55 How. Pr. 269 | N.Y. Sup. Ct. | 1878
I do not think it necessary to decide whether the mortgage sought to be canceled is invalid.
An action for its foreclosure is now pending in the courts of the state of Connecticut, and the plaintiff herein is a defendant in that action, and has interposed an answer thereto setting up the invalidity of the mortgage upon the grounds stated in his complaint herein. - It may be regarded as a serious question whether the corporation could join in the consent necessary to create a valid mortgage, when a portion of the stock held by it, and upon which its assent is based, has been issued, and pledged to, and was held by a creditor as a security for the payment of a debt.
It may well be claimed that the pledgee is the owner of the stock for the purpose of giving a valid assent to the creation, of a mortgage under chapter 481, Laws of 1871. Otherwise his security might be wholly destroyed by the creation of a mortgage upon the corporation property. The legal title to 240 shares of the stock upon which -th& corporate assent to the mortgage was based was in the plaintiff. He was the owner of it, and would so continue until the debt was paid, and the stock redeemed. It is true that by section 17, chapter 40, Laws of 1848, the person who should pledge his stock may represent the same and vote upon it as a stockholder at all meetings of the company; from, which it is argued that
The fact, however, that the existence of the mortgage was known to the plaintiff as early as March, 1875, at a meeting of stockholders called to consider the affairs of the company, and the increase of its capital stock, is. not without significance.
Many of the bonds secured by the mortgage had been turned over to creditors; upon others moneys were raised by the corporation, a portion of which was used to reduce the plaintiff’s debt against the corporation.
Pending the action in the court in Connecticut for the foreclosure of the mortgage, the injunction which had been issued therein restraining the sale of the property, was so far modified as to allow the mortgaged property to be sold under the plaintiff’s execution.
At this time the plaintiff had not answered in that action,' and it does not appeal’ that, up to this time, he had challenged the goodness of the mortgage. He had taken no steps to contest it.
On the 4th day of May, 1877, the officer who held the execution in the plaintiff’s favor, sold at public auction, after due notice, all the right, title and interest of the corporation defendant, in and to the property covered by the mortgage.
The same was sold “ subject to whatever sum might be due upon said property by virtue of the mortgage.” This must be regarded as the plaintiff’s act. It was a proceeding on his judgment. The property was purchased by the plaintiff for the sum of seven dollars and fifty cents, on a sale under an execution in his favor. I think if it was intended, at the time the property was sold, to dispute the validity of the mortgage, the plaintiff, who was present at the sale with his counsel, should then have announced such intention. If the mortgage itself was questioned, it should have been so stated. The statement that the sale was made subject to what might
Hr. Beers, the counsel for the plaintiff, present at the sale, says “ it was not sold subject to the face of the mortgage, which would be for the sum of $100,000; that it was sold and was, at the time of the sale stated, subject to whatever sum might be due on the mortgage; the amount at the time was unknown.” In this there is no suggestion that the mortgage was claimed to be invalid.
Had the validity of the mortgage itself been questioned ; had it been stated, as I think it should have been, that it was claimed to be invalid, and would be wholly resisted, the property would presumably have brought a larger price.
According to the inventory, a large amount of machinery and other personal property was sold for a trifle, subject only, as aforesaid. The'faet that the property brought no greater price, leads to the conclusion that it must have been believed at the sale that some considerable sum was due and collectible on the mortgage.
The officer who made the sale, executed and delivered to the plaintiff, on his purchase, a bill of sale, in which it is expressed that the sale was made “ subject to whatever sum may be due upon a mortgage of the said property to trustees for the benefit of the bondholders.”
There are cases which hold that under such a qualified purchase, the vendee cannot dispute the fact of the mortgage or its validity. Hardin agt. Hyde (40 N. Y, 435) expresses that view (Freeman agt. Auld, 44 N. Y., 50). There are other decisions in the same direction, but I do not consider it important to press this point further.
Carpenter agt. Simmons (1 Robt., 360) is supposed to hold a contrary doctrine, but I do not think it does. Monell, J., says (p. 375) “ He did not purchase subject to the mortgage.” The bill of sale in this case, I think, indicates that the plaintiff so purchased. Without deciding that the plaintiff is absolutely estopped, in every event, and in all courts, from
.In the action pending in a sister state for the foreclosure of the mortgage, the injunction in which was modified to allow the sale under the plaintiff’s judgment, the question raised by his answer, interposed to that action, may properly be litigated by the plaintiff. It is, however, for that court to decide what may be there litigated. I do not think that the prosecution of that suit can be interfered with by the judgment of this court; nor do I think that the defendant should be any longer restrained by injunction from prosecuting their suit in Connecticut.
I do not see how we can well or properly interfere with that litigation of which the Connecticut court has acquired jurisdiction. And an adjudication in Connecticut adverse to the legality of the mortgage, all the parties in interest being before the court, would be final and conclusive, and a judgment there against the validity of the mortgage would be an answer to any suit or proceeding commenced there or elsewhere to enforce the mortgage. Until an adjudication be had in that suit, the property cannot be removed or interfered with in opposition to the plaintiff’s rights. The injunction in the foreclosure suit and the plaintiff’s purchase, under his execution, are security against that.
I cannot see, therefore, that this action is at all necessary for the plaintiff’s thorough protection. Equity disfavors a multiplicity of suits for the same substantial ends. If full relief can be had in one suit no other should be allowed (Vanderbilt agt. Vanderbilt, 54 How. Pr. R., 250).
While the pendency of the action in the courts of Connecticut may not in itself be a complete defense to a suit here, yet it affords a reason why a court of equity should not interfere by injunction, if complete redress may be had in the suit first instituted.
Nor, for the reasons above indicated, is the plaintiff entitled
The trustees and mortgagees, through their counsel, were present when the property was exposed for sale, and sold under such conditions and qualifications.
They had good reason to suppose, under such condition and qualification, that subsequent inquiry and scrutiny with respect to the mortgage would be, not as to its validity, but as to the amount due thereon, which, as Mr. Beers states, was not then known.
The plaintiff’s counsel urges that he is entitled to be reinstated as to his lien on the corporate property, which he held under his attachment, which was, by arrangement, given up before the mortgage was made. I do not' see how, in this suit, he can be so reinstated. But his position as a purchaser of the property for the price named gives him advantages greater than those he had before.
He is now the absolute owner of the property, subject to what may be due on the mortgage, for the price of seven dollars and fifty cents. He has his claim unsatisfied against the corporation — and should we here grant a judgment canceling the mortgage wholly, he would, have the property and his claim in addition. This is much more than being restored to his lien under the attachment.
I am satisfied that the Connecticut action, in which the plaintiff intervened to procure an order to allow the sale under his execution, is the one in which the plaintiff should urge Ms objections to the validity of the mortgage, and that court, I am persuaded, will not be slow to give a just and eqmtable judgment in'the premises.
I cannot think the plaintiff is entitled to the relief asked, and conclude that Ms complaint must be dismissed, with costs.
