97 N.Y.S. 499 | N.Y. App. Div. | 1906
This action was tried before the court without a jury, the facts not being in dispute. The action is on a policy of insurance by which the" defendant agreed to insure one William Reichert for the term of three years from the, 5th day of March, 1900, at noon, to
The court found that on January 1, 1901, William Béichert' bought from the plaintiff Simon- Uhlfelder the premises 319 East Seventieth street in the city of Mew York, subject, to a first mortgage, of $12,000 held by the MeW York Savings Bank, giving at the same time a purchase,-money mortgage of $5,000 ; and that in 'July, 1901, the plaintiff assigned a one-third interest in this second, mortgage of $5,000 to Emma Weinberg; that Beicliert defaulted in the paymént" of interest on this second mortgage, whereupon the plaintiff and the said Emma' Weinberg commenced an action to foreclose the said mortgage making Beichert a party defendant. -In that action a judgment of foreclosure and sale of the premises was entered and in pursuance of that judgment the premises were sold at public auction on the 16th day of February, 1903', by the referee then appointed, at which sale the premises were knocked down to plaintiff by the' referee for $3,000 and- the usual memorandum of sale was signed. At the time of the sale the amount due on this mortgage was $5,410, the result of the sale being that there was a deficiency amounting to $2,549.56. Immediately- after the sale the plaintiff assigned a one-third interest in his bid to Emma Weinberg, and one-third to Isaac .Heilbrun. The referee, by a deed dated March 16, 1903, 'conveyed the premises to the plaintiff Uhlfelder, Emma Weinberg and Isaac Heilbrun as tenants in common, the consideration being $3,000, the amount bid at the sale. This deed was not delivered until some time in June, and was recorded June
The plaintiff, having prior to the fire assigned two-thirds of his . interest under the bid, was entitled to receive and did receive from the referee a conveyance of an undivided third of the property. He, therefore, received g,n undivided third of this property, reduced in value by the amount of the loss by fire. He, therefore, sustained actual damage to the extent of one-tliird that the building on the property was damaged, which would be $966.66. The court, after finding the foregoing facts, found “ that the plaintiff sustained no loss or damage by, the aforesaid fire to his mortgagee interest in said property, but received and was credited with, on such foreclosure sale, his full two-thirds proportion of the capacity of the mortgaged premises in their undamaged condition before tbe fire to respond to the mortgage debt, and the security.fnrnished by the said property for the plaintiff’s mortgage debt was fully realized by him and was in nowise affected by the aforesaid fire.;”, and, as a conclusion of law, “ that the policy of insurance in suit only indemnified the plaintiff against any diminution by fire in the capacity of the mortgaged premises to respond to his mortgage debt, and that as the proof shows that such capacity was in nowise affected or lessened by the fire referred to, but the full consideration of the foreclosure sale before the happening of the fire having been duly paid, the plaintiff has°failed to establish any loss or damage to his mortgagee interest covered by tbe policy in suit by tbe said fire,” and directed judgment dismissing, the complaint on the merits.
The real position in which the plaintiff found himself was that he had received in part payment of his mortgage one-third of a building that had been damaged by fire. The defendant had insured him against loss or dapiage by a fire to the building; but it is said that he cannot recover because the relation of the mortgagee to the property after the sale and before the formal delivery of the referee’s deed liad changed, and that, therefore, he sustained no damage. It §eem,s to me, however, that tbe mortgagee’s interest in the property
The plaintiff, being the mortgagee, secured from the defendant, an insurance company, a policy of insurance by which the insurance company agreed to insure the mortgagor against loss or damage by fire to. the mortgaged premises, “loss, if any, payable to Simon Uhlfelder,, mortgagee, as interest may appear,” and this insurance as to the interest of the mortgagee shall not be invalidated by any foreclosure or other proceedings or notice of sale relating to the property,, nor by any change in the title or ownership of the property. It is quite true, however, the mortgagee could only recover the damages he sustained in consequence of the fire to the extent of the damage to his interest as mortgagee in the premises, but- for this the insurance company was responsible. The learned counsel for the defendant treats this sale as having been made to a third party -so that the only interest that the mortgagee had under the sale was that the purchaser who had agreed to pay for the property should accept a deed from the referee, and if that had been the condition we would have agreed with 'the court below that the plaintiff as mortgagee had sustained no damage by the fire. But that was not the situation, The mortgagee had become the purchase!.’ and was
I think this view is sustained by several decisions of the Court of Appeals in this State, although the exact question was not presented in any of them. In Eddy v. London Assurance Corporation (143 N. Y. 311) the loss under the policy was, as in this case,, payable to the mortgagee or trustee as interest might appear, aifd containing also the clause that the Insurance as to the interest of the mortgagee should not be invalidated by any act or neglect of the mortgagor or owner of the property or by any foreclosure or other proceedings or notice of sale relating to the property. Default having been made under the mortgage, foreclosure proceedings were commenced, and before judgment of foreclosure in the action a fire occurred; the mortgagee proceeding with the action obtained a judgment by default for the foreclosure of the mortgage, and snbquent to the fire the property was sold under the foreclosure judgment, leaving a deficiency of about $5,000. As to. the right of the mortgagee to recover from the insurance company for the loss caused by the fire, the court held that the mortgagee was acting strictly within his legal rights when he took proceedings to foreclose the mortgage, and that there was a separate and distinct insurance of the interest of the mortgagee in the premises and, “ consequently, the mortgagee violated no contract on his part when he commenced the proceedings to foreclose his mortgage, and thug
'In Haight v. Continental Ins. Co. (92 N. Y. 51) die court said-: “ FTor Was the policy avoided' by .the sale on foreclosure..- There was no change of -title. JTo deed was given, and not even a report of sale made and presented to the court, for confirmation. Until then the sale and transfer of possession were inchoate and conditional, and had -not become absolute and complete.” (See, also, Browning v. Home Ins. Co., 71 N. Y. 508; Mutual Life Ins. Co. v. Balch, 4 Abb. N. C. 202.) That the' purchaser at a sale under foreclosure does not become the owner of the property until he receives a deed is- now settled. (Cheney v. Woodruff, 45 N. Y. 98.).
My conclusion; therefore, is that .tjhe plaintiff’s interest as mortgagee in the mortgaged premises continued until the formal delivery of the*deed by the referee, in puvsuahce of the sale under the judgment of foreclosure, .and that,, the fire having occurred before-the delivery of the deed, the plaintiff as mortgagee- was entitled to" v recover the damage caused to- his interest m the premises as mortgagee ; that in -consequence of his transferring two-thirds of Ms
. It follows that the judgment appealed from must be reversed and a new trial ordered, unless the parties waive a new trial, in which event judgment is directed for the plaintiff upon the findings of the court below for that amount, with interest and costs in this court and ip the court below.
O’Brien, P. J., Patterson, Clarke and HouénTON, JJ., concurred.
Judgment reversed and new 'trial ordered, unless the parties waive a new trial, in which event judgment directed for the plaintiff upon the findings of the court below for $966.66,' with interest and costs in this court and in the court below.