Wyckoff v. Devlin

Van Brunt, J. [After stating the facts as above.]— It is undoubtedly true that the surplus moneys were, as between the parties, real estate, and were to be distributed as such, and that the position of the plaintiff in respect thereto was that of mortgagee. But the position and claim of the defendant, that the filing of a notice of claim by the plaintiff herein was in legal effect the commencement of a foreclosure suit against the mortgaged premises, cannot be sustained. The plaintiff had lost his lien of record by reason of the foreclosure of the prior mortgage and sale of the premises mortgaged, and for the purpose of reinstating the lien against the surplus moneys which he would have had upon the land the sale of which produced these surplus moneys if it had not been sold, the plaintiff filed his notice of claim. The defendant thereupon commenced proceedings to obtain these surplus moneys, and the plaintiff herein appeared in those proceedings to defend his lien which was assailed by the defendants, and consented to the appointment of a referee, whose appointment the defendant was entitled to demand as a matter of right. If the plaintiff herein had not filed his notice of claim and appeared in the proceedings instituted by the defendant herein to obtain said surplus moneys, he would have lost all claim to the proceeds of the property which had been [148] mortgaged to him as his security; and he was, as far as appears by this record, in no way connected with these proceedings in relation to these surplus moneys except so far as it was necessary to maintain the lien which his mortgage gave him thereon. Consequently he could not, in any sense, be called a plaintiff in those proceedings. The language of the Code is very plain and pointed and can only apply to the case of a plaintiff in an action of foreclosure. Even if the plaintiff had commenced these proceedings the provision of the Code would not apply. : The reasons which are given by courts for the adoption of the provisions of the Revised Statutes which are incorporated in the Code above referred to, show conclusively that the prohibition of section 1628 of the Code was never intended to apply to any case except where a judgment fot deficiency could be obtained in the proceedings to enforce the lien of the mortgage. In the case of The Equitable Life Insurance Company v. Stevens (63 N. Y. 341), the court say that, before the Revised Statutes were enacted, “ a separate suit at law was necessary for the recovery of the deficiency when one arose, and the creditor had the right to institute proceedings at law upon the bond, even during the pendency of the foreclosure suit. The debtor was thus subjected to a double litigation. The provisions of the Revised Statutes now ip question were enacted for the express purpose of abolishing this oppressive course of proceeding......One object of the statute was to compel the creditor to elect his tribunal, and to protect the mortgagor from the unnecessary expenses of proceedings in more than one tribunal.” It is apparent from the above that the whole policy of the law in this respect is founded upon the fact that in the foreclosure action which he has commenced the creditor can obtain all the relief to which he is entitled, and therefore he should not be allowed to resort to another tribunal. ' But in respect to proceedings to determine priorities qf liens upon surplus moneys, this reason entirely fails. Un [149] less the surplus equals or exceeds the claim of the creditor, the creditor cannot obtain all the relief to which he is entitled. He cannot obtain any judgment for deficiency, and the legislature never intended that a creditor should be restrained in the prosecution of his legal rights who had never had and never could have had any other method of enforcing them: It is only in the case where he has had the opportunity in an action commenced to prosecute, and he has failed to do so, that he is restrained. This rule, in cases where the surplus moneys exceed the amount of the claim of the creditor, may work a hardship, but it would be so manifestly unjust in the great majority of cases that the legislature have not, in the adoption of the section above referred to, given even a hint that they intended to extend the application of the rule to any case where full relief could not be granted. To extend the language of this section to cases of proceedings to ascertain the priority of liens upon surplus moneys, would be carrying judicial legislation to an extent which has never been attempted up to the present time, bold as the courts have been in many instances in this respect. The judgment appealed from should be affirmed, with costs. J. F. Daly and Van Hoesen, JJ., concurred. Judgment affirmed, with costs.