Heidgerd v. Cunningham

In August, 1907, one Augusta Reiss died intestate, seised of certain real property upon which she had given a mortgage in her lifetime, and in the September following an administrator of her estate was duly appointed. Default having been made on the mortgage, a foreclosure action was thereafter begun, and on June 30, 1909, the mortgaged premises were sold pursuant to the judgment of foreclosure and sale. The heirs at law of the mortgagor were made parties to the action of foreclosure, but the administrator of the deceased mortgagor was not, and the purchaser refused to complete his purchase, on the ground that, three years not having elapsed since the death of the owner of the equity, the title was defective, because such administrator was not made a party defendant, so as to cut off whatever interest he had in the property and the lien of the general creditors of the mortgagor, of which there were several, with deficiency of personal assets to satisfy them. A motion was made to compel him to complete his purchase, and the learned Special Term denied it, holding that his contention was correct.

We think this was erroneous. When Augusta Reiss died intestate, the real property, subject to the existing mortgage, passed to her heirs, and they thereafter held as owners. These heirs having been made parties to the foreclosure action, their interest in the property was cut off, and their interest was the only one necessary to make good title. An administrator, as such, has no interest in the land of his intestate; nor does he represent the general creditors of his intestate, in any such sense as makes him a necessary party to a foreclosure action, even where there is a deficiency of personalty to pay debts. An administrator is the person through whom any deficiency on the bond and mortgage debt may be collected, and he may be made a party defendant, and adjudged to pay, through his administration of the estate, any deficiency which may arise, if the plaintiff sees fit to so demand. Code Civ. Proc. § 1627; Glacius v. Fogel, 88 N. Y. 434 . But

Nor do the general creditors of a mortgagor, who has died leaving insufficient personal assets to pay his debts, have any such lien as makes, them necessary parties to a foreclosure action. It has long been the statutory law, now embodied in sections 2749 and 2750 of the Code of Civil Procedure, that at any time within three years after letters were first duly granted within the 'State any representative or creditor of a deceased person, upon showing insufficiency of personal assets, might apply in the prescribed manner for the sale of the decedent’s real estate for the payment of his debts. The law giving this privilege does not state that the creditor has a lien on such real property, general or specific. On the death of the owner of real property, title passes either to his devisees or to his heirs. They can convey it, even within the three years, and a bona fide purchaser, who has no notice of deficiency of personal assets to pay debts, takes good title. Code Civ. Proc. § 1853; Cunningham v. Parker, 146 N. Y. 29 , 40 N. E. 635 , 48 Am. St. Rep. 765 .

Whatever confusion exists as to this right of a creditor to be paid through sale of a decedent’s real estate during the period of three years after letters are issued arises from calling it a lien. It is not a lien in the sense in which that term is ordinarily used. It has been termed a “kind of statutory lien” (Platt v. Platt, 105 N. Y. 488 , 497, 12 N. E. 22 , 25); but a better definition is that it is a “statutory power,” which may be exercised against real property of a decedent on showing deficiency of personal assets (Matthews v. Matthews, 1 Edw. Ch. 565 , 569). This power must be exercised by the creditor, or in his behalf by the personal representative of the decedent, in the manner prescribed by law, and may only be exercised within the prescribed time after letters testamentary or of administration have been duly issued; but the existence of this power does not make the general creditors lienors, or render them or the representatives óf the dece.dent necessary parties to the foreclosure of a mortgage existing at the time of the death of the owner of the land. Gardner v. Lansing, 28 Hun, 413 . The sale of a decedent’s real estate for the purpose of paying his debts in Surrogate’s Court is regulated by title 5 of chapter 18 of the Code of Civil Procedure; and section 2798, which is embraced in that title, recognizes in effect that general creditors have no general lien on such real property, for it expressly provides that on foreclosure of a mortgage thereon the surplus arising from the sale shall be paid into the Surrogate’s Court from which letters were issued, to be distributed among the creditors in the manner thereafter prescribed. If there were any general lien, such distribution would be made through the court in which the foreclosure action was brought.

In Moser v. Cochrane, 107 N. Y. 35 , 13 N.

The order appealed from is réversed, with $10 costs and disbursements, and the motion granted, with $10 costs. All concur.