author: Hardin, P. J. Martin, J. (dissenting).

text:
    Maria A. Lewis, App'lt, v. Julia R. Duane, Individually, etc., Resp't.

      (Supreme Court, General Term, Fourth Department,

      Filed May 13, 1893.)

    1. Foreclosure—Advertisement—Statement oe amount due.
    In the absence of averments of fraudulent intent and evidence that the amount inserted in the notice was swollen for a fraudulent purpose beyond the actual indebtedness, an error in the statement of the amount due is not sufficient to invalidate a sale on foreclosure by advertisement.
    3. Same—Mortgage to secure advances—Accounting—Trust.
    Plaintiff and her husband gave a mortgage to secure the payment of $60,000 in one year to one D., and received from him an instrument stating that the mortgage was given to secure him against liability for indorsements, the amount of which was not known, but supposed to be $33,000, and also for advances to satisfy judgments against plaintiff’s husband; that D. only desired to secure himself for such indorsements and advances, and that anything more than this is not contemplated by D.; that when the amount thereof was ascertained or liquidated, he should indorse the same and reduce the mortgage to said amount; that if he assigned or parted with the mortgage, he should account to L. for the amount L. might have to pay to the holder; that he would protect L. against the enforcement of said judgments, and assign the mortgage to L. ’s order on being reimbursed. Two years after D. foreclosed the mortgage by advertisement, the notice stating that the face thereof, with interest, was due; and, upon notice to" the mortgagors, the premises were sold for $24,000 to D., who is found to have purchased in good faith. In an action to redeem, the referee found that the amount due at the time of the notice was $42,000. Held, that the sale was not invalidated by the error in the notice; that there was nothing in the agreement which made an accounting a condition precedent to the right to foreclose; that the instruments taken together did not create a trust in the real property of the mortgagors, and that their rights were cut oif by the sale, and they had no right to redeem.
    8. Same—Evidence.
    On the trial, plaintiff testified that she was served with notice of foreclosure, and that Mr. H., who was D.’s attorney, both of whom are dead, came to consult with her about it, but was not allowed to testify that he told her that the sale should make no difference as to the agreement. Reid, no-error.
    (Martin, J., dissents.)
    Appeal from a judgment entered in Broome county upon the report of a referee, dismissing plaintiff’s complaint with costs. The action was begun September 1, 1883, by Frederick Lewis and Maria A. Lewis against Virginia M. Drake and Julia B. Drake, as the heirs, legatees, devisees and representatives of Patrick H. Drake, and also of Jane E. Drake, his wife. It was an action brought for an accounting and to redeem certain lands formerly owned by Frederick Lewis, and which were covered by a mortgage executed by him and his wife to Patrick H. Drake, who, in 1875, foreclosed the mortgage by advertisement and bid off the larger portion of the property himself; one parcel having been purchased by Giles W. Hotchkiss at the foreclosure sale. In June, 1873, Frederick Lewis, then a resident of the city of Binghamton, was the owner of the real estate covered by the mortgage in question, and he, with his wife, executed a mortgage to Patrick H. Drake, in the nominal sum of $60,000, the mortgage containing a clause that it was given “ as a security for the payment of the sum of $60,000 one year from date with interest.” It also contained the clause: “ And in case default shall be made in the payment of the principal sum hereby intended to be secured, or in the payment of the interest thereof, or any part of such principal or interest, as above provided, it shall be lawful for the party of the second part, executors, administrators or assigns, at any time thereafter, to sell the premises hereby granted, or any part thereof, in the manner prescribed by law, and out of all moneys arising from such sale to retain the amount then due for principal and interest, together with the costs and charges of making such sale, and the overplus, if any there be, shall be paid by the party making such sale on demand to the said Frederick A. Lewis and Maria A. Lewis, their heirs and assigns.” The mortgage was recorded on the 4th day of June, 1873, in Liber 51 of Mortgages, page 152. On the 4th day of Juñe, 1873, the mortgagee in said mortgage, Patrick H. Drake, executed an agreement in writing, as follows: “ Frederick Lewis and Maria A. Lewis, his wife, both of the city of Binghamton, Broome county, FT. Y., have, this 4th day of June, 1873, executed and delivered to Patrick H. Drake, of the city of Binghamton, and county of FTew York, mortgage upon all their real estate situate in the said county of Broome, for sixty thousand ($60,000) dollars. The value of the property covered by the said mortgage is about one hundred thousand ($100,000) dollars. The intention of the undersigned by this said mortgage is to secure the said Drake against all liability he has or may have incurred as indorser ior the said Lewis. The precise amount of such liability as such indorser is unknown, but supposed to be about thirty-two thousand ($32,000) dollars. And also to secure the said Drake for advances which he is to make to liquidate and satisfy the large amount of judgments against the said Lewis, which are a lien upon the property covered by the said mortgage. The said Drake in the taking oí the said mortgage only desires to secure himself for the amount of his liability as such indorser, and for the advances which he is to make in taking up and satisfying the judgments against the said Lewis. Anything more than this is not contemplated by the said Drake. When the amount" of such liabilities and advances is ascertained or liquidated, then said Drake to indorse same or reduce said mortgage to the true amount so advanced by him. In case he shall assign or part with the control of the said mortgage, he is to account to the said Lewis for the full amount that said Lewis may have to pay upon the same or which he will be liable to pay to the holder thereof. In the meantime the said Drake will take care of and protect the said Lewis and his property from the enforcement of any of the judgments against the said Lewis or his property, and save the property of the said Lewis from sacrifice and the said Lewis from damages and costs. And that he will at any time assign said mortgage to said Lewis’ order upon being reimbursed on his advances in case he shall not have previously assigned the same.
    (Signed) “ P. H. Drake.”
    The referee found, viz.: “ The execution and delivery of the said mortgage and the execution and delivery of the said agreement formed a single transaction between the parties and each was a consideration for the other."
    Jane E. Drake, the wife of Patrick H. Drake, was a sister of the mortgagor, Frederick Lewis, and at that time Lewis was financially embarrassed and “ was unable to procure ready money to pay his debts and obligations when payment thereof was demanded of him. Judgments were duly recovered and docketed against him and promissory notes made by him were due and unpaid. Patrick H. Drake was the first indorser upon such notes and was, by the due protest thereof, charged as such indorser.”
    The referee found that on the 3d of July, 1875, the mortgagee commenced foreclosure of the mortgage by advertisement, and that the notice of sale of the said mortgaged premises, among other things, stated, viz.: ‘‘And, whereas, the amount claimed to be due on said mortgage at the time of the first publication of this notice is $68,750. Now;, therefore, notice is hereby given that by virtue of the power of sale contained in said mortgage and duly recorded as aforesaid, and in pursuance of the statute in such case made and provided, the said mortgage will be foreclosed by a sale of the premises therein described at public auction, at the front door of the court house, in the city of Binghamton, etc.” Notices of such foreclosure were served upon the mortgagors and upon the other parties and posted in accordance with the provisions of the statute. The sale was duly adjourned to the 6th day of November, 1875, and notices thereof given, and the referee finds: “Said mortgaged premises, in pursuance of such notice of sale and such notice of postponement, were, on the 6th day of November, 1875, and at the place and hour named in said notices, sold at public auction, or at public sale; each parcel thereof was sold and bid off separately; and each of such mortgaged tracts or parcels was thereat sold and bid off by Patrick H. Drake, except the following described parcel,” (then follows a description of a 250 acre lot) which the referee finds “was sold to Giles W. Hotchkiss, he being one of the attorneys for the mortgagee.” The referee finds: “ And the aggregate of the sums bidden therefor and for which said mortgaged premises then and there sold was $24,366.” The referee also finds: “Subsequent to June 4, 1873, and prior to the 3d day of July, 1875, the said Patrick H. Drake, under the provisions of said mortgage and agreement, advanced moneys for the liquidation and satisfaction of judgments against the said Frederick Lewis, which were a lien upon the property covered by the said mortgage of June 3, 1873, and prior to the 3d day of July, 1875, the said Drake paid notes of the said Lewis upon which, on the 3d day of June, 1873, the said Drake had incurred liability as an indorser for the said Frederick Lewis:” The referee then proceeds to state the amount of each of said judgments and notes with a statement of interest thereon due July 3, 1875, and then he finds that “On the 3d day of July, 1875, the aggregate of the sums so advanced and paid by said Drake in payment of such, notes and judgments and taxes, with interest computed thereon as stated, was $42,014.48."
    The referee finds that prior in time “ to the execution and delivery of the said mortgage by Frederick Lewis and Maria A. Lewis ” there were judgments docketed in the clerk’s office and liens upon the mortgaged premises “amounting to upwards of the sum of twenty thousand doliam exclusive of interest. Subsequent 1r> said foreclosure sale, the said Patrick H. Drake paid or contributed to the payment of said judgments and no one thereof has been at any time enforced against the said Lewis or his property.” The referee also found that “ Prior to the said foreclosure of and sale under said mortgage, the aggregate amount so paid and advanced by the said Patrick H. Drake upon the notes of Frederick Lewis, upon which said Drake was liable as an indorser, and the judgments against Frederick Lewis, was not ascertained between the said Drake and Lewis, nor was there an offer on the part of said Drake or a demand on the part of the said Lewis that such amount should be ascertained prior to such foreclosure and sale.” During the trial Frederick Lewis died. Prior to his death he transferred and “ conveyed to John B. Van Name nil of his right, title and interest in and to the several parcels of laud described in the sad mortgage and complaint, and the cause of action described in =>aid complaint, for the purpose of transferring the same to the said Maria A. Lewis, the wife of Frederick, through the said VanName, and all of such right, title and interest was by said VanName transferred and conveyed by deed or writing, dated September 3,1883, to the said Maria A. Lewis.” On March 25, 1890, an order was entered at special term “That this action; be continued in the name of Maria A. Lewis as sole plaintiff, such' order and the application therefor having been made subsequent to the death of the said Frederick Lewis.” It is found that “ The defendant Virginia M. Drake died January, 1884, leaving a last will and testament, in and by which she left her property to the defendant Julia E. Duane.” The referee found, viz.: “At the time of the commencement of the proceedings to foreclose the said mortgage, and of the sale of said mortgaged premises thereunder, the said Frederick Lewis and Maria A. Lewis had made default in the payment of the principal sum thereby intended to be secured, and in the payment of the interest thereof, whereby it became and was lawful for the said Patrick H. Drake to sell the said mortgaged premises or any part thereof in the manner prescribed by law, and out of all the moneys arising from such sale to retain the amount then due for principal and interest, together with the costs and charges of making such sales, and to pay the overplus, if any there might be, on demand to the said Frederick Lewis and Maria A. Lewis, their heirs and assigns.”
    He also found that in virtue of the proceedings to foreclose and the affidavits “the legal title, interest and ownership of the mortgagors, Frederick Lewis and Maria A. Lewis, in or of said mortgaged premises, was transferred and conveyed to the respec tive purchasers at said sale, and the equity of redemption therein of the mortgagors foreclosed and their right to redeem terminated.” And as a matter of law “the plaintiff, Maria A. Lewis, is not entitled to the relief demanded in the complaint in this action, or the right to maintain the same, or the right to redeem said mortgaged premises or any part thereof.” Exceptions were filed to several of the findings of fact, and requests were made to find and refusals were made to certain requests, and exceptions taken thereto. No opinion was written by the referee. The case contains all the evidence.

      Edward K. Clark, for app’lt; Millard & Stewart, for resp’t.
   Hardin, P. J.

Plaintiff insists “ that the statutory foreclosure was inoperative, and the plaintiff has the right to redeem.

In Jencks v. Alexander, 11 Paige, 626, it was said, viz: “But, a mere mistake in computing the amount due at the time of the first publication of the notice does not of itself furnish any sufficient ground for setting aside the sale under the statute. The direction in the statute, that the notice of sale shall contain a statement of the amount claimed to be due upon the mortgage, -was undoubtedly for the purpose of appraising the owners of the equity of redemption of the extent of the claim of the mortgagee, so that they might not be surprised at the sale by an 'unfounded claim for what had, in fact, been previously paid, and to enable them to apply to this court for relief in due season if the amount due could not be otherwise adjusted between the parties.” A similar doctrine was laid down in Bunce v. Reed, 16 Barb., 350. The effect of an error in the amount claimed to be due was under consideration in Mowry et al. v. Sanborn et al., 68 N. Y., 1 65, and the court observed: “ Without considering whether the claim of° a much larger amount to be due than was due would, in the absence of fraud, invalidate the proceedings, we are of the opinion it does not appear that the amount claimed was more than was secured by the mortgage.” In that case the mortgage was given, as the one before us, to secure commercial paper of the mortgagor. The case of Ferguson v. Kimball, 3 Barb. Chan., 619; is unlike the one before us, as the mortgage under consideration in that case was conditioned for tiré support of the widow of the mortgagee, and was, therefore, “given as a security to cover unliquidated damages.”

In Klock v. Cronkhite, 1 Hill, 110, Bronson, J., said: “ But the statute imposes no penalty for claiming more than is really due; and if such a claim could, under any circumstances, affect the validity of the sale, it certainly could not in a case like this, where, if the plaintiff has, in fact, demanded too much,it lias not resulted from a fraudulent purpose, but from a mistake concerning his legal rights.” In the case in hand we are not furnished any evidence indicative of a fraudulent intent on the part of the mortgagee or his attorneys who conducted the foreclosure of the mortgage in inserting in the notice of foreclosure the principal sum mentioned in the mortgage augmented by the interest thereon from the date of the mortgage to the time of the foreclosure; and in the absence of averments of fraudulent intent and evidence that the amount inserted in the notice was swollen for the fraudulent purpose beyond the indebtedness of the mortgagors, we are not prepared to say that the foreclosure was inoperative, or that the sale in virtue of' the statute and the power of sale found in the mortgage did not cut off the legal rights of the mortgagors in the premises covered by the mortgage. The mortgagors had personal notice, and acquiesced in the sale, and yielded up possession of the premises to the purchasers at the sale.

In Jackson v. Slater, 5 Wend., 297, it was said “ In this case the foreclosure was under the statute ; and that statute provides that every foreclosure made under it shall be an absolute bar of the equity of redemption, and shall have the like effect as if the mortgage had been foreclosed in a court of chancery by a decree against all parties in interest.”

In Ingraham v. Baldwin, 12 Barb., 20, it was said, viz.: “ The statute foreclosure was equivalent to a decree in equity.”

In Warner v. Blakeman, 36 Barb., 518, it was said, viz.: It is not a good answer to say that these statutory proceedings are not in court, and that the mortgagor is not required to contest them. The notice of such proceedings, with a claim against him for a certain amount due upon the mortgage, at least imposes upon him the duty of notifying purchasers at the sale of his claim, or the duty of silence afterwards. If he will not speak when duty towards others require it, he will not be permitted to speak after-wards, when his interest prompts him to do it.”

In Elliott v. Wood, 53 Barb., 305, it was said: “ Undoubtedly, courts of equity have always held that the equity of redemption is so inseparable from the mortgage, it cannot be disannexed even by an express agreement of the parties. But by statutes of fhe state it has been long declared that mortgaged lands: can be sold by advertisement in all cases where the mortgage contains a power to the mortgagee, or any other person, to sell it upon default being made in any condition of the mortgage. Every sale pursuant to such a power is declared to be equivalent to a foreclosure and sale under the decree of a court of equity. * * * The seventh section of the statute expressly declares that the mortgagee, his assigns, and his or their representatives, may fairly and in good faith purchase the premises at the sale.” In this case the referee has found that on the 3d day of July, 1875, “ the aggregate of the sums so advanced and paid by said Drake in payment of such notes and judgments and taxes, with interest computed thereon as stated, was $42,014.48. No part of said aggregate sum had at said date been repaid to the said Drake by the said Lewis or any person in his behalf.” The referee also found : “ Each of said tracts or parcels were sold to the highest bidder and for the greatest sum bidden therefor, and the aggregate of the[ sums bidden tlierefor and for which said mortgaged premises then and there sold was $24,366. Said sale or sales was or were in all respects honestly and fairly conducted. And said Griles W. Hotchkiss purchased the premises bid off by him fairly and in good faith, and said Patrick H. Drake purchased each parcel of the premises bid off by him fairly and in good faith.” The referee further found that the affidavits of the foreclosure of the said mortgage and of the sale thereunder “ were on the 11th day of February, 1876, duly filed in the office of the clerk of the county of Broome, and were on that day duly recorded in the office of said clerk in Book of Mortgages No. 51, at page 1. Said Frederick Lewis was present at said foreclosure sale and did not, in any manner, forbid such sale or object to the making thereof.”

In Hubbell v. Sibley, 5 Lans., 51, S. C., affirmed 50 N. Y., 468, it was said by this court that: “The statute providing for foreclosure of a mortgage by advertisement is to be complied with substantially, but with regard to the objects intended by it.”

Attention has been given to Burnet v. Denniston, 5 Johns. Chan., 35, which is unlike the case before us; there the advertisement under a power contained a false assumption “ as that the premises are to be sold for default of three mortgages, when they were only two, the third being on other land, by which the public might be misled, or purchasers deterred from bidding; ” and there was also another defect, in that no place of sale was designated in the advertisement; and it also appeared “ that the power inserted in the third mortgage, thus intruded upon the public, was void, for the mortgagor was not of twenty-five years of age when the mortgage was executed ; ” and it also appeared that the sale was made after a tender of' the sum due upon the two mortgages; and by reason of such defects and imperfections the chancellor held the sale invalid. We see nothing in the case militating against the sale now under review.

Our attention is invited to Soule v. Ludlow, 3 Hun, 503, in which case it was held that “ A mortgagee in the execution, by advertisement, of the power pf sale contained in his mortgage, is regarded as a trustee executing a power in trust, and is bound to conduct the proceedings in a fair and just manner, and in good faith. Relief will be granted setting aside such proceedings upon the same grounds upon which a court would set aside a sale had under foreclosure by action.” In that case a- party had taken an assignment of a mortgage, and a foreclosure had taken place without service upon the assignee of the mortgage, and under the circumstances disclosed it was said that the foreclosure “ was a practical fraud upon him,” inasmuch as the defendant “ well knew that the plaintiff was the assignee and owner of said mortgage, for he had paid to him, or to his attorney, several instalments of interest thereon, and knew that Gross had no interest in said foreclosure." Under such circumstances relief was given. We find nothing in the case that aids the position of the appellant

In Elliott v. Wood, 45 N. Y., 78, Allen, J., said: “But a mortgagee is not solely a trustee for the mortgagor, but is a creditor having interests to protect, and has rights which a naked trustee may not have. If it be conceded that a mortgagee with power of sale, being a trustee for sale, cannot either directly or indirectly, except by the express authority of the mortgagor, purchase the mortgaged estate, still he may do so when such authority is conferred either by the terms of the power or in any other way.”

And he further adds, viz.: “Powers of sale are construed liberally for the purpose of effecting the general object, and neither the interest of the mortgagee or mortgagor will be advanced by forbidding purchases by the mortgagee. The security of the mortgagee would be less valuable and the mortgagor would lose the benefit of the competition of the mortgagee upon the sale.” In the mortgage before us it was expressly stipulated, viz.: “ This grant is intended as a security for the payment of the sum of $60,000 one year from date with interest, * * * and in case default shall be made in the payment of the principal sum hereby intended to be secured, or in the payment of the interest thereof, or any part of such principal or interest, as above provided, it shall be lawful for the party of the second part, executors, administrators or assigns, at any time thereafter, to sell the premises hereby granted, or any part thereof, in the manner prescribed by law, etc.” We thus see there was ample power given by the mortgage to the mortgagee to make sale of the premises after the expiration of one year; and § 7, 2 R. S., 546, provides as follows: “ The mortgagee, his assigns, and his or their legal representatives, may fairly and in good faith purchase the premises so advertised, or any part thereof, at such sale;” and § 8 provides that every sale “ pursuant to a power * * * shall be equivalent to a foreclosure and sale under the decree of a court of equity."

In Tuthill v. Tracy, 31 N. Y., 162, it was said: “It is the decree and sale, or the perfection of the a sale, that extinguishes such equity ” of the interest of the mortgagor. Upon the evidence found we are, therefore, of the opinion that under the power of sale mid the statute in such cases made and provided the purchasers at the sale acquired legal title to the mortgaged premises.

(2) It is insisted in behalf of the appellant that a trust was created as to the real property of the mortgagors, and that, therefore, an accounting should be had. It is to be observed that the instrument signed by Drake first recited the fact that the mortgage was given as a security, andsecondly it declared, viz.: “ The intention of the undersigned by this said mortgage is to secure the said Drake against all liability he has or may have incurred as indorser for the said Lewis.” When that phraseology was prepared, presumably it was expected that the paper should be executed by Lewis; however, it never was executed by him; it only bears the signature of Drake, the mortgagee.

It further declares that the intent of the mortgage was “ To secure the said Drake for advances which he is to make to liquidate and satisfy the large amount of judgments against the said Lewis, which are a lien upon the property covered by the said mortgage.” That language is in harmony with the language found in the mortgage. The instrument then contains the following declaration : “ The said Drake in the taking of the said mortgage only desires to secure himself for the amount of his liability as such endorser, and for the advances which he is to make in taking up and satisfying the judgments against the said Lewis.” This language is in harmony with the language found in the mortgage and simply indicates that Drake had taken security to indemnify him against any loss by reason of his indorsements and to reimburse him for any advances which he might make at the instance of Lewis. Then follows a clause as follows: “ Anything more than this is not contemplated by the said Drake.” If we give full effect to that sentence it is simply a declaration that he has taken the mortgage to indemnify him against any loss in the premises; but it is insisted in behalf of the appellant that the right to foreclose the mortgage was dependent upon an ascertainment or liquidation of the indebtedness secured thereby. We think the instrument contains nothing making it a condition precedent to the right to foreclose that such ascertainment or liquidation should be first had. The language relating to that subject is as follows: “ When the amount of such liabilities and advances is ascertained or liquidated, then said Drake to indorse same or reduce said mortgage to the true amount so advanced by him.” This language only provides for an indorsement if the ascertainment or liquidation shall be determined before the maturity of the mortgage or before the same shall be foreclosed or pass from the hands of the mortgagee. Doubtless the mortgagor, upon a proper demand or a suit for that purpose, might have required an ascertainment of the amount advanced by Drake and an indorsement thereof upon the mortgage at any time before the same was foreclosed; and perhaps a suit in equity for such purpose might have been maintained by Lewis at any time prior to the foreclosure. Another clause is found in the instrument relating to a supposed possibility that the mortgagee might assign the mortgage, and it is stipulated that in case he does assign it, or part with the control of it, “ he is to account to the said Lewis for the full amount that said Lewis may have to pay upon the same, or which he will be liable to pay to the holder thereof.” As no assignment was made of the mortgage by Lewis this language is inoperative upon the rights of the parties as to the property.

It must be borne in mind that at the time of the execution of this instrument several judgments were existing liens against the property of Lewis, and by reason thereof the instrument contained the following language: “ In the meantime the said Drake will take care of and protect the said Lewis and his property from the enforcement of any of the judgments against the said Lewis or his property, and save the property of the said Lewis from sacrifice and the said Lewis from damages and costs.” Perhaps a fair construction of the expression “In the meantime,” would be to assume that, until the mortgage matured, it was the duty of Drake to avoid a sale of the real estate upon the judgments. Apparently that was accomplished, and the property of Lewis was saved from sacrifice by sale upon such judgments. We find nothing in the language in the instrument which prevented the operation of the stipulations of the mortgage or restricted the right to enforce the mortgage by means of the power of sale contained therein. The last clause of the instrument, which provided that the mortgagee should assign the mortgage “to said Lewis’ order upon being reimbursed on his advances,” doubtless would have required Drake to assign the mortgage if he had been reimbursed his advances prior to the foreclosure thereof. We are of the opinion that, reading the mortgage and the instrument together, they did not operate to place the legal title to the property in Drake, and that he did not, per force of the stipulations in the two instruments, become a trustee of the real estate; that he sustained the relation of mortgagee to the prop erty and that the title to the property remained in the mortgagor until he was divested by the exercise of the power of sale given in the mortgage. Nor do we think the papers constituted an express trust. Norris v. Schuyler, 23 St. Rep., 84; The Farmers' Loan & Trust Co. v. Carroll, 5 Barb., 615.

This case is unlike Slee v. Manhattan Company, 1 Paige, 48, and the principle there laid down is not applicable to the case. That was an assignment of the mortgage to the defendant as security for a debt, which mortgage was foreclosed by the assignee, and the mortgaged premises were h'd in by him for a sum less than the amount of the mortgage and less than the amount of the debt which the assignment was made to secure; and there the assignee was required, on receiving the amount of the debt, and interest, to convey the mortgaged premises to the assignor, and the relief was granted upon the equitable rule “ which forbids a trustee, or person acting in a fiduciary capacity from speculating out of the subject of the trust.” That case was explained and followed in Hoyt v. Martense, 16 N. Y.,. 231.

This case is unlike Case v. Carroll, 35 N. Y., 385, as in that, case the defendant was the attorney of the plaintiffs in relation to-the bond and mortgage, and their adviser as to the manner of obtaining and using them for the purpose of enabling them to obtain and give a clear title to the farm, and it was held that by reason of his confidential relations to the plaintiff his purchase of the-premises should be deemed to be for and in behalf of the plaintiffs, and that a trust was created “ which a court of equity will enforce against a defendant by requiring him to convey the legal title of the premises to these plaintiffs, upon being paid what was-necessarily expended by him in procuring ” such title.

In Dalton v. Smith, 86 N. Y., 176, a bond and mortgage were assigned as collateral for a loan and the mortgage was foreclosed by the lender without making the borrower a party thereto, and the mortgaged premises were bid in by the lender, and it was held that the equitable interest which the borrower obtained in the mortgage attached to the land and that he was entitled .to the surplus in case of a sale thereof by the lender for more than the amount of his claim. We find nothing in the case which aids-the position of the appellant.

A similar doctrine was laid down in Gilbert v. Thayer, 5 St. Rep., 673. In the latter case it was held that if the assignee forecloses the mortgage without foreclosing the assignor’s right and, becomes a purchaser at the sale, he holds the lands as a substitute-for the mortgage “ and precisely as he held the latter and by no different or stronger title.” We find nothing in either of the-cases last cited which aids the contention of the appellant.”

In Williams v. Townsend, 31 N. Y., 415, it was said, viz.: “A mortgage is a mere security for a debt; and there is no such relation of trust or confidence between the maker and holder of a mortgage as prevents the latter from acquiring title to its subject matter, either under his own or any other valid lien.” That case was referred to in Ten Eyck v. Craig, 2 Hun, 464, and Gilbert, J., said : “We think, therefore, it is a misnomer to call a mortgagee-a trustee of the mortgaged estate. He is a creditor having a lien.”

Our attention is invited to Terrett v. Crombie, 6 Lans., 82. In that case the defendant took a deed of building lots which were under a contract of sale and agreed -with his grantor to make advances for building purposes to the purchaser and in due time-convey to him and receive back mortgages, and after deducting his advances and' certain other sums and claims from the price under the contract, pay the surplus to the grantors by the second mortgages of the purchaser; and it was held that he was a trustee sub modo for the grantor and was bound to convey the subject of the trust to her on payment of the amount due him, with expenses of management and interest, and until discharged from the-trust, to hold, manage and preserve the property for the grantor. And it was also held that he could not divest himself of the character of trustee by becoming the purchaser of the property upon foreclosure sales in actions brought by himself upon' the second mortgages, no settlement having been made with the grantor, and she not having been party to the action. And it was made a query in that case whether the fact would have been otherwise if the grantor had been a party to the foreclosure actions. The case differs very essentially from the one before us. We, are of the opinion that neither the instruments nor the evidence disclosed upon the trial establish that Drake was a trustee for the mortgagors at the time of the foreclosure and sale and purchase by him of the premises covered by the mortgage. The power of sale was exercised in pursuance of its terms and in accordance with the statute and he became the purchaser, and the referee has found upon ample evidence that he was a purchaser in good faith and the sale was regularly conducted and that the affidavits were filed and recorded showing the sale to have been conducted in accordance with the provisions of the statute. We think the effect of the sale was to cut off the mortgagor’s interest in the property ; that the legal title was, through the instrumentality of the sale, transferred to the purchasers at the sale and that the right of redemption was extinguished. It is disclosed in the evidence that the purchasers at the sale went into possession under a claim of title and the evidence indicates several acts on the part of the mortgagor and his wife in acquiescence, approval and ratification of the sale; and no satisfactory evidence is furnished to indicate that the purchasers at the sale in anyway consented to hold the property acquired through the instrumentality of the sale as a ■security. Before such a position can be established evidence must be given which is clear, unequivocal and convincing. Erwin v. Curtis, 43 Hun, 292; 6 St. Rep., 116; Ensign v. Ensign, 120 N. Y., 655; 31 St. Rep., 657.

Considerable evidence was given tending to show that the mortgagors acquiesced in the sale.. It appeared that on the 21st of March, 1876, Drake paid to one Phelps $31,874.45 for the judgments which were a lien on the property covered by the mortgage at the time of its execution, and the accrued interest thereon; and on the 15th of March he sold the Lewis homestead to McKinney for $22,000, and in order to obtain possession of the premises on the 22d of March, he commenced summary proceedings for the recovery of the possession of the premises, and on the return of the summons Lewis appeared in person and made no objection to the demand, and that judgment was given awarding the possession of the premises to Drake, who, on the 26th of March, 1877, was put into possession thereof, and on that day Lewis and his wife executed an instrument referring to the premises on the west side of Washington street as “ formerly owned by me (Lewis), and now occupied by Patrick H. Drake and family, * * * and purchased by him at a mortgage sale, November 6, 1885 * * * are hereby unqualifiedly surrendered to the said Patrick H. Drake, and he is hereby put into full and uninterrupted possession thereof.” That instrument was signed by Frederick Lewis and Maria A. Lewis. Other evidence appears indicative of the knowledge on the part of Lewis of the sale, and of the fact that Drake claimed to be the absolute owner of all the property which he had purchased at the foreclosure sale. Such acquiescence appears to have continued down to about the time of the commencement of this action in 1883. "Upon the whole evidence we are satisfied that at the time of the commencement of this action neither Lewis, nor his successor in interest, had any right in the real estate in law or equity, and that this action, so far as it seeks to redeem any portion of the property from the sale, was properly dismissed upon the merits.

(3) It is claimed that the referee fell into an error in finding that “ Frederick Lewis was present at said foreclosure sale-and did not in any manner forbid such sale or object to the making thereof.” In the view we have taken of the case it is of no importance whether he was present at the sale or not. It does appear, however, that he had notice that the sale would take place at the time and place where it did take place, and that circum- . stances are disclosed which indicate that it is of no importance whether he was personally present and forbade the sale or not.

Plaintiff was sworn in her own behalf, and in the course of her redirect examination she testified that she was served with a notice of foreclosure, and she added, viz.: “ Mr. Hotchkiss came and consulted with me about itthereupon the following question was propounded to her:

“ Q. Did Mr. Hotchkiss tell you, or say to Mr. Lewis in your presence, that the foreclosure should make no difference as to the agreement between Mr. Drake and Mr. Frederick Lewis?” (It was conceded that Mr. Hotchkiss was dead); thereupon the defendant’s counsel objected to the evidence, on the ground that she is not competent under § 829; and it was objected to on the further ground “ that it is incompetent, improper and inadmissible.” The objections were sustained, and the plaintiff took an exception. It does not appear clearly when the alleged conversation took place; whether it was before the sale or not; nor does it appear that any transaction was talcing place in regard to the property at the time of the supposed conversation.

In Breck v. Ringler, 36 St. Rep., 619, it was said: “ An exception was also taken to the exclusion of a statement made by the attorney, Mr. Clapp. But as this was in the absence of the plaintiff, and the attorney was not shown to be authorized to compromise him by any statement he might make, the evidence was rightly excluded.” The reversal of this case, 42 St. Rep., 356, was upon other grounds.

In Gutchess v. Gutchess, 66 Barb., 483, it was said: “The declarations of an agent are not admissible against the principal unless made while he is performing some act, and in reference to the thing done.” It did not appear that the proposed declaration of Mr. Hotchkiss was within the scope of his authority, and that it would, therefore, bind the mortgagee. Story on Agency, § 134; Anderson v. R. W. & O. R. R. Co., 54 N. Y., 341; White v. Miller, 71 id., 118.

In Adee v. Howe, 15 Hun, 21, in delivering the opinion, Board-man, J., said that an admission by an attorney must be within the scope of the attorney’s authority in the proceedings he is •engaged in.” We think the exception taken to the ruling is unavailing. Several exceptions are taken to the findings as made, and to the refusals to find upon requests made by the plaintiff, and it is not deemed important to examine them in detail, as the views already expressed, if adopted, lead to the conclusion that the referee’s disposition of the case was proper; and we are of the opinion that his report should be sustained.

Judgment affirmed, with costs.

Merwin, J., concurs.

Martin, J. (dissenting).

The mortgage given by Lewis and wife to Drake, and the contract signed by Drake, formed a single transaction or agreement between the parties, each being the consideration for the other. When read together, they disclose that the consideration mentioned in the mortgage at the sum of sixty thousand dollars was merely nominal, and not the actual consideration therefor: that the mortgage was given upon property of the value of about one hundred thousand dollars, to secure the mortgagee against liability as indorser, the amount of which was unknown, but supposed to be about thirty-two thousand dollars,and also to secure the mortgagee for such advances as he might make to satisfy any judgments that were a lien upon the property mortgaged.

The purpose of taking the mortgage was declared to be only to secure the mortgagee for his indorsements and any advances which he might make in taking up and satisfying any judgments against the mortgagor, which were a lien upon the mortgaged property. The amount of such liabilities and advances was to be subsequently ascertained, when the mortgagee was to reduce the mortgage to the actual amount paid and advanced. If the mortgagee assigned the mortgage, he was to account to the mortgagor for the full amount that he might have to pay upon the same, or which he would be liable to pay the holder thereof.

When these two instruments are construed together, I think it becomes quite manifest that the intent and purpose of the agreements between the parties was, that the amount of such indebtedness should be ascertained and determined before the mortgage should be enforced against the property of the mortgagor. Until the amount was thus ascertained, clearly the amount due upon such mortgage was unliquidated. The proof discloses that the amount actually due upon the mortgage was at least $25,000 less than the amount stated in the notice of sale in proceedings to foreclose the mortgage by advertisement.

Taking into consideration the mortgage, the agreement signed by the mortgagee at the time the mortgage was given, and the evidence given before the referee, I am led to the conclusion that it was the intent of the parties that the amount due under such mortgage should be ascertained as provided in the agreement signed by the mortgagee, and either indorsed upon the mortgage, or the consideration thereof reduced to the actual amount of the mortgagor’s indedtedness, before the same should be enforced against him, and that the mortgagee could not properly foreclose his mortgage by advertisement until the amount was liquidated between the parties. While this might, perhaps, have been done in an action to liquidate the amount and foreclose the mortgage for the amount found due, the mortgage could not, I think, be foreclosed by advertisement where the amount, as in this.case, was wholly unliquidated.

It also appears from the evidence that many, if not most, of the judgments against the mortgagor were not paid and satisfied by the mortgagee, but were procured to be assigned to his (the mortgagee’s) wife, so that when the foreclosure was had the principal amount due upon the mortgage was the amount paid upon notes-which had been indorsed by the mortgagee. It is, therefore, obvious that the statement contained in the notice of sale was neither actually nor substantially correct.

The evidence also discloses that on July 23, 1873, the mortgagor paid to the mortgagee $5,000 to be paid by him on the liabilities of the mortgagor. On November 15, 1873, he received from the mortgagor, through Bosworth &. Company, the sum of $4,725, which was used by the mortgagee in purchasing a judgment against the mortgagor.

There is other testimony in the case showing quite plainly that, before the amount due upon the mortgage could be ascertained, a careful accounting between the parties was necessary, and that a proper liquidation of the amount due under the provisions of the mortgage required the taking of proof as to the payments and receipts by the mortgagee, and something more than a mere calculation was necessary. I am of the opinion that the proceeding to foreclose this mortgage was premature, as the right to enforce it did not exist until the amount of the mortgagee’s liabilities was ascertained or liquidated, the mortgage reduced by indorsement or otherwise to the correct amount secured thereby, and that the statement of the amount due in the notice of sale was so erroneous as to invalidate the proceeding as between the parties.

The statement m the notice of sale as to the amount due was not mistaken or inadvertent, but false, and must have been known to the mortgagee to be so, and rendered the proceeding invalid and the sale thereunder void as between the parties. Burnet v. Denniston, 5 Johns. Ch., 35, 42.

In Soule v. Ludlow (3 Hun, 503, 505), it is said : “ Relief will be given by suit to set aside foreclosure proceedings by advertisement, whenever by any fraud, mistake, deceit, or unfair contrivance or practice or bad faith in conducting the proceedings of the foreclosure or sale, the rights of the mortgagor or of subsequent incumbrancers have been injuriously affected upon pretty much the same grounds as the court would recognize as sufficient for opening the sale if the foreclosure had been by action."

A mortgage cannot be foreclosed by advertisement where it is given to secure an unliquidated amount. Ferguson v. Kimball, 3 Barb. Ch., 616, 619; Jones on Mortgages (4th eel.), § 1776; Wilkins v. Gordon, 11 Leigh (Va.), 547.

The appellant does not seek by this action to disturb the title of any bona fide purchaser of the real estate sold under the pretended foreclosure. The property was bid off by the mortgagee, or his attorney, who was conversant with all the facts relating to the transaction between the parties. It is an action for an accounting and recovery of the possession from the heirs of the mortgagee of the property sold, which has not passed into the hands of purchasers in good faith, upon the payment of the amount that shall be found due the mortgagee, after deducting the amount he has received from the property sold to purchasers in good faith.

The statute in operation when this mortgage was foreclosed, like the present statute, provided that every sale made to a purchaser in good faith should be equivalent to a foreclosure and sale under a decree of a court of equity so far only as to be an entire bar of all claim or equity of redemption of the mortgagor or his heirs, etc. Therefore, under this statute, the mortgagee was protected against the mortgagor’s equity of redemption only so far as he, or those claiming under him, were purchasers in good faith.

On the trial the plaintiff offered to prove, by her own testimony, that Mr. Hotchkiss, who was one of the defendant’s attorneys, and served the notice of the mortgage sale upon her, said to the mortgagor at the time, and in her presence, that the foreclosure should make no difference as to the agreement between Mr. Drake and Mr. Lewis. This evidence was objected to on the ground that the plaintiff was not competent under § 829; that it already appeared that Mr. Hotchkiss was acting for Mr. Drake, and on the ground that it was incompetent, improper and inadmissible. It was conceded that Mr. Hotchkiss was dead at the time of the trial. It is quite clear, I think, that the purpose of this evidence was to show that the agent and attorney, when engaged in the transaction of the business of the mortgagee, stated to the mortgagor that his rights in the property mortgaged should not be changed to his disadvantage by a foreclosure and sale under the mortgage. If this evidence was admissible, it was important evidence in favor of the plaintiff, when considered in connection with the transaction which had previously taken place between the parties, and the situation of their affairs at the time of such foreclosure. That the evidence was competent, proper and admissible, unless prohibited by § 829, is, I think, quite obvious. It was the statement of the mortgagor’s attorney and agent, who had the entire charge and management of the mortgagee’s business and affairs which related to the taking of this mortgage, and to its foreclosure, while engaged in the act of foreclosing the mortgage, and related to the rights of the parties upon such foreclosure.

“ Whenever an agent makes a business arrangement or does an act representing his principal, what he does in respect to the arrangement or act, while it is in progress, is so far part of the res gestee as to be subsequently admissible in evidence on behalf of either party. Whenever the agent’s acts are so admissible, then his contemporaneous declarations, explanatory of these acts, arc admissible; nor in proving such declarations is it necessary that he should be himself called.” Wharton on Bv., 3d ed., §1173; see, also, opinion of Earl, J., in Anderson v. R., W. & O. R. R. Co., 54 N. Y., 340; Merchants' Bank v. Griswold, 72 id., 472; 480; North River Bank v. Aymar, 3 Hill, 262. Therefore, if it was-admissible under § 829, the referee erred in excluding the evidence. It seems to be settled that § 829 does not apply to transactions and communications with the agents of a deceased person, although both the agent and the principal are dead. Hildebrant v. Crawford, 65 N. Y., 107.

I am of the opinion that the learned referee erred in excluding the evidence offered, as it was of such a character that with the other circumstances and proof in the case it might well have justified a determination of the case in the plaintiff’s favor. If such was the arrangement under which the mortgage was foreclosed, it might well be claimed by the plaintiff that the defend-, ant’s intestate purchased and held the property in question as a trustee for the mortgagor, and that upon receiving the amount of his mortgage debt the mortgagee was liable to account to the plaintiff for the property remaining in his hands.

I think the judgment should be reversed, and a new trial ordered, with costs to abide the event.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Herrick, J.

license: Public Domain

text:
    William T. Hart et al., Resp'ts, v. The Ogdensburg & Lake Champlain Railroad Co. et al., App'lts.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    1. Discovert—When proper.
    An order granting or withholding an order for discovery will not he disturbed by the general term unless it clearly appears that on the merits the special term has erroneously exercised its discretion.
    S. Same.
    In an action by a bondholder to prevent the consolidation of the corporation with a foreign company wherein an open commission was granted to examine the officers of the company, who refused to allow the books of the companies to be examined, an order for the discovery of such books and papers of the two companies was granted. Held, that there was no abuse of discretion.
    Appeal from order granting a discovery and permission to take copies of defendants’ books and papers.
    The facts appear in the opinion at special term, as follows :
    Russell, J.—This action was brought to prevent the consolidation of the defendants, the practical annihilation of the Ogdensburg & Lake Champlain Railroad Company, which is a New York corporation, whose property lies in the state of New York, by being merged into the Central Vermont Company, which is a foreign corporation, under the guise of a consolidation provided for by the statutes of New York. A temporary injunction was granted in this action which was sustained upon a motion to vacate, and also by the general term on appeal, that branch of the supreme court, however, not passing upon the merits, except so far as to consider it wise to prevent a consolidation until the trial of the action, when the merits could be more fully and thoroughly investigated.
    It is for the purpose of having that trial had upon the merits, and to produce the records and evidence so that the trial may not fail on account of the absence of the records, that this motion is brought.
    An open commission has been granted for the examination of the officers of the company who know the relations between the companies and who mainly reside out of this state. That commission will be practically useless, unless the oral testimony can be supplemented by the exact record evidenced by the books and documents of the two companies, and the defendants refuse to permit the inspection or discovery by any voluntary proceeding, standing upon their assumed legal rights to compel strict common law proof of the allegations of the complaint, without any concessions of opportunity to examine books and papers to the plaintiffs, as stockholders of the Ogdensburgh & Lake Champlain Company, or as parties litigant to the action. It is a case in which the ordinary processes of subpoena are futile. The situation presents the somewhat anomalous appearance of a New York corporation, created by the New York laws, enjoying the privileges afforded by the state, with property entirely within the state, and obliged by law to render public service under the jurisdiction of the courts of the state, officered by the agents and employes of a foreign corporation, and controlled entirely by that foreign corporation, with its records, accounts, papers and documents outside of the jurisdiction of the courts and in the custody of the foreign corporation ; and the defense to this motion practically rests upon the right of that foreign corporation to withhold from the view of the courts of this state the power to examine, in a litigation properly brought, the evidence of its dealings with the New York corporation upon an issue of an attempted illegal consolidation inequitably attempted, in which the foreign corporation exchanges its stock for that of a new corporation, share for share, while the New York corporation receives but one share for each ten, and also charging improper diversion of the funds and property of the New York corporation during the past years of the control by the foreign corporation, so that on a fair accounting the foreign corporation would be indebted to the other to an extent which would justify equitable relief.
    As the inquiry must necessarily arise upon this motion whether the courts of this state have power in this litigation to compel the discovery of books and documents which concededly show the accounts between the parties, the course of dealing and the steps, formal and substantial, out of which the attempt to consolidate arose, it should be assumed that the Hew York courts still possess the power and ought to give in this, as well as in all other cases, a fair show to the litigants, who only ask the opportunity to prove their charges.
    This is a petition not only for production and inspection, but also for discovery. It would be needless, perhaps, to have the relief granted if the plaintiffs knew and could produce the evidence as to exactly what the books contain. It is because there is need for a discovery that such a remedy is given. The courts will infer that the books and accounts and documents required by law to be kept by corporations have been so kept, and it is not substantially denied that those books and papers will show the dealings between the companies on the matters at issue. Whether the inferences and presumptions which may be drawn from the papers and books, when produced in evidence, will sustain wholly or partially the plaintiffs’ claims, is precisely the object of the inquiry to be had at the trial of the action.
    I do not think the fact that under the laws of Vermont subpoenas may be enforced for the attendance of witnesses who testify orally before a commissioner on an open commission, is sufficient answer to this motion. It is very evident that the defendants intend to concede no privilege or opportunities to the plaintiffs beyond those which the law gives, and,therefore, in addition to the remedy of a commission, must come the beneficial aid of a production, inspection and discovery, if that commission be effective, especially as the absence of the books and papers is a voluntary act of the substantial defendant, the Central Vermont Company, and an act upon which it ought not to be able to rely to prevent the necessary evidence upon the trial.
    Nor do I think that the New York statute, which give, the privilege to stockholders to examine the stock book, is exclusive of all other rights of stockholders. It seems to me that stockholders are still owners of the corporation property, subject to its debts, and, as such, have some rights to know how their property stands and how their agents are administering their trusts, beyond the mere privilege of knowing who are the other stockholders in the company besides themselves.
    The motion is granted, with ten dollars costs.

      Louis Hasbrouck (Daniel Magone and John C. Keeler, of counsel), for app’lts; Theodore H. Swift (William Caleb Loring and Charles O. Tappan, of counsel), for resp'ts.
   Herrick, J.

The granting or withholding an order for a discovery, under chapter 8, title 6, article 4th of the Code of Civil Procedure, is a matter of discretion in this court at special term, subject, of course, to review at general term. Finlay v. Chapman, 119 N. Y., 404; 29 St. Rep., 579. While the general term has power to review the exercise of its discretion by the special “ term, it will not reverse its action unless it pretty clearly appears that upon the merits of the motion the special term has erroneously exercised its discretion.

An examination of the printed case in this appeal fails to satisfy me that upon the merits the special term improperly exercised the power vested in it.

The discretion vested in the court should be liberally exercised to enable parties to properly prepare for trial; and it seems to me that the reasoning of Justice Harris in Powers v. Elmendorf, 4 How., 60, applies to the provisions of the Code as they now exist. He there said : “ I can see no good reason why a party should be permitted to withhold from the knowledge of his adversary documentary evidence affecting the merits of the controversy, only to surprise him by its production at the trial. Unless-for some satisfactory reason to be made apparent to the court, each party ought to be required, when it is desired, to disclose to the other any books, papers and documents within its power which may contain evidence pertinent to the issue to be tried. If the evidence thus disclosed should be conclusive upon the issue the parties may be saved the expense of a trial, and if not, they will come to the trial upon equal terms, each prepared, so far as the evidence within his reach will enable him to do so, to maintain his side of the controversy. This I believe to have been the intention of the legislature, and this I regard as the true construction of their enactment on this subject.”

The order appealed from should be affirmed, with ten dollars costs and printing and other disbursements of this appeal.

Mayham, P. J., and Puts am, J., concur.


author: Putnam, J.

text:
    Samuel T. Guilford, Resp't, v. Clara M. Jacobie, Impl'd, App'lt

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    1. Foreclosure—Parties—Prior mortgagee.
    It is proper, in an action of foreclosure, to make a prior mortgagee a party defendant, so that the amount of the prior mortgage may be determined and paid out of the proceeds of sale, and its lien discharged.
    2. Same—Subsequent action or prior mortgage.
    The pendency of an action of foreclosure is not a legal defense to a subsequent action to foreclose a prior mortgage, but such subsequent action does not prevent the first one from proceeding and bringing the mortgaged premises to a sale.
    3. Same—Costs op subsequent action.
    Whether in such case the prior mortgagor should be allowed the costs and disbursements of the subsequent action rests in the discretion of the court.
    Appeal from order denying defendant’s motion to modify a judgment of foreclosure.
    Plaintiff held a second mortgage on the premises described in the judgment, and defendant Jacobie held the first mortgage. Subsequent to the commencement of this action defendant Jacobie commenced an action to foreclose her mortgage. The judgment herein provides that after payment of costs the referee shall pay defendant Jacobie’s mortgage, and out of the balance pay the mortgage of plaintiff.
    Thereafter defendant Jacobie moved for a modification of the judgment:

      First. By providing therein that said sale should be had and made subject to the defendant, Clara M. Jacobie’s, mortgage.

      Second. That if the first proposition is denied, that the fees and expenses of sale, as provided in §§ 1626 and 1676 of the Code of Civil Procedure, shall not be paid until the said defendant, Jacobie, is paid the full amount due upon her mortgage.

      Third. That in case the first proposition is denied, that the said Clara M. Jacobie be paid the sum of $1,203.83, with interest from the '7th of July, 1892, together with the costs and disbursements of the action hereinbefore stated, to the time of such payment, to be taxed by the clerk of Warren county; which was denied.

      King & Ashley (H. Prior King, of counsel), for app'lt; J. H. Bain, for resp't.
   Putnam, J.

The order should be affirmed. The defendant Jacobie’s mortgage is past due; there is no dispute as to the amount secured by it, and the judgment of which appellant complains provides for its payment out of the first proceeds of the sale, after deducting the referee’s fees and expenses thereon, before any part of such proceeds are received by plaintiff on account of his mortgage debt or costs.

It was proper for plaintiff to make the prior mortgagee a party defendant, that the amount of her mortgage might be determined and paid out of the proceeds of the sale, and its lien discharged. Met. Trust Co. v. Tonawanda, etc., R. R. Co., 43 Hun, 524; 7 St. Rep., 90; Holcomb v. Holcomb, 2 Barb., 20; Vanderkemp v. Shelton, 11 Paige, 29; Western Ins. Co. v. Eagle Fire Ins. Co., 1 id., 284; 3 Rumsey’s Practice, 111; Emigrant Industrial Sav. Bank v. Goldman, 75 N. Y., 132.

It has been held that the pendency of plaintiff’s action to foreclose his mortgage was not a legal defense to a subsequent action by defendant to foreclose her prior mortgage. Adams v. McPartlin, 11 Abb. N. C., 369.

But such subsequent action does not prevent plaintiff from proceeding in this case, and bringing the mortgaged premises to a sale under the judgment properly entered herein, and carrying out the provisions of said judgment. The question whether defendant Jacobie should be allowed, in addition to the amount on her mortgage for principal and interest, the costs and disbursements incurred in her (unnecessary) action to foreclose her mortgage, was one addressed to the discretion of the court below.

Order affirmed, with costs and printing disbursements.

Mayham, P. J., concurs.


author: Per Curiam.

text:
    Hattie Krauss, Adm'rx, Resp't, v. The Wallkill Valley Railroad Co., App'lt.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    Negligence—Contributory.
    Plaintiff's intestate, while attempting to cross a switch track laid by defendant to the mill where he was employed, between two cars standing thereon, was injured by their being pushed together by a train which was slowly moving on the track to leave cars for the mill. It appeared that he could have seen down the track 200 feet. It was not shown that he looked before stepping on the track. Held, that plaintiff failed to show the absence of contributory negligence, and that it was error to submit the case to the jury.

      Appeal from judgment in favor of plaintiff, entered on verdict, and from order denying motion for a new trial.
    Plaintiff’s intestate was employed in a cement mill, to which defendant had laid a switch track to facilitate the loading and taking away of cement and the delivery of supplies to the mill. Intestate was accustomed to take his tools to the blacksmith shop on the other side of the track to be sharpened before the close of the day, and on the day of the accident had done so, and was returning, when, in attempting to pass between two box cars, which were standing with a space between them, they were pushed together by a train of freight cars, and he was injured. The train was moving at the rate of four and a half miles an hour, and had entered the switch for the purpose of delivering cars to the mill. The court, on request, charged that the circumstances did not prove that intestate looked to see if a train was coming, and refused to charge that without such proof the presumption was that he did not, or that it was incumbent on plaintiff to prove that he ■did look and listen.

      Ashbel Green {F. L. Westbrook, of counsel), for app’lt; William Lounsbery, for resp’t
   Per Curiam.

We think failed to show the absence of contributory negligence on the part of the deceased ; the testimony in the case rather tending to establish his carelessness. The train was backing slowly; Krauss was walking across the track; there were but two box cars between him and the slowly moving train. He could see down the track two or three hundred feet. Had he looked before he stepped on to the track between the two -cars, it is difficult to understand how he could have failed to see at least the nearest end of the approaching train. All the evidence given in the case indicates negligence on the part of the ■deceased.

' If, however, the testimony does not absolutely show the contributory negligence of Krauss, it certainly fails to establish his freedom from negligence. Hence, we think, the case should not have been submitted to the jury. In the absence of evidence éxonerating the deceased from contributing, by his own negligence, to the accident, no case was made for submission to the jury.” Borden v. D., L. & W. R. R. Co., 131 N. Y., 671; 43 St. Rep., 935; Wiwirowski v. L. S. & M. S. R. Co., 124 N. Y., 425; 36 St. Rep., 405.

It is well settled that the omission of a railroad company to ■give statutory or other signals, or exercise proper care, does not excuse one crossing a track from observing care on his own part. Cullen v. D. & H. C. Co., 113 N. Y., 667; 23 St. Rep., 719.

This view of the case renders it unnecessary to discuss the other questions raised.

Judgment reversed,. new trial granted, costs to abide the event.

Mayham, P. J., and Herrick, J., concur.


text:
    Jesse V. Palmer et al., Resp'ts, v. Charles H. Angel et al., App'lts.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    1. Deed—Grant of water power—Place of measurement.
    Where there is a grant of power, that power is to be measured where it is produced or exercised; but where the grant is of a measurable or specific quantity of water, that must be measured at the place of delivery.
    3. Same.
    A deed of certain land also contained covenants providing that the-grantees “are to have the right to tap the race-way ” of the grantor at a specified point; also the right to enter on the grantor’s land to build, repair and use a trunk or race to use the water; “ also to use from the race-way ” of the grantor 800 inches of water for the purpose of carrying their mills, and machinery; and the grantor agreed to “ furnish said water in said race at all times.” Held, that the grant being of water as such, the measurement should be made at the place of delivery, the point where the raceway is tapped.
    Appeal from judgment, entered on report of a referee, restraining defendants from using an aperture or gate in the plaintiff’s race-way of an area greater than 1,280 square inches, and for fifty dollars damages, and costs.

      Gibson & Van Kirk (C. C. Van Kirk, of counsel), for app'lts R. A. Parmenter (Esek Cowen, of counsel), for resp’ts.
   Herrick, J.

Prior to the 1st of May, 1863, the Batten-kill Knitting Company was the owner of certain real estate and-lands in the county of Washington, through which lands arid real-estate runs a stream known as the Battenkill; across such stream, there was a dam, and a mill-pond created by said dam, the water power from which was used to operate the mill owned by the Battenkill Knitting Company.

On the 1st day of May, 1863, the Battenkill Knitting Company executed and delivered to Moses Ballou and Horatio C. Craig, and their assigns, a deed to a portion of the aforesaid premises owned and occupied by the said company, and also conveying to-them a portion of the water power, and in said deed it was covenanted and agreed that the “ parties of the second part, their heirs- and assigns, are to have the right to tap the race-way of the said. Battenkill Knitting Company at a point near the southeast corner of said factory, and nearly opposite said elm tree; also the right to enter upon premises of said company to build, repair or use a trunk or race and head gate by them erected, for the purpose of-using the water as above conveyed; also the right to use from the race-way of said company six hundred inches of water for the purpose of carrying their mills and machinery; and the party of the first part agrees to furnish said water in said race at all times-for the use of the party of the second part.

“ The party of the first part, however, expressly excepts from the grant to the parties of the second part, and expressly reserves, to itself, the first five hundred inches of water from their dam for the use of said knitting factory that is now built, and said knitting company is forever to have the right to use said five hundred inches of water in preference to said parties of the second' part. The parties of the second part are to have the right to draw an additional number of inches of water through their race to use on their wheels up to the number of two hundred inches, by paying therefor to the party of the first part at the rate of one dollar and fifty cents per inch. The parties of the second part are to decide how many inches, if any, they need above the six hundred inches above mentioned on or before the 1st day of January, 1865.”

Ballou and Craig, within the time prescribed, elected to purchase the additional two hundred inches of water, paid the stipulated price therefor, and received a conveyance thereof from the Battenkill Knitting Company.

The plaintiffs have succeeded to all the lands and water power formerly owned and used by the Battenkill Knitting Company, except the land and use of water conveyed by said company to Ballou and Craig; the defendants, by conveyance, have succeeded to all the lands and use of water conveyed by the said company to Ballou and Craig. After the execution and delivery of the deed of 1863, and during that year, the grantees therein named erected upon the premises conveyed to them a paper mill, and tapped the raceway of the Battenkill Knitting Company at the point indicated in the deed, and conducted the water therefrom by a ditch or opening some- fifteen feet in width to the wheels of the paper mill erected by them. The knitting mill and the paper mill were thenceforth operated by their respective owners, changes were made in each, new and additional wheels were put in each ; no attempt appears ever to have been made to measure the amount of water retained by the plaintiffs or their grantors, or used by the defendants or their grantors.

A pumping wheel was put in use by the defendants’ grantors for pumping water out of the defendants’ flume, the water so pumped out not reaching the wheels of the paper mill at all, but being diverted therefrom and used for other purposes.

The mill of the defendants is about seventy feet distant from the point in the plaintiffs’ raceway where it is tapped to draw the water as provided in the deed.

The real question between the parties appears to be, where the water is to be measured. The defendants’ contention is, that it is to be measured at the wheels of their mill, the plaintiffs’ that it is to be measured where their raceway is tapped to deliver the same. The question seems to me to turn upon the wording of the deed, and very little light is shed upon it by the cases that we have been referred to. In Cromwell v. Selden, 3 N. Y., 253, the grant to the defendant was of “water sufficient to keep a saw mill in operation at all times when there is more than there is wanted to drive a grist mill with three run of stone, a set of carding machines, a picker, a fulling mill, and other machines for dressing cloth.”

In Wakely v. Davidson, 26 N. Y., 387, the grant of water power-was in these words: “ also the privilege of water to turn said fulling mill when the same is not wanted for carding wool.”

In Groat v. Moak, 94 N. Y., 115, the conveyance was of a grist mill property and the use of water necessary to operate the grist mill, with the reservation to the grantor of sufficient water to use and operate machinery in a cotton factory.

In Mudge v. Salisbury, 110 N. Y., 418; 18 St. Rep., 601, the grant was of a certain amount of land “ together with the grist mill privileges, being first on the stream, for two run of stone with the necessary apparatus for the same.’’

In all these cases it will be observed that the grant was of power, the amount of water was measured by the power that was granted.

In this case the parties have no specified power granted, but have a specified quantity of water.

■ While the water mentioned in the grant here was of course intended to be used for the purpose of producing power, yet the amount of power was not specified, but the amount of water was. Where there is a grant of power, the amount of water that the grantee is entitled to is measured by the power specified, while in the case of a grant of water as such the power to be used is measured by what can be produced by the specified amount of water granted.

If we felt free by the terms of the deed, construing it most favorably to the gran tees, to interpret it purely as a grant of power, then I think the defendants’ contention would be correct, and the measurement should be made at the point where the power is produced or exerted, that is, at the wheels of the mill. But the grant will not bear that interpretation, it is not water sufficient to operate a given number of wheels, or of water sufficient to opei’ate the mill, but of eight hundred inches of water. The grant is “of the right to use from the racewaythe grantors “ agree to furnish said water in their said racethe grantees have the right to tap the grantors’ race for the purpose of obtaining said water.

It would appear then that the water is to be delivered at the point where the raceway is tapped; it is to be used from the grantors’ raceway, it is to be furnished in their raceway, not at the defendants’ mill, or in the ditch or flume that they dug from such raceway, but in the raceway.

It seems to me, then, that the place where the water is to be furnished and delivered to the defendants by the terms of the grant is the place where it should be measured. The contention that it will not give them as much power measured at that point as it would if measured at the wheels it seems to me cannot affect the interpretation to be given to the wording of the grant. If they had contracted purely for power, then that power would have been measured where it was produced or exercised, which would also be its place of "delivery; having seen fit to contract for a measurable or specific quantity of water, that must be measured at its place of delivery, which is also the place where, in this case, the grantors specifically agreed to furnish it.

The l-eferee has found irom the evidence before him that the grant of water is of square inches, and that at the existing head of water at the point of deliver}' it will require an opening or orifice of 1,280 square inches to permit the delivery of 800 inches, and from this conclusion I can see nothing in the evidence to cause me to differ.

The judgment should be affirmed, with costs.

Mayham, P. J., and Putnam, J., concur.


author: Mayham, P. J.

text:
    In the Matter of the Final Judicial Settlement of the Accounts of James A. Walrath, Adm'r of the Estate of Matilda Sunderlin.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    Appeal—Surrogates—Case.
    In appeals from the decree of a surrogate, where the appellant seeks to • review the fact found by the surrogate, a case containing the evidence should be made.
    Appeal by Sarah 0. Thumb, co-administratrix, from that part of the decree of the surrogate of Montgomery county disallowing the individual claim of the-appellant against the estate.

      J. W. Hill, for app'lt; Huston & Herrick (Hiram L. Huston, of •counsel), for resp’ts.
   Mayham, P. J.

as co administratrix in the

The appellant, as co administratrix in theabove entitled matter, presented on this final judicial settlement a claim for all the surplus of this estate after the payment of the expenses of administration, and all the other debts proved and allowed against the estate of the deceased, which claim was based upon an alleged agreement between the deceased in her lifetime -and this appellant, that the appellant was to support the deceased during the latter part of her life, and in consideration therefor should after the death of the deceased have all her property and •estate.

The administrator who files the petition for a final judicial accounting is the next of kin of the deceased.

The case contains none of the evidence taken before the surrogate, but contains a series of findings, and refusals to find, by the surrogate, from which the appellant claims that as matter of law the appellant should be decreed the balance of this estate remaining in the hands of the administrator.

But the surrogate expressly refuses to find : “ That an agreement was entered into and executed between Matilda Sunderlin and claimant, whereby the claimant was to provide and furnish a house, board and lodge the deceased during her lifetime, and in •consideration of the same claimant is to have the property left by the deceased at her death.”

This refusal to find expressly negatives the claim of the appellant, and if correct leaves the claim of the appellant entirely up-supported by any facts by which it can be upheld.

This finding of fact, if correct, and permitted to stand, takes away appellant’s right to recover upon her alleged contract, and while from some of the surrogate’s findings it might be assumed that the deceased contemplated making some disposition of her property in favor of the appellant, yet there is nothing found by him w nich establishes a gift of this property by the intestate to the claimant either inter viuos or causa mortis.

There was no such delivery to claimant as to constitute a gift inter vivos. Nor is it found by the surrogate that any suggestion of the intestate as to her intention to give her property to the claimant was made by her in contemplation of her sudden or immediate peril of death, and to take effect on the happening of that event, so as to constitute a donatio causa mortis.

There is nothing, therefore, in the record before us from which it can be determined as a question of fact that the agreement on which the appellant claims, was ever made or that she is entitled to the residue of the deceased’s property under any valid gift, and as the evidence before the surrogate is not before this court or embraced in the record, this court cannot review the findings of fact made by the court below.

In appeals from the decree of a surrogate when the appellant seeks to review the fact found by the surrogate, it seems that a case should be made containing the evidence. By § 2576 of the Code of Civil Procedure, it seems that if a party desires to review the facts a case must be made and settled by the surrogate.

The language of that section is: “ If it (an appeal) is taken from a decree rendered upon the trial by the surrogate of an issue of fact, it must be heard upon a case to be made and settled by the surrogate as prescribed by law for making and settling cases upon an appeal in actions." And upon this subject the authorities seem abundant and uniform. Spence v. Chambers, 39 Hun, 193; Angevine v. Jackson, 103 N.Y., 470; 3 St. Rep., 643; Burger v. Burger, 111 N. Y., 530; 20 St. Rep., 105; Matter of Falls, 29 id., 759; Matter of Marsh, 45 Hun, 109; 9 St. Rep., 441.

As the appellant has not thought proper to present a case containing the evidence on this appeal, and as the findings of fact of the referee do not support her theory of a contract, and as the decree gives the property to the next of kin, where the law in the absence of any facts requiring a different disposition carries it, the decree must be affirmed.

Decree affirmed, with costs, with leave to appellant on payment of costs of the appeal to make a case under §2576 of Code of Civil Procedure, and on such case have a reargument of this appeal.

Putnam and Herrick, JJ., concur.