68 N.Y. 336 | NY | 1877
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *338 The mortgage was in part due when this action was commenced. The plaintiff's title to the mortgaged property had become absolute at law by the default of the mortgagor. Van Sicklen and Pickering had notice of the mortgage when they purchased, and the omission to file it did not affect the rights of the plaintiff. The plaintiff could have taken the property under the mortgage, and have extinguished the equity of redemption by a sale under the power. He had also a remedy against the defendant Oliver, upon his covenant to pay the mortgage made on his purchase of the property from Proctor. The covenant inured to the benefit of the mortgagees and their assignee. The plaintiff could also have brought an action to foreclose the mortgage, joining Oliver as one of the defendants, with a view to obtaining a judgment against him for the deficiency in case the mortgaged property was insufficient to pay the mortgage debt. That an *339 action in equity lies to foreclose a chattel mortgage, admits, we think, of no doubt. The remedy by sale under the power without resort to judicial proceedings, is in most cases a more speedy and effectual means of extinguishing the equity of redemption, and has to a great extent superseded a resort to an action of foreclosure. But the right to foreclose by action has not been taken away. In case of a pledge, the right of a pledgee to come into equity to obtain a decree for the sale of the pledge exists, although a valid sale may be made without judicial action or decree. The same rule applies in respect to a mortgage of chattels. (Coote on Mortgages, 237; Hart v. Ten Eyck, 2 J. Ch., 99; Slade v. Rigg, 3 Hare, 35; Charter v. Stevens, 3 Den., 35.)
The complaint contains the averments necessary in an action to foreclose the mortgage, and all the necessary parties were brought in: the plaintiff as assignee of the mortgage; Proctor and Hamilton the mortgagors; Oliver, the purchaser from Proctor and Hamilton, and Van Sicklen and Pickering, who purchased from him with warranty of title and covenant against incumbrances, and who held the equity of redemption. But the action was not brought as an action of foreclosure. It was brought, as the demand for relief plainly shows, to intercept the money due upon the judgment obtained by Oliver against Van Sicklen and Pickering, for the purchase-price of the mortgaged chattels, and to compel its application upon the mortgage debt. Van Sicklen and Pickering did not answer, and suffered a default. Oliver answered, and the trial was had upon the issues between the plaintiff and Oliver. The plaintiff in his complaint does not demand judgment of foreclosure, or any relief looking to that as the purpose of the proceeding.
Section 275 of the Code is decisive against the granting of such a judgment in the action, as against Van Sicklen and Pickering, and the case cannot be sustained as an action to foreclose the mortgage, unless the payment into court by Van Sicklen and Pickering of $500, after suit commenced obviates the objection. The referee finds that by the consent of the *340 plaintiff and Oliver, and pursuant to an order made in the action of Oliver against Van Sicklen and Pickering, "they paid into court $500 of the amount secured by the judgment to abide the order of the court." If this can be construed as an agreement between all the parties to have this fund stand as a substitute for the mortgaged property, and that the court should deal with it as if the property had been sold on the mortgage, and the proceeds brought into court for distribution, the difficulty perhaps would be obviated. But the substance of the transaction was, we think, simply this: the plaintiff claimed a lien on the judgment, or a right to have the money due on it applied in payment of the mortgage, and the money was deposited to secure the plaintiff if he should succeed in establishing his claim, and Van Sicklen and Pickering made the deposit in obedience to the order of the court.
It is quite probable that it was for their interest to have the mortgage paid out of this fund, but this does not touch the question whether the action brought for a different purpose could be maintained as an action of a foreclosure, they, so far as appears, not consenting thereto or waiving any defence they might have to the mortgage.
We think that this relief could not be granted under these circumstances. The action then stands as an action brought by a creditor, before judgment, to reach the equitable assets of his debtor, and in a case where his insolvency has not been shown. It cannot be maintained in that view within the settled doctrine on the subject. (Wiggins v. Armstrong, 2 J. Ch., 144; Dunlevy
v. Talmadge,
The judgment should be affirmed.
All concur.
Judgment affirmed. *341