Foster v. Roche — 21 N.Y. St. Rep. 748

Majority

p. 748

Margaret Foster, Resp’t, v. Theodore M. Roche, as Trustee, and The United States Trust Company of New York, App’lts.

(Supreme Court, General Term, First Department,

Filed January 28, 1889.)

Headnote

Partition—When equitable lien to proceeds will not be assumed.

hi an action for the partition of real property, the defendant, The United States Trust Company of New York, claimed a lien by virtue of two mortgages and the judgment foreclosure of the same. Subsequently and before the entry of final judgment in the partition suit one of the mortgages was declared void. The judgment directing the payment of the mortgages was t' ereupon modified directing that the amount due upon the foreclosure judgment declared void should be paid into court to the credit of the partition suit subject to any claim or lien thereafter ■established of the company against the premises The company objected ■on the ground that it had established the existence of an equitable lien independent of its mortgage. Meld, that as the company had relied solely upon the mortgage and the judgment foreclosing the same and had neither alleged or proved the existence of any such lien no decree could be made besed upon the assumption that an independent equitable lien had been established.

Appeal by defendant Roche from portion of final judgment, which appeal brings up interlocutory judgment for review. Appeal by the United States Trust Company from final judgment.

James Clinton Bolton, for app’lt Roche; Edward W. Sheldon, for app’lt The United States Trust Company.

In consequence of the reversal of a judgment in another case, subsequent to the trial of this action, it is necessary that the interlocutory judgment and final judgment herein should be reversed in part.

The United States Trust Company, by its answer, claimed a lien upon the property sought to be partitioned, by virtue of two mortgages and "the judgments foreclosing the same. The trial court sustained this claim, and found as a con«elusion of law that the premises should be sold, and that -out of the proceeds of sale, after the payment of taxes, the said judgments of foreclosure should be paid.

p. 749

■ The interlocutory judgment contained a direction to the referee to pay the mortgage foreclosure judgments accordingly. Subsequently and before the entry of the final judgment herein, one of the mortgage foreclosure judgments was reversed by] the general term on the ground that the mortgage on which it was based was void. U. S. Trust Co. v. Roche ( 41 Hun, 549 ). This mortgage was made by one Charles H. Town, as trustee. Thereafter when the final .judgment in the present case came to be entered, a clause was inserted therein reciting that it appeared to the satisfaction of the court that the aforesaid mortgage foreclosure .judgment had bean reversed since the interlocutory judgment of parition herein,.and adjudging “that in place and stead of the immediate payment of the amount due upon ■said judgment of foreclosure and sale, said referee deposit with the Farmers’ Loan and Trust Company, the sum of $20,000 to the credit of this action, subject to all and every right, claim or lien, legal or equitable, heretofore adjudged or hereafter to be established, of the United States Trust Company against the premises described in the mortgage, the subject of the foreclosure action.”

Both appellants object to this provision, but for different reasons.

The appellant Roche, insists that the property partitioned should not be subjected to any claim on account of the moneys represented by the mortgage which was pronounced void in the case of the U. S. Trust Co. v. Roche (supra); also that the direction for the deposit of the $20,000 was unauthorized by the findings, and hence the court had no power to insert it in the judgment.

The United States Trust Company, on the other hand, contends that it established the existence of an equitable lien in its favor to the amount of $20,000, independently of the mortgage, and hence that the court below instead of ordering the $20,000 to be deposited, should have directed its immediate application to the payment of the Trust Company’s claim.

While it may very well be that facts could be shown entitling the Trust Company to such a lien, they were not alleged in its answer or proved upon the trial. The company, in its pleading and proof, relied solely upon the mort.gage, and the judgment foreclosing the same, which judgment has since been reversed. The trial court, therefore, ■could not properly have gone so far as to make any decree based upon the assumption that the Trust Company had established the existence of an independent equitable lien. We see no reason, however, why the answer may not be amended so as to permit proof of the facts creating a lien of this character to be given upon the new trial which must be ordered, thus enabling the trust company to have its claim passed upon in the present suit.

As the case stood, the direction for the deposit of the

p. 750

$20,000 not only afforded the trust company no just ground for complaint, but was too favorable to it. There was nothing litigated between the parties or found by the trial court upon which to predicate this provision in the final judgment; and it cannot be sustained against the objections which have been made.

But even if the final judgment contained the same provisions fis to the town mortgage as appear in the findings and the interlocutory judgment, it would still be impossible to uphold it, inasmuch as it would then treat as valid a mortgage lien which has now been decided to'be void. Both judgments must therefore be reversed, so far as to-permit a new trial of the claim of the United States Trust Company, to a lien growing out of the transactions which resulted in the town mortgage. There is no occasion to interfere with any other portions of the judgments save; those which relate to this matter. If the new trial in reference thereto is conducted in accordance with the suggestions which have been made, it ought finally to settle the controversy in the present action.

The reversal, however, should be without costs to either appellant, for each has acted too much on this appeal. The United States Trust Company has sought to sustain an invalid mortgage, and the appellant Roche has appealed not merely from the direction for the deposit of the $20,000, but also from certain other provisions of the final judgment which are based upon findings that the court was requested to make by this appellant himself. He cannot therefore be heard to complain of them.

Judgments reversed in part and new trial ordered, without costs of this appeal.

Brady, J., concurs.