Coffin v. Parker — 38 N.Y. St. Rep. 143

Majority

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Edward H. Coffin et al., Resp’ts, v. Asa W. Parker et al., App’lts; Marie A. Maben et al., Resp’ts.^[1]

(Court of Appeals, Second Division,

Filed June 2, 1891.)

Headnote

1. Mortgage—Redemption—Contribution—Fraud.

This action was brought to determine the amount due upon a $14,000 mortgage, given upon fourteen lots, with a view to redemption, and to require contribution by the several owners. There had been a prior mortgage upon each lot, and two subsequent blanket mortgages. The equities of twelve of the lots were equal. During the pendency of this action prior mortgages upon lots 13 and 14 were foreclosed at the instance of the mortgagee of the $14,000 mortgage. Held, that as there was evidence which justified the court in finding that the assignment and foreclosure of the first mortgages upon lots 13 and 14 were collusive and fraudulent on the part of the mortgagee of the $14,000 mortgage, there was no error in granting the equitable relief of deducting the amount chargeable upon said lots 13 and 14 from the $14,000, as effectually as if said mortgagee had voluntarily released the two lots from the lien of his mortgage.

2. Same.

Upon appeal, the general term modified the judgment so that each lot was decreed to be liable for the amount found chargeable upon it; that each owner be at liberty to pay such amount to the referee and be released; and if any owner neglected to pay, his house be sold. Held, error; that the whole amount of the mortgage debt must be paid, as the mortgagee cannot be compelled to take a less sum.

Appeal from judgment entered upon order of the general term of the supreme court in the second judicial department, modifying and affirming, as. modified, interlocutory and final judgments entered upon decision of the special term in favor of the plaintiffs.

The action was brought for the determination of the amount due upon a mortgage of date December 24, 1884, made by Still-man P. Lincoln to Asa W. Parker upon a certain parcel of land divided into fourteen lots in the city of Brooklyn for $14,000, with a view to redemption of the premises and to require contribution to that end by the several owners of the lots covered by the mortgage. There was a prior mortgage of date December 23, 1884, made by Lincoln upon each lot, twelve of them to the General Synod of the Reformed Church of America, and two to the Board of Education of the Reformed Church of America. There was a blanket mortgage of date February 10, 1885, made by Lincoln to John Hart for $6,000, and by him soon after assigned to Sophie G. Parker, and another blanket mortgage of date April 7, 1885, for $5,000 made by Lincoln to Asa W. Parker. It is unnecessary to refer to other mortgages on the property. After default in payment of the interest on the fourteen first mortgages, Asa W. Parker, as subsequent mortgagee, in proceedings taken for that purpose, obtained direction of the court for assignment of those mortgages, and assignments were

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made to his.appointee, Ralph G. Packard. He assigned the $14,000 mortgage to Josiah S. Packard, in which Ralph G. Packard also had an interest. Sophie G. Parker proceeded to foreclose her mortgage, and pursuant to decree for that purpose eleven of the lots were sold. One was purchased by the plaintiff Coffin, who conveyed an undivided half of it to the plaintiff Jones. One was-purchased by Maria B. Pundt, who conveyed to defendant Brown. One by defendant Maben, and the other eight by Asa W. Parker. Afterwards, on foreclosure by Asa W. Parker of his $5,000-mortgage, the three remaining lots were sold, and Sophie G. Parker was the purchaser. After the commencement of this action two of the first mortgages on lots so purchased by Asa W. Parker, and designated as 13 and 14, were assigned by Ralph G. Packard to Mary A. Sweezy, who proceeded to foreclose them, and obtained decree pursuant to which they were sold to one Doody at sums producing no surplus.

Upon the facts found by the trial court it was determined that the defendants Packard were entitled to be paid the amount of the $14,000 mortgage less the proportionate share chargeable to lots 13 and 14, which should be deducted from such amount; that if the owners of the other parcels or any of them should fail to pay the shares which should be borne by them, such lots should be sold and their shares paid to the plaintiffs; and that a reference -be had to ascertain the amount with which each of the lots should be charged for that purpose. An interlocutory decree was entered accordingly. The referee made his report, which was confirmed and final judgment entered. The general term modified the judgment of the special term by directing that, on payment of the share chargeable upon any lot it be released from the lien of tho $14,000 mortgage.

E. Countryman, for app’lts; Walter S. Logan, for the resp’ts, pl’ffs ; Bristow, Peet & Opdyke, for resp’ts Maben and Brown.

The plaintiffs as owners of one of the lots had the right to redeem the premises from the lien of the prior $14,-000 mortgage by paying the full amount of that mortgage to the party entitled to it. But such redemption was not the sole purpose of the action. The plaintiffs by it sought relief which would require all the owners of the several lots covered by the-mortgage to contribute to that end their proportionate shares of the burden. And the result given by the judgment of the-special term was that the plaintiffs be permitted to-redeem the land covered by the mortgage by paying the amount of it less the proportional sum with which the lots 13 and 14 were found chargeable; and upon such payment the other lots respectively should be charged with their proportionate shares, and such of them as default in payment by the-owners permitted, should be sold to realize the amount they respectively should' bear of the burden of such prior lien, and by way of reimbursement of the plaintiffs. Barring the charge made-upon lots 13 and 14 and the deduction of the amount of it from that of the mortgage, there is no reasonable opportunity for con

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troversy about the determination and judgment of the special term. The redemption by the plaintiffs and their reimbursement by means of charging the due proportion upon the other lands covered by the mortgage, are well recognized rights to be afforded by a court of equity. Pom. Eq. Jur., § 411; Cooper v. Stevens, 1 Johns. Ch., 425 ; Salem v. Edgerly, 33 N. H., 46 ; Aiken v. Gale, 37 id., 501.

The equities of the owners of twelve of the lots covered by the mortgage were equal. The other two lots, 13 and 14, had, before the trial, been sold on foreclosure of prior mortgages, and the proceedings had for that purpose were apparently in due form; and unless such foreclosure and sale were collusive and in fraud of the plaintiffs, those two lots were not legally subject to the contribution charged upon them. The trial court found upon that subject that Asa W. Parker was the attorney for the Packards; that the assignment of the first mortgages were by his request made to Ralph Gr. Packard, as his appointee; .that the assignment of two of those mortgages, covering the lots 13 and 14, to Mary A Sweezy was made, the suit for the foreclosure of them was instituted ana perfected by sale after the commencement and during the pendency of this action, without notice to any of the respondents; and that such assignments and foreclosure were collusive and fraudulent, and done for the purpose of destroying the lien of the $14,000 mortgage on those lots, and of throwing the burden of it wholly upon the other twelve lots, and compelling the owners of them to pay it to save their property. There was some evidence tending to support the view of such purpose. While the defendants Packard do not appear personally to have taken part in the business relating to the mortgages, they seem to have been represented by Mr. Parker, who, in such relation to Ralph G. Packard, suggested to Mrs. Sweezy the subject of the purchase of those two mortgages, and it was upon his negotiation that the assignment of them was made by him, as such representative or attorney, and taken by her.

At that time Mr. Parker had the legal title to those two lots derived from his purchase on the sale of the foreclosure of the mortgage held by his wife, Sophie Gr., and next subsequent to the $14,000 The sale of the two lots on the foreclosure of the mortgages assigned to Sweezy had the apparent effect of divesting him of the title as well as relieving them from the lien of the mortgage in question, which he had assigned to Josiah S. Packard; and Parker and his wife had the legal title subject to that mortgage of eight more of those lots. He was cognizant of the sale of the lots 13 and 14 on the foreclosure of the mortgages, and attended it, and although those lots were worth much more than the amount secured by the first mortgages upon them, they were sold for sums little less than sufficient to satisfy those mortgages and expenses of the foreclosure. It is difficult to account for this action of Parker in seeking Mrs. Sweezy to take the assignments, making them to her and the speedy foreclosure and sale for the amount produced by entire in The in

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ference from his evidence was permitted that he represented the Packards in the matter, and that the assignment was made with a view to the foreclosure, and to accomplish it without the knowledge of the owners of three of the lots who claim they had no notice of it until proved by the defendants at the trial, and thus cast the burden of the $14,000 mortgage on the other twelve. Neither Mrs. Sweezy or the purchaser Doody was called by the defendants to testify on the subject of the transaction, to repel any imputation which might arise out of it bearing upon the question of good faith of the defendant Parker in his relation to the sale and to the purchase by them. The defendants could not properly do indirectly that which they would not be permitted to do directly. After the commencement of this action, it would not have been fair for them without some notice to the defendants to have taken proceedings to relieve a portion of the land from the lien of the second mortgage to defeat contribution of such portion to the burden of redemption or reimbursement of the plaintiffs making it; and if through the assignment such was the purpose it should be equally ineffectual to accomplish it. The suit subsequently brought to foreclose the $14,000 mortgage was not necessarily the subject of any such imputation, because all the owners of the remaining lots were made parties defendant, and they had the means of protecting themselves.

Without referring here more specifically to the evidence tending in that direction, we think the inferences derivable from it were warranted as found by the court, that the assignment of the two of the first mortgages and the foreclosure of them were collusive and fraudulent as against the plaintiffs and the respondent defendants in such sense as to justify the equitable relief given as effectually as if the mortgagee had then voluntarily released the two lots from the lien of the $14,000 mortgage. In such case the amount of the mortgage in behalf of the owners of other lots for the purposes of the redemption would have been proportionally reduced. Cheesebrough v. Millard, 1 Johns. Ch., 409 ; James v. Hubbard, 1 Paige, 228; Guion v. Knapp, 6 id., 35; Stuyvesant v. Hall, 2 Barb. Ch., 151 . It follows that there was no error in the direction of the interlocutory judgment And the value of the lots respectively in excess of the amounts secured by the first mortgages upon them,'and the proportionate amount upon that basis of the $14,000 mortgage chargeable upon each of them as found by the referee, was well supported by the evidence. The final judgment treated as due upon the mortgage the amount remaining after deduction of the proportionate sum found to have been so chargeable upon the lots 13 and 14. But the general term so modified the judgments as to direct that on payment of the declared proportionate share of any lot, it should be released from the lien of the mortgage. This modification was made upon the appeal and application of the defendants, Maben and Brown. And while it may be that, in view of the value of the several lots, such method of redemption would not result prejudicially to the mortgagee, it is not in accordance with the equitable rule applicable to such cases. The principle upon which rests the

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right of redemption, of mortgaged premises, requires that the whole amount of the mortgage debt be paid, and this is requisite to redemption by the owner of a portion only of the mortgaged premises. The mortgagee cannot, as a rule, be required upon the basis of an apportionment to take a sum less than the whole amount due him and release the lien of his mortgage upon any of such premises. The relief of such owner redeeming is in his remedy, founded upon the principle of subrogation to the rights of the mortgagee, against the other portions of the mortgaged premises and to thus seek or compel contribution. Smith v. Kelley, 27 Me., 237 ; Lyon v. Robbins, 45 Conn., 513 ; McCabe v. Bellows, 7 Gray, 148 ; Merritt v. Hosmer, 11 id., 276 ; Lamb v. Montague, 112 Mass., 352 ; Bell v. Mayor, 10 Paige, 49, 71.

In view of the facts as found by the court, the changed situation produced during the pendency of this action did not render the addition of any other parties necessary, and no supplemental pleading on the part of the plaintiffs was requisite to the relief awarded by the judgment. Ho other question requires consideration.

The judgment entered upon the order of the general term should be affirmed except so far as it modified the interlocutory and final judgments, and as to such modification reversed, and those judgments affirmed, with costs to the plaintiffs and without costs to any other party.

All concur, except Brown, J., not sitting.