Colonial Trust Co. v. Eastern Terra Cotta Realty Corp., 268 A.D. 774

Colonial Trust Co. v. Eastern Terra Cotta Realty Corp.

268 A.D. 774 | N.Y. App. Div. | 1944

On the court’s own motion, the decision of this court handed down May 31, 1944 [267 App. Div. 1002], is amended to read as follows: Plaintiff in a foreclosure action appeals from a judgment which (a) dismissed the complaint on the merits, (b) adjudged to be invalid and void the mortgage sought to be foreclosed and the bond securing it, (e) directed delivery of the bond and mortgage to the mortgagor, (d) adjudged to be invalid and void a promissory note made by a corporate defendant other than the mortgagor and indorsed to plaintiff, and (e) directed delivery of the note to the maker thereof, all on the grounds that the bond and mortgage and the note, to which the bond and mortgage were collateral, were made without consideration and merely for accommodation, and that the mortgage was executed for a purpose other than that for which it was authorized. *775The finding of the trial court that the mortgage was executed for a purpose other than that for which it was authorized by the mortgagor’s directors is clearly against the weight of the evidence. The record establishes clearly that the directors knew the purpose for which the mortgage was to be made and was made, and that they knew also that a good consideration moved from the plaintiff. The parties to the mortgage will not be heard now to assert that this was an accommodation mortgage executed without consideration, nor can any alleged agreement that the enforcement of the bond and mortgage would be withheld until the mortgaged property was sold by the mortgagor be upheld. On the facts presented here, such an agreement, if made, was void and unenforcible as violating the public policy of this State. (Rothschild v. Manufacturers Trust Co., 279 N. Y. 355, 359-360; Mount Vernon Trust Co. v. Bergoff, 272 N. Y. 192, 195-196; President & Directors of Manhattan Co. v. Cocheo, 256 App. Div. 560, 563; County Trust Co. v. Moran, 264 App. Div. 792.) The bond and mortgage were executed in strict compliance with the laws of this State. Judgment reversed on the law and the facts, with costs, and judgment of foreclosure and sale, as prayed for in the complaint, directed. Findings of fact and conclusions of law inconsistent herewith are reversed and new findings and conclusions will be made. Settle order on notice within ten days from the date of this decision. Close, P. J., Hagarty, Johnston and Aldrich, JJ., concur; Carswell, J., not voting. [See post, p. 882.]