Sprague v. Cochran — 53 N.Y. St. Rep. 617

Majority

p. 617

Warner E. Sprague, Resp’t, v. William B. Cochran, App’lt.

(Supreme Court, General Term, Third Department,

Filed July 8, 1893.)

Headnote

1. Mortgage—Reformation—Limitation.

The ten year limitation applies to an action to reform a mortgage.

p. 618

2. Same—Agreement to include other real estate.

It was claimed in this action that an agreement to execute a mortgage on all the mortgaaor’s real estate was in equity a mortgage thereon, and that a portion having been omitted by mistake from the mortgage given, should be treated in equity as being embraced therein and that no reformation of the mortgage was necessary. Reid, untenable; that while equity might have reformed the mortgage so as to conform to the agreement had the action been commenced in time, the right to reform having been lost by lapse of time the written contract must govern.

Appeal from so much of a judgment in foreclosure as decrees a reformation of the mortgage, and from order granting leave to to amend the complaint so as to claim such reformation.

In 1876 defendant, whose partner had died, to induce the widow to loan him $3,000 which she had obtained as the proceeds of a policy of insurance on her husband’s life, and to become his partner, agreed to give her a mortgage on all his real estate to secure .said loan. A mortgage was accordingly given, which, however, omitted one of the lots belonging to defendant. The widow -assigned the mortgage to plaintiff.

On the trial before the referee plaintiff moved to amend the. •complaint so as to claim a reformation of the mortgage, but the referee did not decide the motion, preferring to leave the matter to the special term, which granted it. The court adjudged that the facts found constituted an equitable mortgage on the lot in controversy, and directed a foreclosure of the mortgage and a sale of all the property agreed to be mortgaged.

George H. Carpenter, for app’lt; T. F. Bush, for resp’t.

The only matter necessary to be considered by us is whether plaintiff’s right to a reformation of the mortgage in suit was barred by the statute of limitations, and if so, whether such a reformation was necessary to sustain the judgment rendered.

It is suggested that the question involved has not been passed upon by the court of appeals. But there are several well considered cases in this court holding that an action to reform a deed .must be brought within ten years, and we deem it right to follow those decisions. Hoyt v. Putnam, 39 Hun, 402 ; Oakes v. Howell, 27 How., 145 ; Cramer v. Benton, 4 Lans., 294 . Burnett v. Wright, 44 St. Rep., 14 , was an action to foreclose and reform a mortgage drawn on one of the usual blanks, the scrivener omitting to insert in the defeasance clause the amount of the mortgage debt. It read thus: “ This grant is intended as security for the payment of -,” without inserting any amount. The action was brought nineteen years after the execution of the instrument.

This court held that it was a case where it was necessary to reform the mortgage, and that the action for the reformation must be brought within ten years. The judgment was reversed by the court of appeals, 135 N. Y., 541 ; 48 St. Rep., 541 , on the sole ground that no reformation was required; that the morlgage had as much force as if drawn in the form of a deed, and that a defeasance need not ever be in writing, but may be shown by parol. The court of appeals did not overrule the doctrine declared by

p. 619

the general term, that an action to reform a deed must be brought within ten years, but apparently acquiesced in that regard in the ■decision of the court below. Hence the case cited is an authority that ten years limitation applies to an action to reform a mortgage.

I am unable to concur in the view stated in Syms v. The Mayor, 50 N. Y. Supr. Ct., 289 -294, as applicable to such a case as this. The error in the description of the mortgage in suit was caused by a mutual mistake, as found by the referee. There was no fraud, actual or constructive. Hence the provisions of sub-division 5, § 382, Civil Code, are not applicable. The cause of action accrued on the delivery of the mortgage, over ten years prior to the commencement of the action. It is a case where the provision of § 388 applies. The case of Welles v. Yates, 44 N. Y., 525 , was a case of fraud, and hence not similar to the one under consideration. We therefore conclude that the right to reform the mortgage was barred by the statute of limitations.

But the learned counsel for plaintiff claims, as I understand his position, that the agreement of defendant, in consideration of the $3,000 advanced to him, to execute a mortgage upon all of .his real estate, was in equity a mortgage thereon, and that a portion of the said real estate being omitted by mistake, and not included therein, will be treated in equity as being embraced therein, and that hence in fact no reformation of the instrument was necessary. That there being a valid equitable mortgage upon .all of defendant’s premises, the action thereon is not barred while the bond remains in force. This position is a novel one, and we think cannot be sustained. The parties having reduced their ■contract to writing, the writing, unless reformed, must govern. Doubtless if the action had been commenced in time equity could have reformed the contract and made it conform to the real agreement of the parties. But the right to reform having been lost by the lapse of time, the written contract must govern.

In Burnett v. Wright, supra, it did not apparently occur to the members of the court, at general term or in the court of appeals, that the mortgage in that case was an equitable one and was to all intents and purposes as valid as though the agreement of the parties had been wholly embraced therein. The general term in effect held a contrary doctrine, and the court of appeals decided that it was not an equitable, but a legal mortgage. In that case, had the mortgage only covered a part of the premises agreed to be covered I infer from the opinion that the court of appeals would have held a reformation necessary.

Our conclusion is that the order allowing an amendment should be reversed and the motion denied, and the judgment should be modified in pursuance of this memorandum, with costs to the appellant.

Mayham, P. J., and Herrick, J., concur.