Livingston v. Painter — 43 Barb. 270

Majority

p. 270

Livingston vs. Painter, adm’x, &c., and Boyes.

Headnote

H. being the holder of a first mortgage made by L. to secure $12,000, the principal sum of which was then due and payable, at the option of H., in consequence of a default having been made in the payment of interest; and P. being the owner of a second mortgage on the same premises, made by L., which he was then foreclosing; P.,'in order to prevent the threatened foreclosure of the first mortgage, made an agreement with H., whereby, in consideration of H.’s waiving his option to consider the principal of the first mortgage due, he agreed, 1. To pay the interest, taxes and assessments in arrear; 2. To prosecute the foreclosure of the second mortgage; and 3. In the event of his buying the mortgaged premises, “in his own name or otherwise,” at the foreclosure sale, subject'to the first mortgage, to reduce the principal sum secured by the said first mortgage by paying $3000, on account thereof. At the foreclosure sale B. purchased the mortgaged premises, and took the sheriff’s deed in his own name, at the instance and for the benefit of P., and with full knowledge of the agreement made by P., and for the purpose of enabling P. to evade the same.

Held, 1. That the agreement made by P. was a lawful and valid agreement, for a sufficient and lawful consideration.

2. That the complaint showed a prima facie right in H. to come into a court of equity at least for the purpose of obtaining a decree declaring the

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sheriff’s deed to B. to be fraudulent, inoperative and void, so far as it prevented the specific performance of the agreement of P. to reduce the first mortgage.

3. That a court of equity having jurisdiction for that purpose, it could proceed and decree a specific performance of the agreement of P. to reduce the first mortgage by paying $3000 on account thereof. Clerke, J. dissented.

APPEAL from a judgment of the special term dismissing the plaintiff’s complaint. The action was brought to compel the specific performance of an agreement entered into between Hamilton, the assignor of the plaintiff, and the defendant’s intestate. The agreement recited that Painter was the owner of a second mortgage for $12,340 on certain leasehold premises, which he was foreclosing; that Hamilton was the owner of a first mortgage for $12,000 on the same premises, which had become due at Hamilton’s option, in consequence of a default in the payment of interest; and that Hamilton had agreed to waive this option. In consideration of this waiver Painter agreed, first, to pay the interest in arrear; second, to prosecute the foreclosure of the second mortgage to the earliest conclusion; and ■ third, in the event of his buying the leasehold premises “in his own name or otherwise,” at the foreclosure sale, to reduce the principal sum secured by the first mortgage by paying $3000 on account thereof. The complaint, after stating the agreement, alleged that Painter obtained a judgment for the foreclosure of the second mortgage, under which the premises were sold and bought in the name of the defendant Boyes, who obtained the sheriff's deed; that Painter bought the premises in the name of Boyes, for the purpose of evading the terms of his agreement; that Boyes paid no consideration therefor, and acted under the direction of Painter, for whom he was a mere agent or trustee, with a full knowledge of the above agreement; that Painter had failed to reduce the first mortgage by paying $3000 on account of the same, and that the bond, mortgage and agreement had been assigned to the

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plaintiff. The relief prayed for was, first, that the sheriff’s deed to Boyes be declared void, so far as it prevented the specific performance of the agreement; second, that Painter reduce the first mortgage, by paying $3000 on account thereof; and third, for general relief. On the trial, the court dismissed the complaint upon the pleadings and the plaintiff’s opening, upon the ground that it did not present a case for equitable interposition. The opinion of the court is reported in 24 How. Pr. Pi. 231, and 15 Abb. Pr. B. 360.

Leiois L. Helafield, for the appellant.

B. M. Harrington, for the respondents.

The agreement of Painter, the holder of the second mortgage, if he bought “in his own name or otherwise,” at the sale under the foreclosure of his mortgage, that then he should and would reduce the principal sum secured by the first mortgage,, (held by Hamilton as executor, &c.,) by paying on account of the same $3000, was a lawful and valid agreement, for a sufficient and lawful consideration ; the consideration being the agreement of Hamilton to waive his option of considering the whole principal of his mortgage due and payable for non-payment of interest; and Painter avers in his answer, that Hamilton in fact waived his option to consider the whole principal due, by actually, soon after the making of the agreement, receiving from him the interest. It is easy to see that this waiver of Hamilton, of his right to foreclose his mortgage for the whole principal and interest, might be, and probably was, very beneficial to the holder of the second mortgage. The complaint alleges, in subtance, that on the sale under the foreclosure of Painter’s mortgage, the defendant Boyes purchased the mortgaged premises or interest, and took the sheriff’s deed in his name, at the instance and for the benefit of Painter, and with full knowledge of the agreement between Hamilton

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and Painter, for the purpose of enabling Painter to evade the agreement; and that Boyes paid no money, but gave a mortgage to Painter for the whole amount of the purchase money. The specific relief asked by the complaint is, 1st, that the sheriff’s deed to Boyes be declared fraudulent, inoperative and void, so far as it prevents the specific performance of the agreement by Painter to reduce the principal of the first mortgage by paying the $3000 on account thereof; 2d, that the defendant Painter be adjudged to reduce the principal of the mortgage by paying the $3000 on account thereof. The complaint also asks for general relief.

It is plain, I think, that the complaint shows a prima facie right in the plaintiff (Hamilton’s assignee) to come into a court of equity at least for the purpose of obtaining the relief first specifically asked for; and if so, it is perfectly clear that a court of equity having jurisdiction for such purpose could proceed and give the relief secondly specifically asked for, though the plaintiff might have obtained such last mentioned relief in a court of law. But I do not see how the plaintiff could have obtained this relief in a court of law. The relief is, that Painter be decreed to reduce the principal of the mortgage, according to his agreement, by paying $3000 on account of the principal. Certainly a court of law could not grant this relief. The plaintiff asks for a specific, performance of his agreement, and I think the pleadings show, prima facie, that he has a right to it.

I do not see how the plaintiff could recover any thing beyond nominal damages, at law, without showing that his mortgage had been foreclosed for the whole principal, and that the mortgaged premises or interests did not bring sufficient to pay the mortgage.

It appears to me that the plaintiff’s complaint was inadvertently dismissed as it was, on his opening and the pleadings, and that the judgment should be reversed, and a new trial ordered, with costs to abide the event of the action.

p. 274

[New York General, Term,

February 6, 1865.

Even if the prayer in the complaint was merely for a gum of money, the facts set out therein show a good cause of action in equity, on which the plaintiff was entitled to relief. If so, and the court had jurisdiction, it could give such relief as the party was entitled to, including a judgment for money, if proper. I concur in reversing the judgment.

Gierke, J. dissented.

Hew trial granted.

Ingraham, ClcrJce and Sutherland, Justices.]