235 F. 415 | S.D.N.Y. | 1916
(after stating the facts as above). The first question is of the title of the plaintiffs. The simplest way to consider this title is through the suit of foreclosure begun in June, 1913. There were three mortgages foreclosed in one complaint at that time, a mortgage of January 4, 1870, by James Eckerson and wife to John Butler, for $30,000, upon all the premises, except block E, not in controversy, a mortgage of December 26, 1871, by James Eckerson and wife to Sallie A. F. Servin, upon a part of the premises mortgaged to Butler, and a mortgage on June 24, 1874, by James Eckerson and wife to J. Esler Eckerson, upon all the premises mortgaged to Butler. All these mortgages had come to the ownership of Sarah C. Eckerson and Harriet A. Eckerson prior to the commencement of the suit of foreclosure. This suit went through to judgment of foreclosure and sale, and the referee appointed tendered his deed at the closing day, subject to the payment of $6,960.08. The title coming from this foreclosure is challenged for several reasons, each of which I shall take up in detail.
Now it may very well be that the former judgment is a good bar to a second complaint for foreclosure, and that defendants could have defeated the second suit, if they had raised the point. That is, however, quite another matter from saying that the second judgment was void, or that no title could come through it. As I have shown, the lien of the mortgage still remained until sale, notwithstanding the first decree. Nothing was changed, yet it would have resulted ii} a more questionable title tiran the present to have attempted to sell under a decree more than 40 years old. When, therefore, the court, having all the parties before it, made the second decree, it did no more than make a second direction to sell, and the sale would pass the title under section 1632, under whichever decree it proceeded.
The fifth objection was that Catherine M. J. Eckerson was not made a party, but this the defendants concede was cured by a later deed.
“That the report be and the same hereby is confirmed, and that the mortgaged premises described in the complaint in this action as hereinbefore set forth, or so much thereof as may be sufficient to raise the amount due to the claimants for principal, interest, costs', etc,, be sold.”
Therefore I agree with the master that none of the objections to the title which come through the foreclosure suit are valid; and I find that the deed of the referee in foreclosure conveyed a valid title to the property in question. This discussion obviates the necessity of considering any of the conveyances of J. Esler Eckerson as executor to his sisters of a two-thirds interest in the property. He was a party to the foreclosure, both individually and as executor of James Eckerson, and his title was foreclosed; it also obviates any difficulty in respect of the conveyances made by him individually to his sisters of his one-third interest on March 21 and August 2, 1912. All the existing judgment creditors were joined in the foreclosure suit and have been barred, except Zundel, of whom, as I have already said, care was taken in the closing papers. I may say, however, that the last conveyance by J. Esler Eckerson as executor to his sisters was beyond question valid.
“As last as paid and by which payments both liens shall be reduced by said amounts.”
This clause is hung in the air and has no grammatical structure, but I think that it none the less clearly means that as fast as the installments are paid the lien both of the purchase-money mortgage and of the prior mortgages shall be reduced. It gave the right to the vendees, who would be the mortgagors, to withhold payment of any installment until they were assured that it would effect an equal reduction in the prior liens upon the property. There is, however, no word in any part of the contract which requires the vendors to procure an extension of the underlying mortgages, so that they should not fall due before the installments of the purchase-money mortgages. Now it is true that, in Exhibit DD, De Baun asked for an extension and estoppel certificate of the mortgages to Andrew X. Fallon for $15,000, to Jasper H. Allison for $12,000, to John I. Cole for $20,000, and of that to Emily C. Jennings for $2,000. Yet it is not urged that the contract was modified at that time, so as to make an extension necessary.
I directed, however, in the earlier decree, that the purchase-money mortgage should provide that the plaintiffs might not call the underlying mortgages upon the premises held by them, so as to accelerate payments at greater sums than $12,000 per annum. The point now arises whether the defendants are not further entitled to a direction that the first payments should be held in reserve against these mortgages as the plaintiffs do not themselves hold. The question concerns the marshaling of tire installments. I ágree that the defendants must in any case pay $12,000 a year, but it seems to me, if they wish to do so, they should have the option of paying first those underlying mortgages which are in the hands of outsiders, and of which, therefore, I have no power to compel the holders to give extensions. If this be not so, then the defendants are subject to the peril in any year of paying $12,000 to the plaintiffs and being called upon at once to pay the whole sum of an underlying mortgage in addition. I think that the defendants should have the right to apportion the installments so as to secure the falling due of only $12,000 a year, so far as possible. I shall not, therefore, direct them to- pay the installment due on April 1, 1916, to the plaintiffs, but at their option to pay the same, with interest from April 1, 1916, either to the plaintiffs or upon any of the four mortgages left upon the property. Since one of the mortgages has no present payee it will be sufficient, if the plaintiffs do not secure the appointment of a trustee, if they .start proceedings to secure the appointment of a trustee within 30 days after the decree is entered, press the same through with diligence, and make the payment, with interest, within 10 days after he is appointed. While, therefore, I do not think that under the contract they are entitled to an extension, I think they are entitled to protect themselves against a double
As to the supposed assignment of the Emily C. Jennings mortgage, it does not appear that there is any difficulty in learning the actual mortgagee. They must also elect within 30 days if they wish to pay this mortgage.
The objection that the Finegan judgment was on appeal is not good, unless the judgment was stayed. Howard Ins. Co. v. Silverberg, 94 Fed. 921, 925, 36 C. C. A. 549. It does not appear that it was. Mere appeal does not toll the statute.
The only objection to the title which 1 do not overrule is that arising from the possible claim of a fraudulent conveyance by J. Fsler Eckerson in the deeds to his sister of his one-third. I do not mean that this is good. I simply find it unnecessary to consider that question, and decline to pass upon the exception, as it is immaterial to a disposition of the case.
The interest calculated by the referee is subject to a modification. The purchase-money mortgage was to be “collateral,” as it was called, to the underlying mortgages. So much of the interest upon the purchase-money mortgage as equals the interest upon those underlying mortgages, which the plaintiffs clo not hold, is not in my judgment payable. So much as is due upon mortgages held by them is payable, if they give receipts for a corresponding amount of interest upon such mortgages. So much interest as is due upon any surplus of the' purchase-money mortgage above all the underlying mortgages, with interest to the time of the contract, is immediately payable. The plaintiffs are not, however, to have the right to collect interest upon the purchase-money mortgage and add a corresponding sum to the principal of the underlying mortgages for any period after the contract was made.
The decree will therefore be as follows: The special master will hold the closing papers in escrow until the defendants make the proper payments, and, when they do, he will use them, together with
The decree will likewise provide that the defendants shall have 30 days in which to pay $12,000, with interest from April 1, 1916, upon any of the underlying mortgages not owned by the plaintiffs. If within that time there is no person in being entitled to receive such payment, and the defendants shall have commenced proper proceedings to secure the appointment of such person, the time of payment is extended until 10 days ^.fter his appointment, if the prosecution be diligent. The defendants in such case shall be allowed credit upon the purchase-money mortgage, not only for such payments, but for their expenses, including counsel fee in securing such appointment, to be fixed by this court, up to $1,000. If within 30 days the plaintiffs secure extensions of such mortgages, or if within the time specified above the defendants do not pay such installment upon such mortgages, then the defendants shall pay said installment to the plaintiffs, and execution shall issue forthwith as above provided. The decree will provide that there be no costs or disbursements taxed, but that the special master shall take his fee, when allowed by the court or fixed by agreement, out of the funds in his hands. The cause will stand before him to carry out the provisions of the decree, and his report will come up later to be confirmed.