Quackenbush v. O'Hare — 40 N.Y. St. Rep. 797

Majority

p. 797

Rebecca M. F. Quackenbush, Pl’ff, v. Marie O’Hare, Def’t.

(Supreme Court, General Term, First Department,

Filed October 16, 1891.)

Headnote

Foreclosure—Surplus moneys—Inverse order op alienation.

The respondent is the assignee of a mortgage which covered three pieces of real estate. One of the pieces was sold on foreclosure of a junior

p. 798

mortgage, the sale producing a surplus. In proceedings for the distribution of such surplus, Held, that the equitable rule as to the sale of the property in the inverse order of alienation where a mortgage covers several pieces had no application, and that respondent was entitled to the surplus.

Appeal from order distributing surplus money.

Early & Prendergast, for app’lts Washburn & Barnes; Henry G. Atwater, for resp’t Cannon; Moses Weyman, for Murray Hill Bank.

The equitable principle that where several pieces of property are covered by a mortgage to secure the payment of a sum of money and the owner of the equity of redemption has conveyed the several pieces of property to different grantees, that in an action to foreclose the mortgage the court will order the property sold in the inverse order of the alienation so that the property last conveyed shall be first sold to pay the amount due to secure which the mortgage was given, is not applicable to this case.

Ho application is made in this action to sell any portion of the mortgaged premises. By the conveyance or ■ mortgaging of the separate parcels of property by the mortgagor the lien of the respondent’s mortgage was not affected; it still remained a lien "upon all of the several pieces of property mortgaged, and the surplus money in this proceeding being the proceeds of a piece of property upon which the respondent’s mortgage was a lien, he was entitled to have such surplus applied to the payment of his mortgage.

The owners of the parcels of property covered by the respondent’s mortgage, other than the parcel foreclosed in this case, are not parties to this action and the court has no jurisdiction over them. It cannot make a decree directing a sale of the property, and the effect of sustaining the contention of the appellant would be to destroy the respondent’s' lien upon a portion of the property upon which he had such a lien by the execution of the mortgage.

The court having no power in this proceeding to marshall the assets so as to apply the rule above stated, the rule cannot be applied at all. Whether or not the appellant would be entitled to be subrogated to the rights of the respondent to enforce the mortgage against the West Third street property is not presented on this appeal and need not, therefore, be discussed.

When Steers took a conveyance of the West Third street property, he had no notice that the property foreclosed in this suit had been conveyed or that a mortgage to the appellant had been given, and as that mortgage was not recorded he had no constructive notice of such conveyance, so that he had the right to assume that the parcel of property foreclosed in this action would, if the rule contended for by the appellant was applicable, be primarily liable for the payment of this mortgage, and the subsequent purchase of the mortgage under which the respondent claims transferred to the respondent the right of the original mortgagee to obtain the payment of his mortgage from the proceeds of any of the property upon which it was a lien.

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It is clear that the mortgage was not merged by its transfer to .the respondent, for by transferring the mortgage instead of satisfying it or taking an assignment to herself was a clear intimation by Steers that it was not the intention that the mortgage should merge, even assuming that Steers by payment of the mortgage or the amount paid by the respondent for it become its equitable .owner. . It is not claimed that Steers has realized anything out of the parcel of property conveyed to him, and the defeasance executed by Steers shows that such conveyance was simply a ■ mortgage, and that by it he acquired only a lien upon the property to secure the amount of the mortgagor’s indebtedness to him.

It does not appear from the record that any motion was made in the court below to bring other parties in so that the questions raised by the appellant could be determined, and to award this surplus money to the appellant would be in effect to hold that the appellant’s lien was prior to that of the respondent, when in fact the respondent’s lien was prior to the appellant’s.

The respondent was the real party in interest, as he was the owner of the mortgage, and it was to him that the money must be paid. The fact that, as between himself and some other person, such other person might be equitably entitled to a transfer of the mortgage, does not make such other person the real party in interest It is the real owner of the obligation that is entitled to enforce it.

I think, theréfore, the order was right, and should be affirmed, with ten dollars costs and disbursements.

Van Brunt, P. J., and Daniels, J., concur.