Goebel v. Iffla — 19 N.Y. St. Rep. 105

Majority

p. 105

Max Goebel, Resp’t, v. Sophia Iffla, Individually and as Trustee, etc., et al., Defendants, Leo Schlesinger, Purchaser, App’lt.^[1]

(Court of Appeals,

Filed November 27, 1888.)

Headnote

1. Judgment when final.

A judgment rendered by tbe court having competent authority to deal with the subjeet-matter involved in the .action, and jurisdiction of the parties, is final and conclusive between them.

2. Same — When .enteked upon default it is conclusive upon all parties.

The testator devised his real estate to Sophia, his wife, in trust for the enjoyment of herself and his children during her life, remainder to his children, but in case they died without issue before his wife, then to his brothers and sisters. Sophia accepted the trust and upon notice to the-one surviving child, applied under Laws of 1882, chapter 275, and Laws 1884, chapter 20, to the supreme court for authority to raise money upon mortgage on the real estate of which the testator died seized, for the purpose of preserving and improving it. The court being satisfied of its necessity made an order in pursuance of the application. Belying upon this order and at the request of the trustee the plaintiff loaned to Sophia the money authorized to be borrowed, and received from her a bond and mortgage conforming to the direction of the court. Thereafter said mortgage was foreclosed for default in the payment of the interest. The plaintiff upon the foreclosure in his complaint named as parties defendant, the said trustee and the child of the testator and such of testator’s brothers and sisters as were living and the children of those who had died, alleging that they had or claimed to have some interest or lien upon the-said mortgaged premises or some parts thereof because of said will. The defendants were duly served with, processes but made default. The property was sold under the judgment of foreclosure and the purchaser refused to take title on the ground that the expectant estate of the brothers' and sisters in the premises sold, had not been divested, and that upon the death of the son, without issue, during his mother’s life the gift to them would take effect. Held, that the case came within the general rule that a judgment is conclusive between the same parties and their privies upon all matters embraced within the issue in the action, which were or might have been litigated therein. That it is immaterial whether the issue was joined by the defendant or tendered by the plaintiff and left unanswered. That the rule applies as well to a judgment by default, when the facts stated warrant the relief sought, as to one contested. ' That the purchaser was not entitled to be relieved from his purchase.

Appeal from an order of tbe supreme court, general term, first department, reversing an order denying a motion

p. 106

made by the plaintiff, compelling the purchaser to complete his purchase by taking the title tendered to him under a foreclosure sale, and paying the balance of the purchase-price.

Ferdinand Kurzman, for app’lts; John J. Gleason, for resp’t.

Martin Ficken, senior, devised his real estate to Sophia, his wife, in trust for the enjoyment of herself and his children during her life, remainder to his children, but in case he died without issue before his wife, then to his brothers and sisters. He died in 1858, seized in fee of certain premises in the city of New York, and leaving Sophia, his wife, and one child, Martin Ficken, surviving. He afterwards married and had one child, Winona Ficken, a minor. Sophia accepted the trust and, upon notice to Martin Ficken, the son, applied to the supreme court for authority to raise money upon mortgage on the real estate above referred to for the purpose of preserving and improving it.

The court, being satisfied of its necessity, made an order in pursuance of the application, and gave leave to her, as trustee, to borrow $900, and in that character execute her bond and mortgage to secure its repayment in one year from the date thereof, with interest.

The court directed that the mortgage should contain appriate reference to the will of the deceased, and declared that upon its execution and delivery it should be a first lien upon the land and upon all estate, right, title and interest whatever therein, “ with the same force and effect as if executed by the deceased in his life-time, and without regard to the persons who may or shall eventually become seized or possessed of any estate or interest in said land under said will,” and also provided for and directed the application of the moneys raised by said mortgage towards the preservation and improvement of the mortgaged premises.

Relying upon this order and at the request of the trustee, the plaintiff loaned to her the money authorized to be borrowed, and received from her a bond and mortgage conforming to the direction of the court, and purporting to convey all the estate which the testator had in the land during his lifetime, and all the estate of Sophia individually and as trustee, and as beneficiary, and also of the devises in and under said will. The mortgage contained the usual provisions for proceedings in case of default, and was duly recorded in the proper office. Default did occur, and the plaintiff commenced an action to enforce payment. His complaint contained, among others, the matters above referred to, set out the will, and named as parties defendant

p. 107

the said trustee, Martin, the son of the testator, and such of his brothers and sisters as were living, and the children of those who had died, and alleged that they “have or claim to have some interest in or lien upon the said mortgaged premises, or some part thereof, because or by reason of the provisions of said will, in the event of the death of the son of the testator and the said Winona, and any other children born to said son of the testator, dying prior to the said Sophia,” but also alleging that such interest or lien “ is subsequent and inferior to the lien of the plaintiff’s said mortgage, and is subject and subordinate thereto; and that the rights and interests of said defendants, and each and all of them, in the premises, if the event above named should transpire, would, because and by reason of the facts hereinbefore alleged, be inferior and subsequent to said mortgage,” and demanded judgment of foreclosure against all the defendants and a sale of the mortgaged premises. ,

The defendants were duly served with process but made default, and afterwards judgment pursuant to the prayer of the plaintiff was granted, and it was also ordered that if upon the sale more than the amount due should be realized, the surplus should be invested by the trustee, and upon the contingency mentioned in the will it should “ pass to the devisee or persons entitled thereto, pursuant to the provisions of the will. Upon sale of the mortgaged premises under this judgment, Leo Schlesinger became the purchaser at the price of $6,000, signed the usual conditions of sale and paid down $600, as thereby required. He subsequently refused to pay more, and plaintiff instituted proceedings in the supreme court to compel him to complete the purchase. He resisted the application, denying none of the allegations in the moving papers, and expressing a willingness to complete the purchase provided he could obtain a good title, but alleging that he cannot, and asks to be relieved of the purchase and have the money paid restored to him and compensation made for the expenses incurred in the examination of the title and otherwise.

The defect alleged is that the expectant estate of the brothers and sisters in the premises has not been divested, and that upon the death of Martin Ficken, the son, without issue during his mother’s life, the gift to them would take effect. The court at special term denied the plaintiff’s application, released the purchaser and directed the money already paid to be returned, and in addition thereto, $225, being the counsel fees and disbursements incurred by him in causing the title of the premises to be examined. Upon appeal, the general term reversed this order and granted the application of the plaintiff. The purchaser appealed to this court.

p. 108

The application for leave to mortgage, is put by the respondent upon the provisions of chapter 275, of the Laws .of 1882, and chapter 26, of the Laws of 1884, amending article 2, title 2, part 2, of the Revised Statutes. “ Relating to Uses and Trusts.” That act provides that the supreme ;court may upon such terms and conditions as it deems just and proper, authorize a trustee to mortgage real estate held by him, for the purpose of raising funds to be applied in preserving or improving it. It may be, as the appellant claims, that the order in this case exceeds that intended by the legislature, inasmuch as it covers not only the interest iof the trustee and beneficiaries of the trust, but also takes in the rights and interests of persons who may be entitled :-in .remainder on the expiration of the trust. It is not necsessary, however, to pass upon that question, for those persons were made parties to the foreclosure of the mortgage, and so given an opportunity to pay off the mortgage if they saw fit to do so, or defend against it, and show if they could, that it could not be enforced against them. They did neither. The case, therefore, is distinctly within the .principle on which Jordan v. Van Epps ( 85 N. Y., 427 ), and Barnard v. Onderdonk (98 id., 158), were decided, and is controlled by the rule that a judgment rendered by a .court having competent authority to deal with the subject-matter involved in the action, and jurisdiction of the parties, is final and conclusive between them.

The cases cited by the appellant do hot contravene that «doctrine. Many of them were reviewed by the late learned Chief Judge Davies, in Frost v. Koon ( 30 N. Y., 428 ), and from that examination, and the cases referred to it appears •that while prior incumbrancers are neither necessary nor proper parties to an ordinary action of foreclosure, and that when .made such under the general allegation that they claim an interest “ as subsebuent purchaser, incumbrancer, or otherwise,” a decree will not affect them, and, moreover, that if the facts upon which the plaintiff relies to defeat that prior title, are stated, the defendant, whose title is thus assailed, may demur to the complaint upon the ground that the plaintiff had no right to bring him into court upon the foreclosure to try the validity of his title, yet if the party so made a defendant should, instead of demurring, answer and litigate the question, and then judgment should go against him, no case decides that the judgment would not conclude him in a collateral action; nor do those cases decide that where such facts are stated as will, if admitted, subject that title to the plaintiff’s mortgage and to the relief sought, the party against whom they are alleged, will not, in like manner, be estopped from afterwards setting up his interest as against the judgment in the foreclosure action. And what binds him, can be questioned by no one else.

p. 109

The present case is within the general rule that a judgment is conclusive between the same parties and their privies, upon all matters embraced within the issue in the action, and which were or might have been litigated therein. It is immaterial whether issue was joined by the defendant, or tendered by the plaintiff and left unanswered. The rule applies as well to a judgment by default when the facts stated warrant the relief sought as to one contested. Gates v. Preston, 41 N. Y„ 113; Newton v. Hook, 48 N. Y., 676 .

We agree, therefore, with the general term in the conclusion that title tendered to the purchaser is a good title, and that he should be required to complete his purchase.

The order appealed from should be affirmed, with costs.

All concur.