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Thornton v. Moore

56 N.Y.S. 1100 Court Sullivan Cty. Ct. English

Delivered by SMITH, J.

Contents

Majority

p. 1100
(26 Misc. Rep. 120.)
THORNTON v. MOORE et al.
(Sullivan County Court.
January, 1899.)

Headnote

■ 1. Administrators—Actions—Pleading—Counterclaims.
In a foreclosure action by an administrator of the mortgagee, an answer by the administrator of the mortgagor, alleging that on an adjustment of the claims existing in favor of the mortgagor at the time of the death of the mortgagee, including the mortgage and the accounts existing in favor of the mortgagee’s estate, there was and is a balance due and owing the mortgagor’s estate, is sufficient to enable defendant, to prove any counterclaim against the mortgagee’s estate.
3. Same—Failure to Object—Waiver.
The objection to the sufficiency of the answer as a plea of a counterclaim cannot he first urged on appeal.
•3. Same.
A note due from the day of its date is an existing demand in favor of the payee at the time of the maker’s death, so as to be a proper counterclaim, within Code Civ. Proc. §§ 505, 506, to a subsequent action by the administrator of the maker against the payee.
■4. Counterclaim in Foreclosure Suit—Administrators.
In a foreclosure action against the administrator of the mortgagor and the purchasers of the mortgaged land, who had not assumed the payment of the mortgage, the fact that the complaint does not ask a deficiency judgment against any of defendants does not prevent the administrator from interposing a counterclaim, since the personal estate of the deceased mortgagor would, nevertheless, be liable for the deficiency, and also to the purchasers whose title would be defeated by the mortgage sale.
5. Same—Accounting—Effect of Proving Claim.
In a proceeding under Code Civ. Proc. § 2606, to compel the administrator of a deceased administrator to account, the presenting and proving of a claim existing in favor of the deceased administrator against the estate which he represented, does not prevent the last administrator from setting up such claim as a counterclaim in a suit against the estate of the deceased administrator, since the surrogate had no jurisdiction to adjudicate the claim.
Action by William L. Thornton, as administrator de bonis non of the goods,' etc., of Sarah J. Lawrence, deceased, against Julia S. Moore and others. Judgment for plaintiff, with a counterclaim allowed to one of defendants.
Frank S. Anderson and T. F. Bush, for plaintiff.
James I. Curtis, R. Ed. Schofield, and Alpheus Potts, for defendants.

This action,was brought to foreclose a mortgage owned at the time of her death. The mortgage was executed by Edwin R. Lawrence and Sarah J., his wife, to Joseph Anderson, and subsequently assigned to said Sarah .J. Lawrence. It bears date on the 24th day of November, 1876, and was assigned to Sarah J. Lawrence, August 23, 1878. Mrs. Lawrence died February 20, 1888, and Edwin R. Lawrence was thereafter duly appointed administrator of her estate. He entered upon the discharge of his duties as such administrator, but died before the estate was finally settled. The plaintiff was thereafter duly appointed administrator de bonis non of said estate, and Alexander F. Lawson was Appointed administrator of Edwin R. Lawrence. Plaintiff thereafter

p. 1101
commenced this action in his representative capacity, and Alexander F. Lawson was made a party defendant, as administrator of Edwin B. Lawrence. Separate answers were interposed by defendant Lawson and other parties, subsequent purchasers of some portion of the mortgaged premises. Several defenses were set up in the answers, which, under the rulings and decisions upon the trial, it will be unnecessary to consider here. On the trial of the action the defendant Lawson offered in evidence a note, or duebill, held by Edwin B. Lawrence against Sarah J. Lawrence, for the sum of $650. Lawson insists that the note is a proper counterclaim in this action, and should be allowed as an offset against the sum due upon the mortgage. Whether or not the defendant is right in this contention constitutes substantially the only question necessary to determine in this action.

Section 505 of the Code of Civil Procedure provides that in an action against an administrator, the defendant may set forth as a counterclaim a demand belonging to the decedent, where the decedent would have been entitled to set forth the same in an action against him. Section 506 provides that in an action by an administrator a demand against the decedent, belonging at the time of his death to-the defendant, may be set forth as a counterclaim as if an action had been brought by the decedent in his lifetime. It would seem that the language of these provisions is broad enough to admit the note as-a counterclaim in this action, but the attorney for the plaintiff, in his-brief, urges several reasons why, as he claims, the counterclaim cannot be allowed. They will be considered briefly in the order in which; they are presented.

1. It is claimed that the note cannot be interposed as a defense, because no counterclaim was set up in the defendant Lawson’s answer.. Lawson alleges, in his answer: “That on a proper settlement and adjustment of the account and claims existing in favor of Edwin B. Lawrence at the time of the death of Sarah J. Lawrence, including the-said bond and mortgage, and the accounts and claims existing in favor of the estate of said Sarah J. Lawrence, there was and is a balance due and owing from the said estate of Sarah J. Lawrence to the-said Edwin B. Lawrence, and the same is now due and owing his estate.” There can be no doubt that this allegation was intended to-enable the defendant Lawson to prove any demand which constituted a legitimate and proper counterclaim in favor of his intestate’s estate,, and under the authority of Lathrop v. Godfrey, 3 Hun, 739 , I am inclined to think that it is sufficient for that purpose. No objection was-made on the trial on that ground. Had there been, the defendant-might have moved to amend his answer, and put himself in a position to prove the note; and, consequently, no objection upon that ground’ should be heard at this time. Jordan v. Bank, 74 N. Y. 471 . The-note was due from the day of its date, January 9, 1887. Sarah J.. Lawrence died on the 20th day of February, 1888. The note was a demand existing in favor of Edwin B. Lawrence at the time of her-death, and is, therefore, a proper counterclaim in the action. Patterson v. Patterson, 59 N. Y. 574 ; Jordan v. Bank, supra; Thompson v. Whitmarsh, 100 N. Y. 35 , 2 N. E. 273 ; Wakeman v. Everett, 41 Hun, 278 .

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2. No judgment for deficiency against any of the defendants is demanded in the complaint. Plaintiff urges this as a reason why the counterclaim cannot be allowed. Perhaps a sufficient answer to this contention can be found in the fact that no judgment for deficiency could have been properly demanded against .any of these defendants. The subsequent purchasers of the mortgaged premises were not liable for any deficiency, because they had not assumed the payment of the mortgage. The defendant Lawson was sued in his representative capacity, and no judgment for deficiency could be obtained against him. Thom. Mortg. (2d Ed.) § 831; Glacius v. Fogel, 88 N. Y. 434 . But the personal estate of the deceased mortgagor was liable for any deficiency on the sale of the premises. Glacius v. Fogel, supra. It was also liable to the subsequent purchasers whose title would be defeated by the mortgage sale. It was, therefore, the duty of the administrator to interpose any defense which would reduce the amount of the plaintiff’s demand. The cases cited by plaintiff’s attorney to sustain his position that a counterclaim cannot be allowed in an action wherein no personal judgment is demanded are either clearly distinguishable from this case, or else tend to sustain the defendant’s claim. The case of Lipman v. Iron Works, 128 N. Y. 58 , 27 N. E. 975 , holds that a party in a foreclosure case, who has a lien against or claim upon the mortgaged premises subject to the mortgage, and is, therefore, a. necessary defendant in the action, but who owns no part of the mortgaged premises, and against whom no personal judgment for deficiency is demanded, cannot set up a counterclaim consisting of an independent cause of action in his favor. In the case of Hunt v. Chapman, 51 N. Y. 555 , the counterclaim was allowed, not because the plaintiff demanded a deficiency judgment against the party setting up the counterclaim, but because the case was one in which a separate judgment for deficiency might be had against such defendant. To the same import, also, is Bathgate v. Haskin, 59 N. Y. 540 . In Insurance Co. v. McKay, 21 N. Y. 196 , the court held that, as defendant McKay had no title or interest in the mortgaged premises, and the complaint claimed nothing against him personally, and there was nothing in litigation between plaintiff and himself, the action was not subject to his counterclaim. In that case the court took occasion to remark that “in a foreclosure suit a defendant who is personally liable for the debt, or whose land is bound by the lien, may probably introduce an offset to reduce or extinguish the claim.” Insurance Co. v. McKay, 21 N. Y. 196 . I can see no valid reason why, where the action is brought against the owner of the mortgaged premises, or a party liable for the debt, the defendant should not be permitted to set up any proper defense or counterclaim which will tend to reduce or defeat the plaintiff’s claim. If this were not allowed, a mortgagee against whom a valid counterclaim existed in the hands of the mortgagor could circumvent its being interposed in the action to foreclose simply by pursuing his remedy against the property, and not demanding any personal judgment,—something that is entirely unnecessary where the property is ample security for the mortgage debt.

3. It is also claimed that the allowance of this counterclaim will interfere with the pro rata distribution of assets between the creditors

p. 1103
of the deceased parties. As there is no evidence in the case that the estate of either Sarah J. Lawrence or Edwin R. Lawrence is insolvent, or will not pay the just debts in full, it is difficult to understand how it can be determined in this action that any creditor of either estate will be injured by the allowance of this counterclaim. But, whether they would or not, these claims were both past due before the death of either party, and the allowance of the note as a counterclaim is expressly authorized by sections 505 and 506 of the Code, and the cases above cited.

4. Plaintiff further argues that said note has already been interposed by defendant Lawson as a claim against the estate of Sarah J. Lawrence in a proceeding instituted under section 2606 of the Code of Civil Procedure by the present administrator of Sarah J. Lawrence against said Lawson for an accounting in relation to the proceedings of Edwin R. Lawrence as administrator of said Sarah J. Lawrence. The evidence shows that the note was proved in that proceeding, which is still pending; but, as that is a proceeding to compel the administrator of a deceased administrator to account, the surrogate’s court has no jurisdiction to try the matter of a claim existing in favor of the deceased administrator against the estate which he represented. The mere fact that it was presented and proved on that accounting does not extinguish the claim nor prevent the defendant Lawson from setting it up in this action. There is no power in the court to order it paid or allowed in that proceeding. After a careful examination of the authorities cited by the counsel for the plaintiff, I am compelled to conclude that the note is a proper counterclaim, and should be allowed in this action. The plaintiff is entitled to the usual judgment of foreclosure and sale for the amount of the bond and mortgage, with interest thereon as claimed in the complaint, less the amount of the duebill and interest from the day of its date, and, as the mortgaged premises have been sold subsequent to the mortgage by clear title, they should be sold in the inverse order of their alienation.

Ordered accordingly.

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