Haines v. Twelfth Ward Bank

Headnote

Haines v. Twelfth Ward Bank of N. Y., 163 App. Div. 164 , affirmed.

Appeal from a judgment, entered May 25, 1914, upon an order of the Appellate Division of the Supreme Court in the first judicial department, reversing a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term and directing a dismissal of the "complaint in an action to secure the cancellation of a certain judgment of record. The judgment was recovered by the defendant in an action upon a promissory note which plaintiff had indorsed. As collateral security there had been assigned to the defendant a one-half interest in a fourth mortgage. The mortgaged premises were thereafter sold on foreclosure of a prior mortgage and defendant became the purchaser, bidding an amount sufficient to cover all outstanding liens against the premises, and immediately thereafter pursuant to a previous agreement transferred the premises' to a third party for an amount showing a profit to the bank of an amount more than sufficient to wipe out the indebtedness to secure which the collateral had been assigned. Plaintiff contended that the bank by reason of its position as pledgee of the security owed a duty to the plaintiff to deal fairly with her as such pledgee and had no right to profit at her expense; that the bank did not deal fairly with her and did profit at her expense in the making of the contract with the subsequent purchaser which at once eliminated him as a possible bidder for the property; that in equity, the bid of the respondent bank was in substance and in effect the bid of the subsequent purchaser and that he in fact paid on this foreclosure sale $201,000, of which the respondent bank received the benefit, although the public bid was only $182,500, and that

the respondent bank is bound to account to the appellant for the actual amount paid by subsequent purchaser.