Merritt v. Gouley — 35 N.Y. St. Rep. 277

Majority

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Jane E. Merritt, App’lt, v. John W. S. Gouley, Impl’d, Resp’t.

(Supreme Court, General Term, Second Department,

Filed December 8, 1890.)

Headnote

1. Pleading—Frivolous answer.

It is only in cases where the answer is so clearly bad as to require no argument or illustration, that the same can be stricken out as frivolous.

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2. Same—Answer.

An allegation in an answer is not sham which is not shown to be false, • nor irrelevant if it sets up any defense which can be proved on the trial.

3. Foreclosure—Counterclaim—Covenant of seizin.

In an action to foreclose a purchase money mortgage in which judgment for deficiency is demanded, a breach of the covenant of seizin in the deed to defendant may be set up as a counterclaim.

Appeal from an order denying motion for judgment on defendant’s answer as frivolous.

This action is brought to foreclose á purchase money mortgage made by the defendant to the plaintiff, to secure payment of $6,000, the plaintiff having conveyed the premises in said mortgage described to the defendant for the consideration of $10,000, by deed dated February 18, 1882. The said deed contains the usual full covenants, and among them a covenant of seizin and right to convey. A judgment for deficiency is asked against the defendant.

The, answer alleges that at the time of said conveyance Charles E. Purdy and William M. Purdy, then infants under the age of fourteen years, were seized in fee of an undivided one-half of said premises, and, by way of counterclaim, sets up his damages accruing from the plaintiff’s breach of the covenant of seizin.

The defendant also alleges that he is ready and willing, and offers to reconvey to the plaintiff said premises, and to account for all rents received by him, upon the cancellation of said bond and mortgage, and upon receiving the amount paid to the plaintiff in cash as part of said consideration.

The following is the opinion delivered at special term:

Barnard, J.—The action is one for the foreclosure of a purchase money mortgage. The deed given -by the plaintiff to the defendant, Gmiley, contained a covenant that the plaintiff was seized of an unincumbered estate in the land and had good right to convey ; she only was seized of one-half of the land. This defendant went into possession and has continued in possession without interruption. The defendant sets up as a defense this breach of covenant as a counterclaim.

There are many cases which hold that a failure of title cannot be set up as a defense to the foreclosure of a purchase money mortgage. Before the Code the cases were all intelligible and harmonious. The mortgage was foreclosed in equity and the broken covenant, if there was any, was to be sued at law.

The statute of set off did not permit one in equity except it was also a set off in legal actions, and a breach of covenant was not one where the damages could be ascertained by computation or were not liquidated. The Code provides for a counterclaim sufficiently comprehensive to cover it

The Code in § 501 provides, in an action on contract a counter- . claim may be set up for the breach of any other contract existing at the commencement of the action.

A mortgage is a contract by specialty and the action is to enforce the lien on it. The claim set up by defendant’s answer is on

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contract and existed at the commemcement of the action; a suit might be commenced on the broken covenant without being dispossessed. It is only when the covenant goes solely to the possession that an action is premature before the possession is disturbed. So if there is no covenant of seizin and no disturbance of possession, a failure of title is no defense to the foreclosure. The cases which establish this are no authority for the proposition that a broken covenant will not be set up as a defense to the foreclosure. The motion to strike out the counterclaim is therefore denied, with ten dollars costs. Bathgatev. Haslcin, 59 1ST. Y., 533.

Nelson H Baker (Smith Lent, of counsel), for app’lt; Julius J. & A. Lyons (Michael H. Cardozo and Edgar J. Nathan, of counsel), for resp’t

This is a foreclosure suit of a purchase money mortgage, wherein a judgment of deficiency is prayed for in case a sale fails to produce an amount sufficient to pay the mortgage with interest and costs.

The answer, among other matters, puts in issue the amount claimed to be due by setting up a counterclaim for damages by reason of a breach of the covenant of seizin in the deed. The plaintiff moved to strike out the answer as sham and irrelevant, and for judgment upon it as frivolous.

It is a sufficient answer to this motion that it would require argument to prove that it was frivolous. It is only in cases where the answer is so clearly bad as to require no argument or illustration that the same can be stricken out as frivolous. Strong v. Sproul, 53 N. Y., 497 .

Again, that part of the order was not appealable under § 537 of the Code of Civil Procedure.

The answer is not sham, for it. is not proved to be false, and it is not irrelevant if it sets up any defense that can be proved upon the trial.

The defendant had a right to contest the amount due, and it was a proper way to do that by setting up a counterclaim.

If the plaintiff, at the time the deed was delivered, had no title to or possession of the property, there was a breach of the covenant of seizin at the instant of- such delivery, which entitled the defendant to damages, and there is no reason in saying that he shall be driven to a separate suit upon that covenant when proper relief can be obtained in this one suit. The plaintiff asked for a personal judgment against the defendant upon an action of contract, and the defendant’s claim arises out of contract, and falls within the description of a counterclaim under the Code, § 501. Hunt v. Chapman, 51 N. Y, 555 ; Bathgate v. Haskin, 59 id., 533; Seligman v. Dudley, 14 Hun, 186 ; Wiltrie on Foreclosure, § 376.

It is true that it has been held that a breach of the covenant of a deed without eviction cannot be pleaded in bar of a suit to foreclose a purchase moneV mortuaere.

In McConihe v. Fales, 107 N. Y.. 404 ; 12 N. Y. State Rep., 279, it is held that a failure of title is no defense to a foreclosure

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suit without an allegation of fraud in sale or an eviction. But in that case there was no breach of covenant set up as a counterclaim to reduce the amount due in equity upon the bond. The late case of Kirtz v. Peck, 113 N. Y., 222 ; 22 N. Y. State Rep., 733, is to the same effect, but I. find no case decided since the enactment of § 501 of the Code which holds that a breach of the covenant of seizin cannot be set up as a counterclaim under such circumstances as exist here.

Order affirmed, with costs and disbursements.

Dykman, J., concurs; Barnard, P. J., not sitting.

Cases cited

McConihe v. Fales 107 N. Y.. 404 N.Y. 1887-11-29 p. 279