Jones v. Phelps

2 Barb. Ch. 440 | New York Court of Chancery | 1847

The Chancellor.

The complainant made a mistake in drawing up the decree. For, upon a fair construction of its language, the appellant is made contingently liable for the-amount of the bond and mortgage given by Crandall, as well as for- the whole costs of the suit. He is clearly not- liable for any part of the amount due upon that bond and mortgage. And if this part of- the decree had- been objected to in the court below, there is no question that- it would have been properly settled before-it was entered; and- thus have saved the delay and expense of- an appeal. Although- this part of the decree must be modified, therefore, it ought not to excuse the appellant from the payment of costs. For his solicitor should have proposed amendments, and have had the decree corrected in this respect, before it was entered. Or, if it was entered without serving a draft thereof upon him, he should have moved the vice chancellor to have it amended. Again, the appeal is too broad; as it proceeds upon the supposition that the appellant is not personally liable to the complainant for any deficiency, if the mortgaged premises should sell for enough to pay the first mortgage and interest; although the proceeds of the sale should not be enough to pay the costs of the suit also. Even in those cases where the defendant has not delayed the proceedings, and increased the costs, by an improper defence, the necessary expenses of the suit as well as of the master’s sale are deducted out of the proceeds of the mortgaged premises ; thereby rendering the mortgagor, in effect, liable for those costs and expenses, if the proceeds of the sale are not sufficient to pay the whole debt for which he is personally liable, in addition thereto. In this case, however, it would be wholly inequitable to take those costs which were made by the appellant’s improper defence, out of the proceeds of the sale, if the proceeds are not sufficient to pay both mortgages. Besides, the defence put in by the appellant delayed the sale of the premises for a long time; as a decree might have been obtained in the spring of 1845, if he had not put in an answer, no part of which was sustained by the proofs in the cause. In the meantime the interest has been running on both mortgages; which would have been stopped, by the application of the proceeds of the mortgaged premises to the payment of the complainant’s demand, if a sale had not been delayed by the defendant’s litigation. In such a case, as the costs are in the discretion of the court, it is proper to charge them personally on the defendant who has caused them to be made ; instead of taking them out of the proceeds of the mortgaged premises, which in equity belong to the complainant, or to others who hold incumbrances upon the premises.

In the present case, although the question as to the priority of the Hill mortgage over that given to the defendant, was disposed of by the interlocutory decree, which has not been appealed from, I have looked into the pleadings'and proofs, in reference to this question of costs. And I find that the appellant was clearly in the wrong in respect to the question oí priority. Both mortgages being recorded at the same time, and each mortgagee being cognizant of the giving of the other mortgage when he took his own, the recording acts had no application to the case. And the evidence clearly establishes the fact that it was the understanding, agreement, and intention of the parties, that the mortgage to Hill should have a preference over that which was given to Phelps, so as to be a prior lien upon the premises. Although they have the same date and were acknowledged at the same time, the law, for the purpose of carrying into effect the intention of the parties, will presume the mortgage to Hill to have been delivered before the delivery of the other mortgage of the same date to Phelps. The appellant’s defence, therefore, was not only invalid but wholly unconscientious.

The decree must be modified so as to direct the master to ascertain the amount of costs to which the complainant would have been entitled, upon an ordinary decree, on a bill taken as confessed against all of the defendants; and to pay that amount, and also the costs and expenses of the sale, out of the proceeds of the mortgaged premises in the first place. The amount due on the second of January, 1846, the date of the master’s report, upon the bond and mortgage given by the appellant, must be computed and stated in the decree; and the master who makes the sale must be directed next to pay that amount, with interest from the second of January, 1846, out of the proceeds of such sale. And if there is more than sufficient for those purposes, he must apply the residue of such proceeds, or so much thereof as may be necessary for that purpose, to pay the amount due on the complainant’s second mortgage, with interest thereon from the last mentioned day; and he must bring the surplus, if any, into court for the benefit of whoever may be entitled to it, and subject to the further order of the court. If there is not sufficient, after paying the costs and expenses aforesaid, to pay the amount due upon the complainant’s first bond and mortgage, the master must report the amount of that deficiency, and the sum then due upon the complainant’s second bond and mortgage, separately. And the defendant Crandall, who is primarily liable for the amount due on both of those bonds and mortgages, must be decreed to pay such deficiency, with interest thereon from the date of such report. If it cannot be collected upon execution against him, then, upon the return of the execution against his property unsatisfied, the defendant Phelps must pay the amount of the deficiency reported due upon the complainant’s first bond and mortgage, with interest; or so much thereof as shall not have been collected by execution from the defendant Crandall. The master must also, in his report, state the amount due upon the complainant’s taxed bill of costs, after deducting the portion of such costs which the master is directed to pay out of the proceeds of the sale; and the defendant Phelps must pay the amount so reported due for such costs, with interest thereon from the date of the master’s report. In case the proceeds of the sale shall be sufficient to pay the amount due upon the complainant’s first bond and mortgage, together with that part of the costs and expenses which are directed to be paid out of such proceeds, but not sufficient to pay the amount due upon the complainant’s second bond and mortgage, the master must report the amount of such deficiency; and the defendant Crandall must be directed to pay it personally.

The appellant must also pay the respondent’s costs upon this appeal, to be taxed.