134 N.Y.S. 78 | N.Y. App. Div. | 1912
These are cross-appeals by the plaintiff and by the defendant City Beal Estate Company from an order of the Special Term in an action for foreclosure of a first mortgage on realty. The City Beal Estate Company is the owner and the holder of a second mortgage for $140,500, due, unpaid and next in priority to the said first mortgage, and the only other lien on the said realty. It owns and holds that mortgage as collateral security for a debt of $28,971.48, due from Pelletreau and Cooper, who were the real owners of the equity in the premises, or at least controlled it. On the day before plaintiff filed the lis pendens herein the record title of the realty was in the defendant the Lotus Bealty Company. The foreclosure search, continued thereafter, failed to disclose a recorded deed of the premises made to Lewis, a dummy, at the instance of Pelletreau, and so Lewis was not made a party to the action. Shortly before the foreclosure sale this omission was discovered, and thereupon the plaintiff, in consideration of Pelletreau’s procurance of a deed of the premises from Lewis to the defendant the Lotus Bealty Company, stipulated in writing that plaintiff would bid at the foreclosure sale “ at least the amount found due by the said judgment, together with its taxable costs and disbursements and allowance, with interest, less any sum in the hands of the Beceiver.” It is not contended that the said second mortgagee, the City Beal Estate Company, had any hand in the conveyances to the dummy Lewis, or was a party to the said arrangement for the said reconveyance by Lewis, or to any agreement or stipulation incident thereto. Upon motion of the plaintiff a receiver pendente lite of the rents and profits of the premises had been
I shall consider first the appeal of the plaintiff, whose contention is that upon the said stipulation of the defendant, the City Real Estate Company, the doctrine of marshaling of assets should be applied in that the said City Real Estate Company, having two funds as security for its debt, should be relegated solely to the securities which it has in its hands.
The fund which is in controversy is made up of the rents and profits of the realty collected by the receiver. If the amount received under the foreclosure sale did not suffice to satisfy the plaintiff’s claim as mortgagor (inclusive of the expenses incidental to its action for foreclosure [Bushwick Savings Bank v. Traum, 26 App. Div. 532; affd., 158 N. Y. 668]), then the rents
Although the receiver was appointed at the instance of the plaintiff and directed to apply the rents and profits to the satisfaction of the plaintiff’s bond and mortgage, that fact presents no reason why the surplus (which exists after such application) should be diverted from application to the second mortgage for the benefit of the plaintiff as purchaser, but the court can and should direct the application sought by the second mortgagee, inasmuch as the fund represents the mortgaged premises as subject to the lien of such mortgage. (Keogh v. McManus, 34 Hun, 521; Vogel v. Nachemson, supra ; Jones Mort. § 1688.) Moreover, the order of appointment directs that any sum received after the application to the satisfaction of the plaintiff’s bond and mortgage shall be kept subject to the further order of the court.
I now consider the appeal of the City Real Estate Company. It contends that the order should not provide interest at six per cent per annum on the said sum which the receiver is to pay to the plaintiff “ in satisfaction of its said deficiency.” I think that this contention is sound. The order obtained by the plaintiff directed the receiver to deposit these rents and profits with a certain depositary, and the plaintiff is entitled to any interest that the receiver gained by such deposit, apportioned to the sum paid to the plaintiff, and not to interest at the legal rate. (Warren v. Banning, 140 N. Y. 227.) The City Real Estate Company further. insists that the plaintiff as purchaser is chargeable with interest upon the sum that remains unpaid upon the purchase price of the property. The confirmation of the sale by the court relates to the time of the delivery of the deed to the purchaser. (Thomas Mort. § 1021 and authorities cited.) From whatever time the purchase money was due under the terms of sale, the purchaser should be compelled to
The order is modified, and as modified affirmed, with ten dollars costs and disbursements to the appellant the City Real Estate Company.
Hirschberg, Burr, Thomas and Carr, JJ., concurred.
Order modified in accordance with opinion, and as modified affirmed, with ten dollars costs and disbursements to the appellant City Real Estate Company. Order to be settled before the presiding justice.