23 N.Y.S. 433 | N.Y. Sup. Ct. | 1893
Lead Opinion
Plaintiff insists “that the statutory foreclosure was inoperative, and the plaintiff has the right to redeem.” In Jencks v. Alexander, 11 Paige, 626, it was said, viz.:
“But a mere mistake in computing the amount due at the time of the first publication of the notice does not, of itself, furnish any sufficient ground for setting aside the sale under the statute. The direction in the statute that the notice of sale shall contain a statement of the amount claimed to be due upon the mortgage was undoubtedly for the purpose of apprising the owners of the equity of redemption of the extent of the claim of the mortgagee, so that they might not be surprised at the sale by an unfounded claim for what" had in fact been previously paid, and to enable them to apply to this court for relief in due season if the amount due could not be otherwise adjusted between the parties.”
A similar doctrine was laid down in Bunce v. Reed, 16 Barb. 350. The effect of an error in the amount claimed to be due was under consideration in Mowry v. Sanborn, 68 N. Y. 165, and the court observed:
“Without considering whether the claim of a much larger amount to be due than was due would, in the absence of fraud, invalidate the proceedings, we are of the opinion that it does not appear that the amount claimed was more than- was secured by the mortgage."
In that case the mortgage was given, as the one before us, to secure commercial paper of the mortgagor. The case of Ferguson v. Kimball, 3 Barb. Ch. 619, is unlike the one before us, as the mortgage under consideration in that case was conditioned for the support of the widow of the mortgagee, and was .therefore “given as a security to cover unliquidated damages.” In Klock v. Cronkhite, 1 Hill, 110, Bronson, J., said:
“But the statute imposes no penalty for claiming more than is really due; and if such a claim could, under any circumstances, affect the validity of the sale, it certainly could not in a case like this, where, if the plaintiff has in fact demanded too much, it has not resulted from a fraudulent purpose, but from a mistake concerning his legal rights.”
In the case in hand we are not furnished any evidence indicative of a fraudulent intent on -the part of -the mortgagee, or his attorneys who conducted the foreclosure of the mortgage, in inserting in the notice of foreclosure the principal sum mentioned in the mortgage, augmented by the interest thereon from the date of the mortgage to the time of the foreclosure; and in the absence of averments of fraudulent intent, and evidence that the amount stated in the mortgage was swollen, for the fraudulent purpose, beyond the indebtedness of the mortgagors, we are not prepared to say that the foreclosure was inoperative, or that the sale in virtue of the statute and the power of sale found in the mortgage did not cut off the legal rights of the mortgagors in the premises covered by the mort
“In this case the foreclosure was under the statute; and that statute provides that every foreclosure made under it shall be an absolute bar of the equity of -redemption, and shall have the like effect as if the mortgage had been foreclosed in a court of chancery by a decree against all parties in interest.”
In Ingraham v. Baldwin, 12 Barb. 20, it was said, viz.:
“The statute foreclosure was equivalent to a decree in equity.”
In Warner v. Blakeman, 36 Barb. 518, it was said, viz.:
“It is not a good answer to say that these statutory proceedings are not in court, and that the mortgagor is not required to contest them. The notice of such proceedings, with a claim against him for a certain amount due upon the mortgage, at least imposes upon him the duty of notifying purchasers at the sale of his claim, or the duty of silence afterwards. If he will not speak when duty towards others requires it, he will not be permitted to speak after-wards, when his interest prompts him to do it.”
In Elliott v. Wood, 53 Barb. 305, it was said:
“Undoubtedly, courts of equity have always held that the equity of redemption is so inseparable from the mortgage, it cannot be disannexed, even by an express agreement of the parties. But by the statutes of the state it has long been declared that mortgaged "lands can be sold by advertisement in all cases where the mortgage contains a power to the mortgagee, or any other person, to sell it upon default being made in any condition of the mortgage. Every sale pursuant to such a power is declared to be equivalent to a foreclosure and sale under a decree of a court of equity. * * * The seventh section of the statute expressly declares that the'mortgagee, his assigns, and his or their representatives, may fairly, and in good faith, purchase the premises at the sale.”
la this case the referee has found that on the 3d day of July, 1875—
“The aggregate of the sums so advanced and paid by said Drake in payment of such notes and judgments and taxes, with interest computed thereon, as stated, was $42,014.48. No part of said aggregate sum had at said date been repaid to the said Drake by the said Lewis, or any person in his behalf.”
The referee also found:
“Each of said tracts or parcels were sold to the highest bidder, and for the greatest sum bidden therefor; and the aggregate of the sums bidden therefor, and for which said mortgaged premises then and there sold, was $24,-8(56.00. Said sale or sales was or were, in all respects, honestly and fairly conducted; and said Giles W. Hotchkiss purchased the premises bid off by him fairly and in good faith, and said Patrick H. Drake pm-chased each parcel of the premises bid off by him fairly and in good faith.”
The referee further found that the affidavits of the foreclosure of the said mortgage, and of the sale thereunder—
“Were on the 11th day of February, 1876, duly filed in the office of the clerk of the county of Broome, and were on that day duly recorded in the office of said clerk, in Book of Mortgages No. 51, at page 1. Said Frederick Lewis was present at said foreclosure sale, and did not in any manner forbid such sale, or object to the making thereof.”
In Hubbell v. Sibley, 5 Lans. 51, affirmed 50 N. Y. 468, it was said by this court that—
*438 “The statute providing for foreclosure of a mortgage by advertisement is to be complied with substantially, but with regard to the objects intended by it.”
Attention has been given to Burnet v. Denniston, 5 Johns. Ch. 85, which is unlike the case before us. There the advertisement under a power contained a false assumption, “as that the- premises are to be sold for default of three mortgages, when' they were only -two,—the third being on other land, by which the public might be misled, or purchasers deterred from bidding;” and there was also another defect, in that no place of sale was designated in the ¿advertisement; and it also appeared “.that the power inserted in the third mortgage, thus intruded upon the public, was void, for the mortgagor was not twenty-five years of age when the mortgage was executed;” and it also appeared that the sale was made after a tender of the sum due upon the two mortgages; and by reason of such defects and imperfections the chancellor held -the sale invalid. We see nothing in the case militating against the sale now under review.
Our attention is invited to Soule v. Ludlow, 3 Hun, 503, in which case it was held that “a mortgagee, in the execution, by advertisement, of the power of sale contained in his mortgage, is regarded as a trustee executing a power ip. trust, and is bound to conduct the proceedings in a fair and just manner, and in good faith. Belief will be granted, • setting aside such proceedings, upon the same grounds upon which a court would set aside a sale had under foreclosure by action.” In that case a party had taken an assignment of a mortgage, and a foreclosure had taken place without service upon the assignee of the mortgage; and under the circumstances disclosed it was said that the foreclosure “was a practical fraud upon him,” inasmuch as the defendant “well knew that the plaintiff was the assignee and owner of said mortgage, for he had paid to him, or to his attorney, several installments of interest thereon, and knew that Goss had no interest in said foreclosure.” Under such circumstances, relief was given. We find nothing in the case that aids the position of the appellant.
In Elliott v. Wood, 45 N. Y. 78, Allen, J., said:
“But a mortgagee is not solely a trustee for the mortgagor, but is a creditor having interests to protect, and has rights which a naked trustee may not have. If it be conceded that a mortgagee with a power of sale, being a trustee for sale, cannot, either directly or indirectly, except by the express authority of the mortgagor, purchase the mortgaged estate, still he may do so when such authority is conferred either by the terms of the power, or in any other way.”
And he further adds, viz.:
“Powers of sale are construed liberally, for the purpose of effecting the general object, and neither the interest of the mortgagee or mortgagor will be advanced by forbidding purchases by the mortgagee. The security of the mortgagee would be less valuable, and the mortgagor would lose the benefit of the competition of the mortgagee upon the sale.”
In the mortgage before us it was expressly stipulated, viz.:
“This grant is intended as a security for the payment of the sum of $60,000 one year-from date, with interest; * * * tad in ease default shall be made*439 in the payment of the principal sum hereby intended to be secured, or in the payment of the interest thereof, or any part of such principal or interest, as above provided, it shall be lawful for the party of the second part, executors, administrators, or assigns, at any time thereafter, to sell the premises hereby granted, or any part thereof, in the manner prescribed by law,” etc.
We thus see there was ample power given by the mortgage to the mortgagee to make sale of the premises after the expiration of one year; and section 7, 2 Rev. St. 546, provides as follows: The mortgagee, his assigns, -and his or their legal representatives, may fairly and in good faith purchase the premises so advertised, or any part thereof, at such sale;” and section 8 provides that every sale “pursuant to a power * * * shall be equivalent to a foreclosure and sale under the decree of a court of equity.” In Tuthill v. Tracy, 31 N. Y. 162, it was said, “It is the decree and sale, or the perfection of the statutory proceedings by a sale, that extinguishes such equity” of the interest of the mortgagor. Upon the evidence found, we are therefore of the opinion that under the power of sale, and the statute in such cases made and provided, the purchasers at the sale acquired legal title to the mortgaged premises.
2. It is insisted in behalf of the appellant that a trust was created as to the real property of the mortgagors, and that, therefore, an accounting should be had. It is to be observed that the instrument signed by Drake first recited the fact that the mortgage was given as a security; and, secondly, it declared, viz.: “The intention of the undersigned, by this said mortgage, is to secure the said Drake against all liability he has or may have incurred as indorser for the said Lewis.” When that phraseology was prepared, presumably, it was expected that the paper should be executed by Lewis. However, it never was executed by him. It only bears the signature of Drake, the mortgagee. It further declares that the intent of the mortgagor was “to secure the said Drake for advances which he is to make to liquidate and satisfy the large amount of •judgments against the said Lewis, which are a lien upon the property covered by the said mortgage.” That language is in harmony with the language found in the mortgage. The instrument then contains the following declaration: “The said Drake, in the taking of the said mortgage, only desires to secure himself for the amount of his liability as such indorser, and for the advance which he is to make in taking up and satisfying the judgments against the said Lewis.” This language is in "harmony with the language found in the mortgage, and simply indicates that Drake had taken security to indemnify him against any loss by reason of his indorsements, and to reimburse him for any advances which he might make at the instance of Lewis. Then follows a clause as follows: “Anything more than this is not contemplated by the said Drake.” If we give full effect to that sentence, it is simply a declaration that he has taken the mortgage to indemnify him against any loss in tne premises, but it is insisted in behalf of the appellant that the right to foreclose the mortgage was dependent upon an ascertainment or liquidation of the indebtedness secured thereby. We think the instrument contains nothing making it a condition precedent to
‘A mortgage is a mere security for a debt; and there is no such relation of trust or confidence between the maker and holder of a mortgage as prevents the latter from acquiring title to its subject-matter, either under his own or any other valid lien.”
That case was referred to in Ten Eyck v. Craig, 2 Hun, 464, and Gilbert, J., said:
“We think, therefore, it is a misnomer to call a mortgagee a trasteo of the mortgaged estate. He is a creditor having a lien.”
Our attention is invited to Terrett v. Crombie, 6 Lans. 82. In that ease the defendant took a deed of building lots which were under
3. It is claimed that the referee fell into an error in finding that “Frederick Lewis was present at said foreclosure sale, and did not in any manner forbid such sale, or object to the making thereof.” In the view we have taken of the case, it is of no importance whether he was present at the sale or not. It does appear, however, that he had notice that the sale would take place at the time and place where it did take place, and that circumstances are disclosed which indicate that it is of no importance whether he was personally present, and forbade the sale, or not. Plaintiff was sworn in her own behalf, and in the course of her redirect examination she tes anea tnat she was served with a notice of foreclosure, and snt added, viz.: “Mr. Hotchkiss came, and consulted with me about it.” Thereupon the following question was propounded to her: “Question. Did Mr. Hotchkiss tell you, or say to Mr. Lewis in your presence, that the foreclosure should make no difference as to the agreement between Mr. Drake and Mr. Frederick Lewis?” (It was conceded that Mr. Hotchkiss was dead.) Thereupon the defendant’s counsel objected to the evidence on the ground that she is not competent under section 829, and it was objected to on the further ground “that it is incompetent, improper, and inadmissible.” The objections were sustained, and the plaintiff took an exception. It does not appear clearly when the alleged conversation took place, —whether it was before the sale or not,—nor does it appear that any transaction was taking place in regard to the property at the time of the supposed conversation. In Breck v. Ringler, (Sup.) 13 N. Y. Supp. 501, it was said:
•‘An exception was also taken to the exclusion of a statement made by the attorney Mr. Olapp. But as this was in the absence of the plaintiff, and the attorney was not shown to be authorized to compromise him by any statement he might make, the evidence was rightly excluded.”
The reversal of this case—(N. Y. App.) 29 N. E. Rep. 833—was upon other grounds.
“The declarations of an agent are not admissible against the principal, unless made while he is performing some act, and in reference to the thing done.”
It did not appear that the proposed declaration of Mr. Hotchkiss was within the scope of his authority, and that it would therefore bind the mortgagee. Story, Ag. § 134; Anderson v. Railroad Co., 54 N. Y. 341; White v. Miller, 71 N. Y. 118. In Adee v. Howe, 15 Hun, 21, in delivering the opinion, Boardman, J., said that an admission by an attorney “must be within the scope of the attorney’s authority in the proceedings he is engaged in.” We think the exception taken to the ruling is unavailing.
Several exceptions are taken to the findings as made, and to the refusals to find upon requests made by the plaintiff, and it is not deemed important to examine them in detail, as the views already expressed, if adopted, lead to the conclusion that the referee’s disposition of the case was proper, and we are of the opinion that his report should be sustained. Judgment affirmed, with costs.
MEEWIN, J., concurs.
Dissenting Opinion
(dissenting.) The mortgage given by Lewis and wife to Brake, and the contract signed by Drake, formed a single transaction or agreement between the parties, each being the consideration for the other. When read together, they disclose that the consideration mentioned in the mortgage at the sum of $60,000 was merely nominal, and not the actual consideration therefor; that the mortgage was given upon property of the value of about $100,000 to secure the mortgagee against liability as indorser, the amount of which was unknown, but supposed to be about $32,000, and also to secure the mortgagee for such advances as he might make to satisfy any judgments that were a lien upon the property mortgaged. The purpose of taking the mortgage was declared to be only to secure the mortgagee for his indorsements, and any advances which he might. make in taking up and satisfying any judgments against the mortgagors, which were a lien upon the mortgaged property. The amount of such liabilities and advances was to be subsequently ascertained, when the mortgagee was to reduce the mortgage to the actual amount paid and advanced. If the mortgagee assigned the mortgage, he was to account to the mortgagors for the full amount that he might have to pay upon the same, or which he would be liable to pay the holder thereof. When these two instruments are construed together, I think it becomes quite manifest that the intent and purpose of the agreements between the parties was that the amount of such indebtedness should be ascertained and determined before the mortgage should be enforced against the property of the mortgagors. Until the amount was thus ascertained, clearly, the amount due upon such mortgage was unliquidated. The proof discloses that the amount actually due upon the mortgage was at least $25,000 less than the amount
“Relief will be given by suit to set aside foreclosure proceedings by advertisement whenever, by any fraud, mistake, deceit, or unfair contrivance or practice or bad faith in conducting the proceedings of the foreclosure sale, the rights of the mortgagor or of subsequent incumbrances have been injurir*446 ously affected, upon pretty much the same grounds as the court would recognize as sufficient for opening the sale if the foreclosure had been by action.”
A mortgage cannot be foreclosed by advertisement where it is given to secure an unliquidated amount. Ferguson v. Kimball, 3 Barb. Ch. 616, 619; Jones, Mortg. (4th Ed.) § 1776; Wilkins v. Gordon, 11 Leigh, 547. The appellant does not seek by this action to disturb the title of any bona fide purchaser of the real estate sold under the pretended foreclosure. The property was bid off by the mortgagee or his attorney, who was conversant with all the facts relating to the transaction between the parties. It is an action for an accounting and recovery of the possession from the heirs of the mortgagee of the property sold, which has not passed into the hands of purchasers in good faith, upon the payment of the amount that shall be found due the mortgagee after deducting the amount he has received from the property sold to purchasers in good faith. The statute in operation when .this mortgage was foreclosed, like the present statute, provided that every sale made to a purchaser in good faith should be equivalent to a foreclosure and sale under a decree of a court of equity, so far only as to be an entire bar of all claim or equity of redemption of the mortgagor or his heirs, etc. Therefore, under this statute, the mortgagee was protected against the mortgagor’s equity of redemption only so far as he, or those claiming under him, were purchasers in good faith.
On the trial the plaintiff offered to prove by her own testimony that Mr. Hotchkiss, who was one of the defendant’s attorneys, and who served the notice of the mortgage sale upon her, said to the mortgagor at the time, and in her presence, that the foreclosure should make no difference as to the agreement between Mr. Drake and Mr. Lewis. This evidence was objected to on the ground that the plaintiff was not competent, under section 829;. that it already appeared that Mr. Hotchkiss was acting for Mr. Drake; and on the ground that it was incompetent, improper, and inadmissible. It was conceded that Mr. Hotchkiss was dead at the time of the trial. It is quite clear, I think, that the purpose of this evidence was to show that the agent and attorney, when engaged in the transaction of the business of the mortgagee, stated to the mortgagor that his rights in the property mortgaged should not be changed to his disadvantage by a foreclosure and sale under the mortgage. If this evidence was admissible, it was important evidence in favor of the plaintiff, when considered in connection with the transaction which had previously taken place between the parties, and the situation of their affairs at the time of such foreclosure. That the evidence was competent, proper, and admissible, unless prohibited by section 829, is, I think, quite obvious. It was the statement of the mortgagor’s attorney and agent, who had the entire charge and management of the mortgagee’s business and affairs, which related to the taking of this mortgage, and to its foreclosure, while engaged in the act of foreclosing the mortgage, and related to the ' rights of the parties upon such foreclosure. “Whenever an agent