Payn v. Grant

Learned, P. J.: The general rule undoubtedly is that parties to an action are bound by the judgment. But the courts seem to have made an exception where, in a foreclosure action, one, having a prior right, Jias been made a party defendant. And they iiave held that the general clause of foreclosure in the judgment does not cut off such a person’s rights. In Lewis v. Smith (9 N. Y., 502), the wife of the mortgagor did not join in the mortgage. Oh foreclosure she was made a party defendant, with the usual allegation. She did ■not defend ; and it was held that the decree did not bar her dower. In Merchants' Bank v. Thompson (55 N. Y., 7) the same principle was decided ; the court saying that the position of the wife was the same as if she had not been a party. (See also Rathbone v. Hooney, 58 N. Y., 463.) The same doctrine is established as tó the holder of a mechanics’ lien in Emigrant Ind. Sav. Bk. v. Goldman (75 N. Y., 127) and as to a prior judgment in Frost v. Koon (30 N. Y., 428. See also Eagle Fire Ins. Co. v. Lent, 6 Paige, 635). Under these decisions, then, the defendants, Lucy C. Lester and Harris, had no occasion to put in answers, alleging the priority of their liens ; as the judgment would not have barred them, if their liens were prior in fact. In the case of Benjamin v. Elmira R. R. Co. (49 Barb., 441) cited by the' learned judge, the incumbrance [137] was subsequent to the mortgage foreclosed. So that the. case does not apply. Nor does that of Mechanics' and Traders' Savings Inst. v. Roberts (1 Abb. Pr., 381). In Bank of Orleans v. Flagg (3 Barb. Ch., 318) on the foreclosure of a mortgage the plaintiff made Graves a party defendant, who had a contract of purchase from the mortgagor. The contract was made prior to the mortgage. The allegations of the complaint were simply in the usual form, that Graves and others had or claimed some interests, &c., which had accrued subsequent, &c. Graves answered, denying that he claimed an interest, and setting up his agreement. The Chancellor held that the bill was not propT erly framed to enable the plaintiffs to litigate the question whether they were entitled to a preference over Graves; that, to enable them to litigate that question, instead of falsely averring that Graves had an interest which had accrued subsequent, &c., they should have set forth his claim specifically. And he reversed the decree and dismissed the bill as to Graves. That case is important because it shows the construction put by the Chancellor on rule 132, adopted by him, which permitted this general allegation as to inciunbranees, and which is commented upon by Judge Denio, in Lewis v. Smith (ut supra). It is also important, because it is cited as authority for a dictum of Judge Allen, in Brown v. Volkening (64 N. Y., 76), to which, in fact, it seems to be opjiosed. What the allegations were in the complaint in that last cited case does not appear. The judgment of the.Court of Appeals was for reversal; and therefore it does not appear that they disagreed with the doctrine of the Chancellor, in the Bank of Orleans v. Flagg, viz.: that the complaint should have been dismissed as to Volkening. The subsequent case of Emigrant, Ind. Sav. Bk. v. Goldman (ut supra), shows that the doctrine, of Lewis v. Smith is undisturbed. If, then, it was unnecessary for Lucy C. Lester and Harris to answer, has Grant been injured by their answering, and by the ■judgment establishing the priority of their liens ? According to the rule laid down by the Chancellor, when it appeared that their claims were prior to the mortgage, the complaint should have been dismissed as to them. If this had been done, no harm could have [138] been done to Grant. But on the contrary, there ivas a direct adjudication in this action, to which he was a party, that the inchoate right of dower, the mortgage and the judgment were prior to the plaintiff's mortgage. This also established as against him the amount of the Lester judgment and of the Harris mortgage. The plaintiff had no right to establish these facts against Grant. The complaint served on him (or of which ho was bound to talce notice) alleged, on the contrary, that the rights of Lucy C. Lester and of Harris were subsequent- to the plaintiff’s mortgage. His default was an admission only of the facts alleged in the complaint. And the plaintiff had no right, on such default, to enter a judgment, contrary to those allegations. (Tracy v. N. Y. Steam Faucet Co., 1 E. D. Smith, 355.) It is unnecessary to inquire whether the defendants, Lucy C. Lester and Harris, could have availed themselves of section 521 of the Code of Civil Procedure, because, in fact, they did not. The sale under the judgment followed it, and was expressly made subject to these alleged prior liens. The purchaser, therefore, was bound by the adjudication and sale. It is insisted that Grant was not injured, for the reason that his own judgment was so late tliát, in any event, the value of the property would be consumed before he was reached. But this is not a case where we arc to measure his rights by examining whether or not he will probably be injured. A judgment was perfected against him, to which the plaintiff was not entitled. That is an injury. It is insisted that Grant can have no relief, because the sale has been confirmed and the deed delivered. One answer to that is. that the purchaser was the attorney of Lucy C. Lester, chargeable with notice that the judgment was unauthorized. The reasons why Grant did not oppose confirmation are satisfactory to excuse him. The order appealed from must be reversed, with §10 costs, and printing disbursements; and the motion granted, striking out the clause in the judgment mentioned in the moving papers, and setting aside the sale, with §10 costs against plaintiffs. Present — Learned, P. J., and Landon, J. Ordered accordingly.