128 N.Y.S. 902 | N.Y. App. Div. | 1911
On the 22d of December, 1908, .George Nicholas borrowed $30,000 from the Lincoln National Bank, and to secure the payment of it executed and delivered a deed to Charles E. Warren, who was then cashier of the bank, and Who gave back a letter, stating that the deed was to be held in escrow for the protection of a certain number of notes of the grantor amounting -to $30,000, and that on the settlement of said obligation in full, he, Warren, would redeed the property. The premises in question were sold on the foreclosure of a prior mortgage, and this is a contest over the surplus between Warren and the bank on the one hand, and subsequent judgment creditors on the other hand. The said instrument was -recorded as a deed without recording the defeasance clause. The subsequent judgment creditors assert that the conveyance, though in form a deed, was in fact a mortgage, and that it is unenforcible because the mortgage tax has not been paid; that the bank, the real party in interest, cannot'maintain a suit on it as it. is a sealed instrument, and that Warren cannot maintain a suit on it, because as to him there was no consideration.
Certain propositions involved in this case are so plain that the bare statement of them suffices. The instrument in question was a mortgage.' The recording of it as a deed without the defeasance clause gave the mortgagee no benefit of the recording act. It was valid, however, as against the subsequent judgment creditors unless rendered invalid by the failure to pay the mortgage tax. When the instrument was offered in* evidence before the referee, no objection was made; but, wljen it appeared what the actual transaction was, a motion was made to strike it out.
However, the statute does not make it the duty of the mortgagee to record the mortgage forthwith, or provide that his failure to do so and to pay the tax shall render the mortgage void. The tax is payable when the mortgage is recorded. Unless the tax is paid the mortgage cannot be offered in evidence or enforced. We see no reason why the mortgage may
The appellants are undoubtedly correct in asserting that the bank, not having been named as a party in the instrument, cannot sue to enforce it and that the case does not fall within the express trusts authorized by the Eeal Property Law. But it is of no concern to them whether the mortgage he enforced by the bank or by Warren, whether by the latter as trustee or otherwise. The rule that no one but a party to a sealed instrument can sue to enforce it, which has survived most of the rules respecting the effect of a seal, does not require a holding that such an instrument is unenforcible if not made in the name of the principal. It simply requires the instrument to be enforced by the agent instead of the principal. (Henricus v. Englert, 137 N. Y. 488.) The law is not so absurd as to deny a right of action to the principal because of the presence of a seal and to the agent because a seal no longer conclusively imports a consideration. Section 449 of the Code of Civil Procedure seems to have been intended for just such a case, as the learned justice at Special Term held on the authority of Considerant v. Brisbane (22 N. Y. 389). It is quite true that Warren is not the trustee of an express trust, but for the purpose of enabling him to maintain an action he will be so treated.
The order should be reversed, with ten dollars costs and disbursements to abide the final order, and the proceeding referred back to the referee for a further hearing and report.
Ingraham, ■ P. J., Laughlin, Clarke and Scott, JJ., concurred.
Order reversed, with ten dollars costs and disbursements to abide the final order, and proceeding referred back to referee.