Heller v. Neeves

The following opinion was filed June 19, 1896: WiNslow, J. This is an appeal from a judgment of mortgage foreclosure. There was no principal or interest due when the action was commenced, and the only default then existing was that the taxes upon the premises for two years had been allowed to remain unpaid, contrary to the covenants of the mortgage. The mortgagee had not paid these taxes, but they had been paid by a prior mortgagee. The [638] only question presented is whether the mortgage can be foreclosed simply for default in the payment of the taxes. The mortgage contains a covenant by the mortgagors to pay the taxes when due, and a power of sale in case of failure to pay principal, or interest when due, “ or in case of nonpayment of any taxes ” on the mortgaged premises. In case of such sale the covenant provides that the mortgagee is to retain “the principal and interest which may then be duer together with costs and charges ” and the stipulated solicit- or’s fees, and render the surplus to the mortgagors. There are no other covenants touching the payment of taxes or the effect of nonpayment, nor is there any stipulation that the mortgagee may pay the same and recover the amount as part of the mortgage debt, or that the mortgage debt shall become due on default in payment of the taxes. In this situation it seems to us clear that there was no default justifying foreclosure when the suit was brought. .There was, it is true, a breach of the covenant to pay taxes, but not a dollar had thereby become due on the .mortgage. It was a mere technical breach which had resulted in no actionable injury. After it had taken place there was no sum due from the mortgagor to the mortgagee which the mortgagee could retain in case of foreclosure by advertisement under the power contained in the mortgage, and if there could be no foreclosure by advertisement we do not see upon what principle there could be foreclosure by action. It is true that the principle is laid down in some of the textbooks (e. g. 2 Jones, Mortg. [5th ed.] § 1175) that there may be foreclosure for default in paying taxes alone, but it will be found that no case cited to the proposition justifies the broad statement. In every case there cited there was either a default in payment of some part of the mortgage debt or a breach of some other condition of the mortgage, in addition to the default in payment of the taxes. We hold that when a mortgage is conditioned like the one before us, , [639] a mere naked breach of the covenant to pay taxes gives no. right to foreclose. Williams v. Townsend, 31 N. Y. 411. By the Oourt.— Judgment reversed, and action remanded with directions to dismiss the complaint.