Andrews v. O'Mahoney — 21 N.Y. St. Rep. 583

Majority

p. 583

John Andrews, App’lt, v. Jeremiah O’Mahoney et al., Resp’ts.^[1]

(Court of Appeals,

Filed March 5, 1889.)

Headnote

1. Mortgage foreclosure—Sale—Specific performance—When decreed.

The plaintiff herein was an attorney at law, and foreclosed two mortgages which he held upon a certain lot of land, and obtained judgments directing their sale. On the sale of the property under the second mortgage, he bid it in under terms of sale which he had prepared, and which provided that it was to be sold subject to his prior mortgage, which was then in judgment, in two separate parcels, etc. Held, that the plaintiff must complete his purchase, pay the amount of his bid, and take the property, subject to his said prior mortgage.

2. Same—Sale of more parcels than sufficient to' pat the debt not void—Who-mat move to set aside sale for irregularity.

The first parcel sold he bid more for than enough to pay the amount of the mortgage debt secured by the second mortgage. Held, that the sale of the other parcel was not absolutely void, but was simply irregular; that the owner of the equity of redemption, or the holder of a subsequent mortgage, were the only ones that could ask to have it set aside.

3. Same—Court mat order more parcels sold than sufficient to pat MORTGAGE DEBT.

The court in a foreclosure action has power to order a sale of sufficient

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of the property mortgaged to pay all the incumbrances thereon; as well prior as subsequent, if such a sale is proper for the protection of the interests of all persons having liens thereon.

4. Same—Power of court to make order—Satisfaction of sale.

Although the judgment contains no such provision, the court has the power, when the situation of the property and the nature and amount of the subsequent incumbrances is brought to its attention, and requires that it be done for the best interest of all, to authorize a sale of all the parcels of the land mortgaged, and to modify the judgment accordingly. A sale of both parcels having been made it could, in view of all the circumstances of this case, ratify the sale.

5. Same—Statute of frauds does not apply to judicial sales.

In this state judicial sales of lands under a judgment in a foreclosure action are not within the statute of frauds, and are binding upon the purchaser, without any written contract or memorandum of the terms of sale.

6 Same—How purchaser may be compelled to complete his purchase.

By bidding, the purchaser subjects himself to the jurisdiction of the court and becomes a party to the proceedings, and may be compelled to complete his purchase by an order of the court and by its process for contempt, if necessary

Appeal from an order of the supreme court, general term, second department, affirming an order requiring the plaintiff to complete a purchase of property under a decree of foreclosure and sale.

John Andrews, appl’t in person; N. C. Moak, for respt’s.

The plaintiff had two mortgages upon a lot of land in the city of Brooklyn, which was about thirty-three feet in width, and 100 feet in depth. His first mortgage was for about $300, and his second mortgage for about $200. He commenced actions to foreclose both mortgages, and both actions were prosecuted to judgment. This action was for the foreclosure of the second mortgage. There were two subsequent mortgages upon the same lot, one for $1,200 held by Daniel Doody, on the westerly half thereof, and one for $480, held by Owen O’Keefe, on the easterly half thereof, Doody and O’ Keefe being defendants in this- action. The plaintiff is an attorney at law, and acted in his own behalf in this action. He prepared the terms of sale which provided that the property would be sold subject to his prior mortgage, which was then in judgment, in two separate parcels, to wit: the westerly half and the easterly half. At the sale he bid off the westerly half for $1,200, and the easterly half for $480. He subsequently refused to complete his purchases, and then a motion was máde by Doody, who had also become the owner of O’Keefe’s mortgage to compel him to do so, and the motion was granted. The order granting the motion having been affirmed by the general term, this appeal was taken to this court.

It is claimed by the plaintiff, that the sale was not made subject to his prior mortgage, but that the amount due thereon,' including the costs of foreclosing the same was first to be paid out of the proceeds of sale, and that he is

p. 585

not bound to complete his purchase unless the sheriff will assent to such payment. On the part of Doody it is claimed that the sale was made subject to the plaintiff’s prior mortgage; and so the court below found, and we see no reason to disturb its finding. The terms of sale as drawn by the plaintiff, plainly provide that the sale of each half was to be made subject to his prior mortgage. • It is true that it is also provided that “ all taxes, assessments and other incumbrances, which at the time of the sale, are liens or incumbrances upon said premises, will be allowed by the sheriff out of the purchase money.” But this language has no reference, 'whatever, to the prior incumbrance of the plaintiff’s mortgage, subject to which the sale was made, but has reference to other incumbrances, if any.

The amount duo upon the plaintiff’s judgment was about 8300, and the half of the premises first sold brought §1,455, and the plaintiff, therefore, claims that the 'further sale of the other half was void and that on that account he should not he compelled to complete his purchases. The sale of the last half was not absolutely void and was simply irregular. O’Mahoney, the owner of the equity of redemption, could have come into court and asked to* have the sale of the last half sel, aside, and if no objection were made by Doody and O’Keefe the court would probably have granted his motion. But the court, in a foreclosure action, has the power to order a sale of sufficient of the property mortgaged to pay all the incumbrances thereon, as well prior as subsequent, if such a sale is proper for the protection of the interests of all persons having liens thereon. It is true that there was no such provision in this judgment, but the court had the power, when the situation of the property and the nature and amount of the subsequent incumbrances were brought to his attention, to authorize a sale of both parcels of land, and to modify the judgment accordingly; and a sale of both parcels having been made, it could, in view of all the circumstances, ratify the sale. Wolcott v. Schenck, 23 How. Pr. R., 385; McBride v. Lewishon, 17 Hun, 524 ; De Forest v. Farley, 62 N. Y., 628 .

Here all the incumbrances, including costs and interest, were probably upwards of §2,500, so that if the proceeds of the sale be applied first to the satisfaction of the plaintiff’s first mortgage, there will be a deficiency upon the mortgages held by Doody, and if the proceeds be applied upon the plaintiff’s second mortgage, and upon the two subsequent mortgages, there will then be a small deficiency to satisfy the first mortgage. It does not appear that the .mortgagor has made any objection to the sale, or that he Is in any way interested in making any objection thereto.

p. 586

The holder of the subsequent mortgages desires to have the sale consummated, and he is the only other person to make any objection.

"Under the circumstances, the plaintiff, himself having ■conducted the sale, and having bid off the property, cannot be heard now to say upon such facts as appear in this record that the sale was illegal or irregular, because of the sale of both parcels; and ' this objection, therefore, does not avail him.

It does not appear that any memorandum of the sale was made, or signed by the sheriff or the plaintiff; and he therefore claims that he is not bound by the purchases he made. But it is clearly settled in this state that judicial sales of this kind are not within the Statute of Frauds, and that they are binding upon the purchaser without any written contract or memorandum of the terms of sale. The sale is made by the court, through the sheriff acting as its officer, and strictly speaking there can be no written contract. The purchaser could not sue the court, and it could not sue him upon his contract. The sheriff in such a case is under no duty to bind himself personally, or to demand that the bidder shall be bound to him personally; and the bidder is under no obligation to bind himself by contract to the sheriff. By bidding, he subjects himself to the jurisdiction of the court and in effect becomes a party to the proceeding, and he may be compelled to complete his purchase by an order of the court and by its process for contempt, if necessary. The statute of frauds has no operation in such a case, and so it has frequently been decided. Reed on Statute of Frauds, § 304; Wood on Statute of Frauds, § 261; Willetts v. Van Alst, 26 How. Pr., 325 ; Hegeman v. Johnson, 35 Barb., 200 ; Miller v. Collyer, 36 id., 253 ; Matter of Davis, 7 Daly, 7 , 8; Cazet v. Hubbell, 36 N. Y., 677 .

We are, therefore, of opinion that the order below should be affirmed, with costs.

All concur.