Moulton v. Cornish

Hardin, P. J. 1. We think.the defendant cannot successfully complain that the purchasers of the Klock and Bells farms were not made parties defendant in this action. He took no objection to the complaint on that ground by demurrer, and the relief sought in this action does not impair his liens as to those farms; and, besides, his answer does not set up that such purchasers are necessary parties to this action. Bank v. Farthing, 101 N. Y. 344, 4 N. E. Rep. 734. 2. From an early day in the court of chancery in England the payment or tender of money having been made, though after the day named in the mortgage, it has been held that the mortgage should be considered as redeemed in equity, the same as it would have been at law if the payment had been made before the day; and, following- that practice, bills were “filed by mortgagees for the extinction or foreclosure of this equity, unless payment were made by a short day to be named. The settled English practice is for the decree to order the amount due to be ascertained, and the costs to be taxed, and that, upon the payment of both within six months, the plaintiff shall reconvey to the defendant; but, in default of payment within the time limited, that the said defendant do stand absolutely debarred and foreclosed of and from all equity of redemption of and in said mortgaged premises.” Clark v. Reyburn, 8 Wall. 323. In Bolles v. Duff, 43 N. Y. 474, this practice was referred to in the following language: “Strict foreclosures are rarely pursued or allowed in this state, except in cases where a foreclosure has once been had and the premises sold; but some judgment creditor, or person similarly [270] situated, not having been made a party, has a right to redeem. As to him, a. strict foreclosure is proper. In general, a mere strict foreclosure is a severe remedy. It transfers the absolute title without any sale, no matter what the value of the premises.” This practice was recognized in Peabody v. Roberts, 47 Barb. 92; Kendall v. Treadwell, 14 How. Pr. 167; Salmon v. Allen, 11 Hun, 32. It is insisted in behalf of the appellant that section 1626 has cut off the equity practice as it had existed prior to the Code. We find in Thomas on Mortgages, (page 732,.§ 1143,) and in Wiltsie on Mortgages, (page 929, § 833,) it is suggested that such, possibly, may be the effect of section 1626 of the Code. Neither of the authors, nor does the appellant in this case, cite any authority for holding that such is the effect of section 1626 of the Code of Civil Procedure. That section is one of a series of sections prescribing for the ordinary action of foreclosure, notwithstanding that section, we think the remedy, as it has heretofore been used by courts of equity, remains. Wolff v. Ward, (Mo. Sup.) 16 S. W. Rep. 161; Amer. Dig. 1891, pp. 1516, 1517, 58, 59. The plaintiff in this case is not seeking a sale of the mortgaged premises. In the foreclosure of her prior mortgage a sale has been had, and the title of the mortgagor has passed to her as a purchaser under that sale. She comes before the court stating that she has acquired the title to the premises in virtue of her mortgage and the proceedings for foreclosure thereof, and, in effect, asks the defendant to redeem the premises from her mortgage, and that the amount equitably due him by reason of the premises be ascertained, and that the defendant be given a period of six months in which to make such redemption. She further asks the equitable intervention of the court that, in the event he fails to redeem in the manner and within the period prescribed, he be forever foreclosed. If a sale had been asked for by the plaintiff, it would have been obnoxious to the objections stated by Davis, J., in Salmon v. Allen, 11 Hun, 32. In speaking of such a sale he says: “That course would tend to throw the title into great confusion, for there can be no doubt that, as between the owner in fee and the other persons who were made parties to the foreclosure of Mrs. Allen’s mortgage, her title to the lots under the foreclosure is complete, and her mortgage is extinguished by the conveyance to her of the fee under the decree. All the right that the plaintiff has, therefore, in equity, under his junior mortgage, is the right to redeem the premises from Mrs. Allen, by paying off the amount of her mortgage and interest, unless she choose to come in and pay the amount of his mortgage for the purpose of perfecting her title. *' * * We think it was not proper to have adjudged a sale of the fee of the premises subject to the lien of Mrs. Allen’s mortgage, as the judgment in the court below does, but that, instead of such a judgment, a decree of redemption should have been entered in accordance with the established practice in equity. Gage v. Brewster, 31 N. Y. 218; Vroom v. Ditmas, 4 Paige, 526; Venderkemp v. Shelton, 11 Paige, 28; Benedict v. Gilman, 4 Paige, 58; Pardee v. Van Anken, 3 Barb. 534; Brainard v. Cooper, 10 N. Y. 356. See opinion of Mullin, J., in Gage v. Brewster, supra, at page 226; People v. Beebe, 1 Barb. 379; 2 Barb. Ch. Pr. (Revised Ed.) p. 193 et seq. and notes.” The case before us is unlike Walsh v. Insurance Co., 13 Abb. Pr. 33. That was an independent action by the second mortgagee to foreclose his mortgage, there having been a foreclosure of a. prior mortgage without naming him as a party thereto. Doubtless, at any time prior to the sale had in virtue of the proceedings upon the first mortgage, the defendant here might have maintained an action to foreclose his-mortgage, and forced a sale in respect thereto, and had a sale and decree in such proceedings. Bache v. Purcell, 6 Hun, 518. 3. We are of the opinion that the trial court fell into an error in requiring the defendant in the case of redemption to pay the costs of the former action in foreclosure. In volume 1, bk. 2, Bl. Comm. p. 158, it is said: “But here again the courts of equity interpose, aiid though a mortgage be thus for271 felted, and the estate absolutely vested in the mortgagee at the common law, yet they will consider the real value of the tenements compared witli the sum borrowed; and, if the estate be of greater value than the sum lent thereon, they will allow the mortgagor, at any reasonable time, to recall or redeem his estate, paying to the mortgagee his principal, interest, and expenses; for otherwise, in strictness of law, an estate worth 1,000 pounds might be forfeited for non-payment of 100 pounds or a less sum. The reasonable advantage allowed to mortgagors is called the * equity of redemption; ’ and this enables the mortgagor to call on the mortgagee, who has possession of his estate, to deliver it back, and account for the rents and profits received, on payment of his whole debt and interest; thereby turning the mortuum into a kind of vivum vadium. But, on the other hand, the mortgagee may either compel the sale of the estate, in order to get the whole of his money immediately, or else call upon the mortgagor to redeem his estate presently, or in default thereof to be forever foreclosed from redeeming the same; that is, to lose his equity of redemption without possibility of recall.” The defendant was not a party to that action, and he has never become liable to pay costs, and W'e think it was improper to impose the payment of costs of that action as a condition of exercising the right of redemption. We think the question was fully settled in Gage v. Brewster, 31 N. Y. 218. See, also, Peabody v. Roberts, 47 Barb. 92; Belden v. Slade, 26 Hun, 635. 4. We think the requirement to furnish a guaranty was unusual, and was an exaction beyond any precedent we have discovered in the numerous cases pertaining to a redemption. The remedy is sufficiently severe and harsh, (Bolles v. Duff, supra,) without having attached to it any unusual exactions. 5. We think the plaintiff’s purchase of the Tavern farm was not subject to the mortgage of the defendant. The title and interest which she derived were as of the time of the date of her mortgage. 6. We recognize the rule that this court has the power to review the facts and consider the evidence, and to determine whether the findings accord with the weight of the evidence. Finch v. Parker, 49 N. Y. 1; Godfrey v. Mosher, 66 N. Y. 250. We have looked into the evidence, considered the same in connection with the findings, and we do not feel called upon to disturb the findings of fact made by the trial judge. The same are supported by the evidence, and are apparently in accord with the weight thereof. 7. It is found that at the sale on the 16th of March, 1889, and before the sale had been made, the referee publicly announced the conditions and terms of the sale; and, among the conditions, he stated that the property was sold free and clear of any and all right of dower, charge, or lien upon the same, “except that it is claimed by one FTehemiah FT. Cornish; that he is the owner by assignment of a mortgage made by Ichabod C. McIntosh to Miriam M. Kellogg, covering the premises, 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 record lien upon said mortgaged premises. Cornish has not been made a party defendant to this action.” It is also found “that after such public announcement of said condition and terms of sale, subject thereto, the plaintiff became the purchaser at the said sale of that portion of the mortgaged premises known as the ‘Tavern Farm,’ so called, for $6,095, particularly described in the complaint in this action.” It is also found “that the plaintiff so purchased the same at said sale, with the knowledge of the lien of defendant’s said mortgage, and the order aforesaid to make him a party defendant as aforesaid, and that he had not been made such party defendant.” By the decision made at the trial it was provided that “the value of any improvements made thereon by her in good faith” be ascertained, and the defendant be required to pay the same as one of the conditions of redemption. In Mickles v. Dillaye, 17 N. Y. 84, Judge Denio, in stating the rule applicable to the right of redemption, says; “The general rule is there [272] fore understood to be that, upon taking the account in a suit for redemption against a mortgagee in possession, he is to be charged with the rents and profits, and be allowed only for necessary reparations. Moore v. Cable, 1 Johns. Ch. 387; Quin v. Brittain, 1 Hoff. Ch. 353; Story, Eq. Jur. § 1016. ” In Benedict v. Gilman, 4 Paige, 62, improvements were allowed, but it appeared “that the complainant was ignorant of the existence of these judgments until after he had made permanent improvements upon the premises to a considerable extent;” and it was said: “tinder such circumstances, it would bo inequitable and unjust to give the defendants the benefit of those improvements without compelling them to pay an equivalent therefor. The case would have been different if the complainant had made the improvements with a full knowledge of the defendant’s equitable right to redeem. See Moore v. Cable, 1 Johns. Ch. 383.” In Wetmore v. Roberts, 10 How. Pr. 56, the rule laid down in Benedict v. Gilman, supra, was referred to approvingly, and the improvements were allowed “on the ground that Claxton, having purchased and improved as owner and in good faith, and the interest of the plaintiff at the time of the sale being of no value, it would be unjust for a court of equity to take from the former and give to the latter the value of these improvements.” See opinion of Hand, J., 10 How. Pr. 56. In Mickles v. Dillaye, 17 N. Y. 84, Judge Denio refers to Wetmore v. Roberts approvingly. In considering the rule as to when improvements may be allowed, it was said in Hubbell v. Moulson, 53 N. Y. 228, by Andrews, J.: If the party in possession “has made permanent improvements upon the land, in the belief that he was the absolute owner, the increased value by reason thereof maybe allowed to him. ” Upon the doctrine so stated he refers to Mickles v. Dillaye, 17 N. Y. 80. According to the finding which we have quoted, the plaintiff in the case before us had knowledge of the existence of the defendant’s mortgage at the time of her purchase, and the rule as stated in Hughes v. Edwards, 9 Wheat. 500, by Washington, J., should be applied. He says: “The claim, therefore, of a purchaser with notice, to have the value of the improvements which may have been made from the fruits of the property itself deducted from the price at which the property may be sold, seems to the court too unreasonable to admit of a serious argument in its support. Ho case was cited, nor has this court met with one, which affords it the slightest countenance.” In Moore v. Cable, 1 Johns. Ch. 387, Chancellor Kent observed: “Many a debtor may be able to redeem by refunding the debt and interest, but might not be ablé to redeem under the charge of paying for the beneficial improvements which the mortgagee had been able and willing to make. The English courts have always looked with jealousy at the demands of a mortgagee, beyond the payment of his debt;” and in that case his direction to the master to compute the principal and interest due on the mortgage contained a provision “that he allow for the expense of necessary reparations, .if any, but not for improvements in clearing part of the land.” We think the special term fell into an error in directing the referee to ascertain the value of any improvements made by the plaintiff since her purchase of the mortgage premises. If the foregoing views are adopted, it follows that the decision and judgment should be modified by eliminating therefrom (1) The provision as to the guaranty to be furnished by the defendant; (2) the provision as to the costs of the former action; (3) the provision as to the improvements made upon the Tavern farm since the purchase thereof at the foreclosure sale by the plaintiff; and, after such modifications are made, an affirmance of the order. Decision and judgment modified in accordance with the opinion of Hardin, P. J., and as so modified affirmed, without costs of this appeal to either party. The form of judgment may be settled before Hardin, P. J., upon five days’ notice. All concur.