Matter of City of New York (43rd Avenue)

Rippey, J. Condemnation proceedings were brought by the city of New York to acquire certain lands for opening and extending Forty-third avenue from Fifty-seventh street to Sixty-third street in the borough of Queens. Damage Parcel No. 12 was included within the lands condemned and an award of $1,500 was made by Special Term to the mortgagee and a nominal award of one dollar to the fee owner of the property. The Appellate Division, upon appeal, modified the Special Term order by providing “ that when the City pays the award to the mortgagee Harbro Holding Co., Inc., it shall have an equitable lien therefor upon the mortgaged premises not taken, by way of subrogation to the rights of the mortgagee, to the extent of the amount of the award,” and, as so modified, affirmed. The city alone is appealing to this court. Title to Damage Parcel No. 12 vested in the city on November 2, 1927. The award was made on December 1, 1937. Trials and appeals intervened since the commencement of the proceeding on April 14, 1927. On February 28, 1928, the Harbro Holding Company, Inc., became the owner by assignment of a mortgage dated October 19, 1925, of the face value of $18,000 for which it paid the sum of $10,000. On February 28, 1928, the assignee released to the Woodris Realty Corporation eight lots in the tract for a consideration of one dollar, although the mortgage provided for payment of $1,000 upon release of each interior lot and of $1,500 for the release of each corner lot covered by the mortgage, aggregating a total of $9,000. The Woodris Realty Corporation had become owner of nineteen lots in the tract on December 30, 1927. On April 11, 1929, the Woodris Realty Corporation conveyed a total of thirteen lots to the Harbro Holding Company, Inc. At the time of that transfer any Hen which might have existed by virtue of the mortgage on Damage Parcel No. *47 12 had been extinguished by virtue of the vesting of title in the city (Administrative Code of City of New York [L. 1937, ch. 929], § B15-37.0; Matter of Braico, 235 App. Div. 132; affd., 260 N. Y. 625; Matter of City of New York [Boscobel Ave.], 242 App. Div. 392; Gates v. De La Mare, 142 N. Y. 307, 312; Deering v. Schreyer, 171 N. Y. 451). The nominal award to the owner was correct, since private street easements existed against the property prior to the time of the vesting of title in the city. That, however, did not affect the hen of the mortgage upon the property taken (Matter of City of New York [Braddock Ave.], 278 N. Y. 163). The city contends here that its right to subrogation has been impaired since, subsequent to the date of vesting, the mortgagee released for a nominal consideration from the hen of its mortgage various lots as above stated, relying upon Matter of City of New York (Braddock Ave.) (supra), but the city overlooks the fact that the decision in that case was based upon an equitable necessity to prevent unjust enrichment on the part of the owner. Here, although the stockholders of the corporation to which the lots were released are the same as the stockholders of the Harbro Holding Company, Inc., the most that the city could ask for would be a reduction of the balance remaining due on Harbro’s mortgage in accordance with the schedule contained in the release clauses of the mortgage. The court took that fact into consideration in making the award. Harbro was in no way unjustly enriched and the doctrine of subrogation should not have been applied in this case. Nevertheless, it was applied, and the Harbro Holding Company, Lac., is not appealing. The city may claim the right of subrogation as to the lots not taken which the lower court has given it up to the full amount of the award and the city is not in any manner prejudiced by the modification by the court below. The award has been unanimously affirmed and is sustained by the evidence. There is no point that the city can urge here warranting any reversal or modification of the order appealed from. *48 The o"der appealed from should be affirmed, without costs.