Majority
p. 399BOLLES against DUFF. Court of Appeals; December, 1870.
Headnote
Strict Foreclosure. —Redemption. —Bar. — Parties.tn an ordinary action for foreclosure and sale of mortgaged premises, the usual decree for that purpose is final, so far as to be appealable to the court of appeals, without awaiting the order confirming the report of the sale.
In an action brought to have an assignment of a lease, absolute on its face, declared a mortgage, a judgment so declaring it, but ordering
p. 400
the complaint dismissed within a certain time, if redemption be not made, is not a foreclosure of the mortgage until the final order so dismissing the complaint is obtained; and the plaintiff may apply to the court to extend the time limited for redeeming.
Such judgment is not a bar to an action brought against the assignee by a receiver appointed at the instance of judgment creditors of the assignor, to secure the benefit of the judgment, even though the premises are. not redeemed within the time limited.
Where an assignee for the benefit of creditors collusively refuses to enforce rights vested in -him as trustee for their benefit, a receiver of the debtor’s property, appointed at the instance of creditors, may maintain an action in his stead, and the court may direct the property so reached to be distributed according to the provisions of the assignment.
Appeal from an order.'
This action was brought by Jesse N. Bolles, as receiver, against John A. Duff, Wm. H. Roberts and John M. Trimble.
On July 26, 1856, Trimble assigned to Whitney and Earl, of Hew York city, as security for a loan to him, a lease of certain lots, upon which he afterwards erected what was known as Laura Keene’s theater, costing about fifty thousand dollars. Upon its face the assignment was absolute. On January 7, 1857, Trimble assigned said lease and all his other property to Roberts, in trust to pay debts, and if there were any surplus, to return it to Trimble. In the spring of 1857, Roberts having first tendered to Whitney and Earl some thirty-six thousand dollars in full for the money advanced on the security .of said lease, and demanded an assignment thereof to him, and a surrender of the premises leased, commenced an action against them to have said assignment of the lease declared a mere security or mortgage for the money advanced thereon, and to redeem the premises therefrom. Whitney and Ear] denied that the assignment was intended as a security, but insisted it was, and was intended to be, absolute ; but asked for no foreclosure or other affirmative relief.
p. 401
Such proceedings were had in that suit, that upon the report of a referee as to the amount advanced and unpaid, the supreme court, on December 13, 1862, adjudged that the sum of twenty-six thousand two hundred and forty dollars and ninety-seven cents was due to Whitney and Earl from Trimble, and that said assignment of the lease was taken and held as a security therefor; that upon payment thereof within two months from that date they should reassign the lease to Roberts ; “but, in default of the plaintiff paying unto said defendants the aforesaid sum of twenty-six thousand two hundred and forty dollars and ninety-seven cents, with interest from December 13, 1862, within the time aforesaid, it is ordered that the said plaintiff’s complaint be and do from thenceforth stand dismissed out of this court.”
On January 22, 1863, the defendant, Duff, procured an assignment from Whitney and Earl, with the written consent of Roberts, of all their rights under said lease and under said decree. Roberts did not pay the money specified in the decree.
In the early’part of July, 1863, the plaintiff in this suit, who had been appointed receiver in supplementary proceedings taken by certain creditors of Trimble, commenced this suit to get the benefit of the decree made in the suit of Roberts against Whitney and Earl.
This suit was commenced in behalf of the plaintiff and all other creditors of Trimble, and the complaint alleged among other things, in substance, that Roberts neglected to give the creditors of Trimble notice to aid him in complying with the decree, and willfully and by collusion with Duff neglected and refused to pay it himself.
The answer of Roberts did not deny the collusion, or the willful neglect and refusal to redeem. The answer of Duff denied all collusion, and claimed the property as his own.
p. 402
The cause was tried before Justice Potter, who found the facts as to the lease, the advance by way of loan by Whitney and Earl upon the assignment thereof to them, the general -assignment by Trimble to Roberts for the benefit of creditors, the action by Roberts against Whitney and Earl, the decree therein, and the assignment of that decree to Duff with the assent of Roberts as before stated, and with full knowledge by Duff of all the antecedent facts as to the nature of the assignment of the lease to 'Whitney and Earl, and its object. That Roberts never offered the property at public or private sale, and did not notify the creditors of Trimble of the decree or of its requirements. That he was insolvent, and though prior to January 22, 1863, (the date of the assignment to Duff) he applied to several parties to take up said decree, yet it did not appear on what terms or for whose benefit. That after that date, Roberts made no attempt to sell the property, or to ■obtain its rents or in any way to make it available to the creditors of Trimble, but tacitly consented that Duff might keep the same as owner, and that Duff purchased said lease, &c., through a Mr. Kimball as agent, who was also the attorney of Roberts and Trimble in that transaction. The court decreed that the property in the hands of Duff was liable for the claims of the creditors of Trimble after satisfying the proper advances of Duff, and directed a reference to ascertain the amount of such advances.
The provision of the decree upon the latter point was as follows:
“The transfer of the defendant Roberts to Duff, whether fraudulently intended by Roberts or not, was an abuse of his trust, and conferred no rights on Duff to the prejudice of Trimble’s creditors, and if Duff does not in equity assume the same trust as Roberts was clothed with, then Roberts’ transfer is to be deemed and judged, in equity, as fraudulent against those creditors, and void to divest them of their rights, and
p. 403I. The action is brought in the names of the proper parties (Bate v. Graham, 11 N. Y. [1 Kern.], 237; Story Eq. Pl., § 184, and authorities there cited; Connah v.
should estop Duff from claiming that his purchase was absolute, so as to cut off those creditors.’’
The directions for a reference provided that “Duff must be allowed the moneys paid by him for the decree and claim, with interest thereon, and all taxes, assessments, insurance, necessary and reasonable repairs, with interest, and the cost of and interest on all such improvements as have added permanent value to the property and have increased the rents and income thereof, and an allowance of one thousand dollars for his energy and efficient management of the property.” Also that Duff was to be charged with “ all the moneys received for the rents, income, issues and profits of the premises transferred to him by the sale” from Roberts to Whitney & Earle, and interest on moneys so received by him, &c. And the decree finally provided that after liquidation of the account so to be taken,—• “out of any moneys that remain then that there be paid to the creditors of said Trimble the amount of their claims pro rata, according to the terms of said assignment” from Trimble to Roberts,—any surplus to be paid to Trimble. „
Upon an appeal to the general term this judgment was reversed by a majority of the court in the first district, and a new trial ordered, upon the ground that the judgment in the suit of Roberts against Whitney was an absolute bar to this action. Ingraham, P. J., dissented.
Other proceedings are reported in 7 Abb. Pr. N. S., 385 ; S. C., 38 How. Pr., 492 ; 55 Barb., 580 , 313 ; 56 Id., 567).
Pending the litigation Mr. Duff had been appointed a receiver of the property to abide the event.
B. C. Thayer, for plaintiff, appellant.
p. 404Sedgwick, 1 Barb., 210 ; Reed v. Emery, 8 Paige, 417; Long v. Majestre, 1 Johns. Ch., 305 ; Cook v. Bolton, 5 Russ., 282; Gedge v. Traill, 1 Russ & M., 281; Brainard v. Cooper, 10 N. Y. [6 Seld.], 356; Hagan v. Walker, 14 How. U. S., 29). II. The action may be sustained, upon the facts found, as an action to enforce the execution of the trust committed to Roberts by the general assignment. It was his duty to redeem, otherwise his action was an injury instead of a benefit to the estate (De Ruyter v. St. Peter’s.Church, 3 N. Y. [3 Comst.], 238; Will. Eq. Jur., 614 ; Matter of Mechanics’ Bank, 2 Barb., 446 ; Hardmann v. Bowen, 39 N. Y., 196 , 200; Litchfield v. White, 3 Sandf., 545 ; Pingree v. Comstock, 18 Pick., 46 ). A receiver or other officer of the court can carry the decree into effect ( 2 Barb., 446 ; 39 N. Y., 200 , and cases there cited). The plaintiff cannot be prejudiced by the fact that the court did not find all the facts alleged in the complaint, if sufficient were found to authorize the judgment (Conkey v. Bond, 36 N. Y., 427 , 430). III. A receiver, appointed in supplementary proceedings, may represent the creditor upon whose judgment he is appointed, in any action to enforce the judgment (Porter v. Williams, 9 N. Y. [5 Seld.], 142 ; Bostwick v. Menck, 40 N. Y., 383 , 386.) IY. Duff not only had actual notice that the assignment of the lease was in the nature of a mortgage, and that Roberts held under an assignment for the benefit of creditors, but being an assignee of the decree itself, his title is subservient to the rights of the parties to the litigation, and, by the fact of the assignment, he became a trustee for Trimble’s creditors (2 Story Eq. Jur., § 1257; Smith v. Bowen, 35 N. Y., 83 ; Mechanics’ Bank of Alexandria v. Seton, 1 Pet., 309 ; Murray v. Ballou, 1 Johns. Ch., 566 ). V. Duff, as mortgagee in possession, was trustee in the land for Trimble, and Roberts was trustee under
p. 405the general assignment. It is not possible that by their acts Trimble or his creditors should be deprived of any rights (Jencks v. Alexander, 11 Paige, 619). YI. The facts found establish the fraudulent collusion between Duff and Roberts (Case v. Phelps, 39 N. Y., 164 ; Conkey v. Bond, 36 N. Y., 427 ; Jencks v. Alexander, supra). VII. The decree in Roberts v. Whitney is not a bar to this action (2 Story Eq. Jur., §§ 1036 a, 1045 ; Calverley v. Phelp, 6 Madd., 229 ; Goldsmith v. Stonehewer, 17 Jur., 199 ; Osbourn v. Fallows, 1 Russ. & M., 741; 1 Fish, on Mortg., 2 ed., 317, 574; Troughton v. Binkes, 6 Ves., 573; Bate v. Graham, supra). No affirmative relief was asked by the defendants in that suit, and the court could not decree a foreclosure (Wright v. Delafield, 25 N. Y., 266 ; Mechanics’, &c., Savings Institution v. Roberts, 1 Abb. Pr., 381 ). There could be no dismissal until default was ascertained and adjudged by the court, and the decree could not be pleaded in bar (2 Dan. Ch. Pr., 1 Am. ed., 1202, 1205, &c.; Story Eg. Pl., 771; Mitf. Eq. Pl., 237, &c.; Cooper Eq. Pl., 271; Beame Pl. in Eq., 208, 210 ; Mitf. Pl., 277; Jouitt v. Gaither, 6 Monr., 251; Senhouse v. Earle, 2 Ves. Sr., 450 ; Stevens v. Praed, 2 Cox, 376 ; Cater v. Dewar, Dick., 654; 2 Barb. Ch. Pr., 200, note b, and cases cited ; 1 Seat, on Decrees, 467, note; Stuart v. Worrall, 1 Brown Ch., Perk, ed., 506, 582 ; 1 Smith Ch. Pr., 700 ; Thompson v. Grant, 4 Madd., 438 ; 2 Fish, on Mortg., 2 ed., 1037, § 1881; 902, § 1790 ; 2 Van Santv. Eq. Pr., 2 ed., 117 ; Perine v. Dunn, 4 Johns. Ch., 140 ,143). It is a mistake to suppose that Morris v. Morange ( 38 N. Y., 172 ) established a different rule. A decree for the foreclosure of a mortgage and sale of the mortgaged premises was there held final for the purposes of an appeal (see Beebe v. Russell, 19 How. U. S., 283 ; Farrelly u.Woodfolk, Id., 288 ). A decree like the present is interlocutory and not final. To constitute, in cases of
p. 406trust, the former suit a bar, the new suit must be brought by the same party, or his representatives (Neafie v. Neafie, 7 Johns. Ch., 1 ). The subject matter of this action is different from the former; it sets up fraud and violation of trust by Roberts, who was the plaintiff in that action. . The question in issue there was simply mortgage or no mortgage, and this is the only decision the parties are estopped from controverting. VIII. It would be working the greatest injustice to allow Duff to retain property the annual rental of which nearly equals his advance (Hart v. Ten Eyck, 2 Johns. Ch., 62 , 101; Tibbs v. Morris, 44 Barb., 138 ; Ryan v. Dox, 34 N. Y., 307 ; Sheldon v. Edwards, 35 Id., 279 ; Boyd v. Dunlap, 1 Johns. Ch., 478 , and cases there cited ; Bigelow v. Ayrault, 46 Barb., 143 ). IX. The right of redemption exists in every person having an interest in, or a lien upon, the mortgaged premises (Brainard v. Cooper, supra; 13 N. Y., 215 ). No length of time will bar the right to redeem where there has been fraud (Marks v. Pell, 1 Johns. Ch., 594 , and cases cited). X. When Roberts made his tender, the mortgage reverted by operation of law to Roberts as Trimble’s assignee (4 Kent Com., 143 (160), 193 (222); 1 Hill on Mortg., 480, 516; Farmers’ Fire Ins. & Loan Co. v. Edwards, 26 Wend., 541 ; Merritt v. Lambert, 7 Paige, 344 ; Parks v. Hall, 2 Pick., 206 ; Kortright v. Cady, 21 N. Y., 343 ; Hartley v. Tatham, 1 Keyes, 222; Hutchings v . Munger, 41 N. Y., 155 ; 2 Pars, on Cont., 5 ed., 641, and authorities). XI. The tender, though not found by the judge, was not controverted, and was proved by uncontradicted evidence. The court will presume that the judge found this fact, and give it the effect of a special finding (Smith v. Coe, 29 N. Y., 666 ; Sinclair v. Tallmadge, 35 Barb., 602 ; Viele v. Troy & Boston R. R. Co., 20 N. Y., 184 ), and will presume the finding of all-other facts necessary to his conclusions, or amend the
p. 407pleadings to conform to the proof (Valentine v. Conner, 40 N. Y., 248 ; 11 Id., 242; 18 Id., 515; 21 Id., 314). —I. In determining whether the order appealed from should be affirmed, this court is not to restrict itself to the grounds assumed by the general term of the supreme court. II. This court is not to act upon anything alleged in the plaintiff’s complaint (as to which issue was taken by respondent) not proved on the trial. There was no proof of fraud in the assignment from Trimble to Roberts, or in allowing the redemptionary period of two months to expire without taking advantage of it. III. The assignment being honest (and Judge Potter directed it to be carried out), Trimble had no interest in the property to communicate to the plaintiff in this action, beyond a right to any surplus remaining after discharging the trusts of the assignment or satisfying creditors’ claims. The creditors could not need the surplus to pay their debts, for there could be no surplus until their debts were paid. It was not until then that Trimble had any rights in the matter. IV. Had the plaintiff brought this action to recover such a surplus for the benefit of Trimble,—and, under the circumstances of the case, he could have brought the action for the benefit of no other person, —it would have been subject to the same defenses as if brought by Trimble himself. V. The judgment of the special term was wrong, so far as it gave Trimble any surplus after the trusts of the assignment had been fulfilled. VI. If the action is not maintainable for the benefit of creditors, and only for that of Trimble and his estate, it fails altogether. VII. This action is barred by the absoluteness of the judgment in the action of Roberts against Whitney
Brown, Hall & Vanderpoel, and John Graham, for defendant, respondent.
p. 408and Earle. The creditors he represents were embodied in Eoberts in that action, and the redemptionary period having expired, in good faith as against Eoberts, it expired as against the creditors and Trimble. VIII. The redemptionary period having expired, the judgment became final, and operated as a bar .to another action for the benefit of Eoberts, as receiver, or Trimble or his creditors, no matter by whom brought; and, if there was error in it, it could only have been reviewed by appeal. This bar took effect either as a judgment of dismissal or as an absolute foreclosure of the mortgage. No appeal having been brought from that judgment, it is final. IX. The argument that the Eoberts action should have been summarily dismissed after default in redeeming, is answered by Morris v. Morange, 38 N. Y., 172 . X. The plaintiff, if entitled to relief, should be confined to the particular judgments under which he was appointed receiver (Bostwick v. Menck, 40 N. Y., 383 ). XI. The, special term erred in the principle of indemnity to the respondent. XII. Whatever was conclusive upon Eoberts concluded those he represented. Trimble’s creditors were parties to the action against Whitney and Earle, in and through Eoberts as assignee. The action of the trustee binds those he represents ; otherwise the right given by the Code (§ 113), allowing the trustee of an express trust to sué without joining with him the person for whose benefit the action is prosecuted, would be meaningless. If the plaintiff sought the benefit of what Eoberts accomplished in that action, he necessarily took it cum onere. He could not take the judgment so far as it created a mortgage, and repudiate it as to the two months’ period of redemption. XIII. It is quite unnecessary, to make the judgment a bar, that there should be a finding by the court.
p. 409after the expiration of the time limited by the decree, of the fact of non-payment and a final decree of foreclosure founded on that fact (Morris v. Morange, 38 N. Y., 172 ). XIY. The preliminary objection, taken below, that the amendment of 1867 to section 268 of the Code, allowing a motion for a new trial upon an interlocutory judgment like the present, did not apply, because the judgment existed before the amendment, is met by the following authorities : People v. Tibbets, 4 Cow., 384 ; In re Palmer, 40 N. Y., 561 ; Norris v. Crocker, 13 How. U. S., 429 ; Ins. Co. v. Ritchie, 5 Wall., 541 ; Exp. McCardle, 6 Id., 318 ; S. C., 7 Id., 506; Sedgw. on Slat. & Const. L., 188-202. XV. The authorities relied on to sustain this objection do not do it (Citing and distinguishing People v. Carnal, 6 N. Y. [2 Seld.] 463; Ely v. Holton, 15 N. Y., 595 ). XVI. The judgment of the special term was not warranted by the evidence. The same counsel also submitted the following additional points, which were those argued in the supreme court. The first branch of the argument referred to the admission of testimony, and to an amendment to the complaint allowed by the judge. These questions were not passed upon by the court. Second. I. There is no proof that the orders, under which plaintiff claimed to have been appointed, were ever recorded. II. The recording is as essential as the filing (Becker v. Torrance, 31 N. Y., 631 ; Hardmann v. Bowen, 39 N Y, 196 ). III. The receiver, by virtue of his appointment, has the right, for the benefit of creditors, to impeach by action, any fraudulent assignment or transfer of the
p. 410debtor’s property (3 Rev. Stat., 5 ed., 226, §§ 1, 2, 3 ; Osgood v. Laytin, 48 Barb., 463 ; Porter v. Williams, 9 N. Y. [5 Seld.], 142). IV. The complaint claimed that Trimble’s assignment to Roberts was fraudulent. Had that ground been established before, or at the time of the appointment of the present receiver, for every purpose of assign ing the property, Trimble would have stood as though no previous assignment had been made. V. So long as the assignment stands, it is an insuperable barrier to the acquisition of any right by the plaintiff, to bring an action affecting the property devoted by it to creditors, at least, by becoming Trimble’s assignee, under the statute relative to supplementary proceedings. Bolles, the receiver, must get rid of it, before he can occupy any other than a subordinate portion in relation to it.' If Roberts, as assignee, were recreant to his trust, the remedy was simple ;■ to apply to the court to appoint a new trustee, or else have the creditors assert their rights in their own name. It is not enough that the plaintiff represents meritorious claims; the inquiry is, whether he is the proper party to represent them. VI. The case resolves itself into this. Four years after Trimble made the assignment for the benefit of creditors, he made another assignment, and, though the first assignment is in force, and the assignee living and not superseded in his trust, the second assignee contends, that he has all the rights of the first. This cannot be correct (Porter v. Williams, supra; Ford v. Williams, 13 N. Y., 577 ). VII. Another difficulty with the judgment is this. After the interlocutory decree in Roberts v. Whitney was pronounced, and before and after the pronouncing of the final decree, Mr. Trimble claims that he concluded an agreement with Mr. Duff, whereby this, the only item of property existing under his assignment
p. 411for the benefit of creditors, was assigned to Mr. Buff to hold for his benefit, until he found it convenient to settle with Ms creditors. Justice Potter, overlooking this testimony, disregarded this arrangement entirely, and administered the assignment to Roberts, as if this agreement had not been made. If Mr. Buff had got control of this property in this way, Mr. Trimble’s creditors alone, not Mr. Trimble, could have forced him to respond to them (1 Story Eq. Jur., Redf. ed., § 371; Waterbury v. Westervelt, 9 N. Y. [5 Seld.], 598; Bostwick v. Menck, 40 N. Y., 383 ). VIII. Justice Potter should have opened the assignment of the Roberts decree to Mr. Buff, far enough to let in Trimble’s creditors only; but he adjudged Trimble the fruits of his self-confessed fraud. IX. In this light Trimble is to be regarded as the plaintiff in this action, and a complaint presenting such facts, could not have stood the test of a demurrer. X. If Trimble’s assignment to Roberts were fraudulent, how could Mr. Bolles question it when asking the benefit of what Mr. Roberts, as assignee, brought into being % Third. The conclusions of law. I. The action of Roberts against Earl & Whitney was expressly brought to redeem the property in question, from the operation of the mortgage. It passed to final, judgment, and this is a second action instituted to accomplish the same result, and that too, in favor of parties in privity with the plaintiff in the same action. II. It has not been proved or found, as a fact, that Trimble’s creditors lost the benefit of the Roberts decree, by fraud, or in any way entitling them to relief, or that Mr. Buff was a party to that fraud. The conclusiveness of that decree is taken away on grounds purely technical and unsound. This is overbearing the rule of res adjudicada,. III. If the redemptionary period expired without
p. 412redeeming, the decree in question provided by its very terms that the complaint of Roberts, the assignee (who sued strictly in that character), “ stand dismissed out of court.” The decree was final — the end of the action ; such by its very terms, and any further dismissal was uncalled for (Morris v. Morange, 38 N. Y., 172 ). Roberts, in bringing the action to redeem, as assignee, represented Trimble’s creditors, and was not bound to make them parties, because he represented them (Story Eq. Pl., 5 ed., §§ 157, 184). V. Whatever was concusive upon Roberts as assignee, was conclusive upon them, in the absence of fraud or some peculiar equity. VI. Standing upon this decree, and asking the benefit of it, the creditors are estopped. YII. If that decree be regarded as an absolute judgment of dismissal, it barred the cause of action embraced in it beyond the possibility of being revived by any party in any proceeding (People v. Vilas, 36 N. Y., 459 ; 2 Barb. Ch. Pr., 1844, 199, 200 ; and citing and commenting at length upon Audubon v. Excelsior Ins. Co., 27 N. Y., 216 ; Porter v. Purdy, 29 N. Y., 106 ). VIII. If the decree be regarded as a foreclosure of the Earl and Whitney mortgage, in default of redemption (and it had that effect also), no further foreclosure was necessary, no matter how the court expressed itself in the decree ; whether by absolutely dismissing his complaint or otherwise. The foreclosure was the effect of the absolute dismissal (Bangs v. Duckinfield, 18 N. Y., 592 ; Beach v. Cooke, 28 Id., 508; Diven v. Lee, 36 Id., 302; and as to the conclusiveness of a prior judgment see Sweet v. Tuttle, 14 Id., 465; Campbell v. Hall, 16 Id., 575 ; Gloodale v. Tuttle, 29 Id., 459; Sheldon v. Edwards, 35 Id., 279 ; Plate v. N. Y. Cent. R. R. Co., 37 Id., 472 ; De Puy v. Strong, Id., 372; Snyder v. Trumpbour, 38 Id.. 355).
p. 413IX. The court, in Roberts v. Whitney, did not exceed its powers in rendering the judgment of foreclosure, and the judgment or decree, not having been appealed from,, is a perfect bar to this proceeding. X. This action was prematurely brought, the complaint being sworn to before any demand was made upon Duff. XI. The judgment should not, in any event, be permitted to stand, so far as it restricts the indemnity of the defendant Duff to an allowance for the cost of his repairs and improvements. Entering under the supposition that he would become absolute owner in two months, the improvements were made in good faith, as owner, and he should be folly indemnified. XII. The evidence does not sustain the judgment upon the merits. XIII. The plaintiff has succeeded in an action he never brought. He set up equities to escape the bar of the decree, but was told by the court that the decree did not stand in his way.
Is the judgment in the suit of Roberts against Whitney, a bar? I incline to think it is not. It is settled in this State that in an ordinary action for foreclosure and sale of the premises, the usual decree for that purpose is final, so far at least as to be appeal-able to this court, without waiting for the order confirming the report of sale (Morris v. Morange, 38 N. Y., 172 ).
In England a strict foreclosure was the usual remedy. The power to give possession to the purchaser on a foreclosure sale was doubted, but finally exercised by the court of chancery (See Kershaw v. Thompson, 4 Johns. Ch., 609 , and cases cited). By our statute the court was given power over the whole subject, though the act was in a good degree declaratory (2 Rev. Stat.,
p. 414
191, 192). Strict foreclosures are now rarely pursued or allowed in this State, except in cases where a foreclosure has once been had and the premises sold, but some judgment creditor or person similarly situated, not having been made a party, has a right to redeem-; —as to him a strict foreclosure is proper.
In general a mere strict foreclosure is a severe remedy. It transfers the absolute title without any sale, no matter what the value of the premises.
The defense in this case claims that the suit of Roberts •y. Whitney and Earle was simply to redeem, and that the failure to pay the sum decreed to be due within the time allowed, and the complaint being dismissed, operated as a strict foreclosure, and the estate of the mortgagor was thereby forfeited (Ferine v. Dunn, 4 Johns. Ch., 140 , and cases there cited ; Beach v. Cooke, 28 N. Y., 535 ; Hansard v. Hardy, 18 Ves., 460 ; Wood v. Surr, 19 Beav., 551).
But the main purpose of that suit was not merely to redeem. The object was to have the assignment to Whitney and Earle (which was absolute on its face) adjudged to be in fact merely a mortgage. After a long litigation as to that point, the assignment was so held.
The time allowed to a party, to pay the amount deemed to be due on a bill to redeem,, is usually six months (Perine v. Dunn, supra; Smith Ch. Pr., 2 ed., 275). In the case at bar but two months were allowed, though the case had been defended upon a false and unconscientious claim, and the amount to be paid was large.
The court in making that decree, did not probably have their attention directed to its effect, in case the plaintiffs should be unable to pay within the specified time; and though it specifies nothing as to its being or operating as a foreclosure, in case the plaintiff fail to pay, yet it is in that respect in the usual form of decrees in such cases (Smith Ch. Pr., 2 ed., 725).
p. 415
But if the defendant Duff insists upon this forfeiture, he must show that the decree clearly gives it to him. It seems that there never was in this case any final order obtained (upon proof of the fact that there had been no payment) that the complaint should stand dismissed. The authorities in England are quite uniform that this final order is necessary in a strict foreclosure, and that until that final order is obtained, the mortgage is. not foreclosed, and no title passes to the mortgagee (2 Dan. Pl. & Pr., 1205 ; Sheriff v. Sparks, 1 West., 130 ; Thompson v. Grant, 4 Madd., 438; Faulkner v . Bolton, 7 Sim., 319 ; 2 Fish, on Mortg., 1037, § 1881 ; Smith Ch. Pr., 725; Hansard v. Hardy, 18 Ves., 460; Wood v. Surr, 19 Bear., 551). No case is cited in this State to the contrary of this rule ; but Chancellor Kent, in Ferine v. Dunn (supra), seems to give it sanction. See his comments there as to the case of Jones v. Hendrick.
Without extending this rule beyond the cases to which it is now applied, I think it sound in its application here, to a strict foreclosure, implied from the dismissal of a bill to redeem. Until that order be obtained, the records of the court do not show which party has finally obtained the judgment, or who is the owner of the land. Until that order is obtained, the complainant may apply to have the time to pay the'amount decreed to be due, extended.
There are several objections as to the decisions of the court upon admitting or rejecting evidence. But this disposition of the case makes them immaterial.
The action is properly instituted by this receiver under the circumstances of this case, and I think substantial justice is done by the decree. The main complaint of the defendant Duff is that he is not permitted to make a speculation at the expense of the creditors of Trimble, and perhaps of Trimble too, if the proceeds of the property should reach him. If Duff is in any
p. 416
degree right in his estimate of the value of the property, the question of Trimble’s participation in any part of the proceeds of this property can never be a practical one. But no facts are found that exclude him.
The order appealed from is reversed, and the judgment of the special term affirmed with costs. •