been based upon the theory that the plaintiff, by not replying to the defendant Miller's answer, admitted all its allegations; and judgment in her favor was awarded against the plaintiff, while the action was suspended as to the other defendants. We think this disposition of the case was unjustified and erroneous. It is difficult to understand how, upon any correct theory, the issue thus joined could be disposed of without permitting the plaintiff to prove the facts she alleged. The defendants were proper parties, and the question of the priority of the mortgages was directly at issue. The failure to serve a reply did not admit the defendant's denial, nor any allegation of new matter in defense or contradiction of the facts alleged in the complaint. Walker v. Insurance Co., 143 N. Y. 167, 38 N. E. 106. Both the trial court and the appellate division seem to have relied upon the case of Metropolitan Trust Co. v. Tonawanda Val. & C. R. Co., 43 Hun, 521, affirmed in 106 N. Y. 673, 13 N. E. 937. That action was to foreclose a junior mortgage, and the holder of a senior mortgage was made a party. The relief asked in the complaint was that the premises might be sold subject to such senior mortgage, or that the amount due thereon might be ascertained, and first paid out of the proceeds of the sale. The senior mortgagee appeared and answered, setting forth the necessary facts for a foreclosure of its mortgage, and demanded that it might be foreclosed, the property sold, its judgment paid, and the surplus disposed of as the law required. There was no question as to the priority of the defendant's mortgage. It was alleged by both parties, and practically the same relief was sought by each. In that case the court merely granted a decree foreclosing the defendant's mortgage instead of the plaintiff's. A broad distinction exists between that case and this. In that case there was no issue between the parties, and it was the duty of the court to direct a judgment foreclosing either the plaintiff's mortgage or that of the defendant. It doubtless had a discretion as to which it would foreclose. The defendant's being prior, the court directed its foreclosure. In that case Judge Bradley, in effect, said that the practice adopted was not in contravention of the provisions of the statute relating to the foreclosure of mortgages, and there seemed to be no impropriety in pursuing that practice, because the rights of the parties were effectually preserved, and the plaintiff was not prejudiced. No such situation exists here. In this case there was a direct issue between the plaintiff and the defendant Miller as to whether the mortgage of the latter was of equal priority with the other two mortgages, or whether it was a prior and superior lien. Although there was a direct issue between the parties independent of any counterclaim, the practice adopted resulted in a judgment against the plaintiff without affording her any opportunity to try it. Consequently, it cannot be said...