Scott v. Trustees of Gospel Tabernacle — 55 N.Y. Super. Ct. 327

Majority

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ELIZABETH J.. SCOTT, Respondent v. THE TRUSTEES OF THE GOSPEL TABERNACLE, Respondents, and THE MADISON AVENUE CONGREGATIONAL CHURCH, Appellant.

Headnote

Appeal, order affirmed, if appellant be not aggrieved,—Appellant relien not aggi'iaved; party defendant in a foreclosure action being a grantor, subject to the mortgage, having an interest in the premises contingent on his

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grantee's non-performance of certain conditions for a certain period, when not aggrieved by a provision in the judgment, dispensing with bringing surplus in court, and authorizing his grantee to be credited with it.

Where one who conveys mortgaged premises subject to the mortgage, assumed by his grantee, upon certain conditions, with a clause of re-entry in case the conditions are not kept for a certain period, is, with his grantee made a party defendant to an action to foreclose the mortgage, and fails to appear on a motion for judgment, whereupon his grantee procures a provision to be inserted in the judgment to the effect that, if such grantee becomes a purchaser on the sale, the surplus of his bid over and above the sum necessary to pay the amount due the plaintiff with interest and costs of sale, be credited on the amount bid by him as owner of the equity of redemption, without actual payment of such surplus.

’Held, that such grantor was not aggrieved by such provision, and that therefore an order denying a motion made by him to strike out such provision should be affirmed.

Before Sedgwick, Ch. J., Truax and Dugro, JJ.

Decided March 6, 1888.

Appeal from order denying motion to strike from judgment in foreclosure, certain matters.

Thomas T. Stillwell, attorney and of counsel for appellant, argued:

I. The court had no power to make the provision complained of. 1. Section 1633 of the Code says that the surplus must be paid into court. 2. The direction of the Code is absolute, and no discretion is given to the court to vary it. 3. The law is framed to protect the rights which have accrued since the filing of the Us pen-dens, while this judgment completely wipes out all such rights. The judgment says, almost in so many words, that if The Trustees of the Gospel Tabernacle will pay the mortgage and interest, and the costs and expenses of the sale, it shall possess the premises free from all incumbrances, subsequent to the filing of the lis pen-

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dens, not only past but future. 4. It is no answer to the above to say that we have not shown that we are injured by this judgment. We are injured by having a judgment against us to which the plaintiff was not entitled. This was ruled in Payn v. Grant, 23 Hun 134 . The law provides a way in which one can prove his claim to the surplus after the sale, and the court has no power to compel him to prove his claim before there is a surplus, and in default of which to direct the referee to at once pay it to a party who has never claimed it. The right to the surplus may arise after the judgment and before the sale.

II. The Madison Avenue Congregational Church is prejudiced by the provision complained of. 1. The condition in the deed mentioned in the answer may be broken and the Madison Avenue Congregational Church may re-enter these premises before the day of the sale. If this should happen there could be no question but what the trustees of the Gospel Tabernacle would have no interest in the property or the surplus, but under this judgment it would get the property back again by paying the mortgage debt and costs. 2. As mortgagor, the Madison Avenue Congregational Church is liable for any deficiency _ arising from the sale, and is therefore entitled to have the property sold at a bona fide auction to the highest bidder, (a.) Under this judgment there can be only a mock auction. Any possible purchaser reading the judgment will see that The Trustees of the Gospel Tabernacle intend to buy in the property, and that it can bid $1,000,000 if necessary, as it will have to pay only a certain amount, whatever the nominal bid is. The result will be that no bona fide purchaser will attend the sale, and the property will be sold at whatever price the two parties in collusion herein may see fit to bid through their agents. (6.) It is no answer to this to say that we can attend the auction and bid it up to an amount sufficient to pay the mortgage and costs. A religious corporation presumably has no money with

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which to speculate in real estate, and its officers would have no authority to bid! A person bidding to prevent a sacrifice of property could not bid as high as one who desired that particular piece of property for a definite purpose. There is nothing to show that this property, under the most favorable auction sale, would bring enough to pay the mortgage, and if there is a possibility of a deficiency even on such a sale we are entitled to have the ordinary inducements of an auction to encourage attendance and' bidding, to wit: that the property is to be sold to the highest bidder without reserve. 3. There is at least sufficient merit in the claim of the Madison Avenue Congregational Church to an interest in the surplus to entitle it to have it settled in the regular manner, and not as a side issue to a motion, (a.) The interest of the said church is a mere “possibility of reverter,” and no reported case seems to have involved this question in respect to such an interest. A wife’s inchoate right of dower, however, is an interest in land very similar to a grantor’s “possibility of revert-er.” (6.) A wife’s inchoate right of dower will be protected in the distribution of the surplus. Denton v. Nanny, 8 Barb. 618 ; Blydenburg v. Northrop, 13 How. 289 ; Vartie v. Underwood, 18 Barb. 562 ; N. Y. Life Ins. Co. v. Mayer, Gen. Term, Com. Pleas, Daily Reg. Dec. 22, 1887. (c.) It naturally follows that a possibility of reverter would be protected in the same manner, and the surplus in this case would be invested until the expiration of the five years, and then given to the trustees of the Gospel Tabernacle, unless the condition should be previously broken, in which case it would be at once given to the Madison Avenue Congregational Church.

III. This judgment “determines the-ultimate rights” of the two defendants, and the trustees of the Gospel Tabernacle did not demand it in an answer, and serve a copy of the answer on the attorney for the other defendant, as required by section 521 of the Code. In Payn

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v. Grant ( 23 Hun 134 ), the general term passed on this very point, and reversed an order denying a motion made by one defendant to have stricken from the judgment a clause which determined the rights of other defendants, who had not served their answers on him.

IV. The judgment was taken by default on insufficient notice to appellant.

V. The default of defendant was taken two days after the day for which the motion was noticed.

VI. The moving papers did not ask for any relief similar to that in the provision complained of, and the judgment having been entered by default, the court had no power to grant such relief. Payn v. Grant, 23 Hun 134 .

Edward S. Clinch, attorney and of counsel for plaintiff, respondent, argued:

It was proper to insert in the judgment the provision objected to. The property was valuable. The equity belonged to. the trustees of the Gospel Tabernacle, and it was right that in case they became the purchasers on the foreclosure sale, they should not be obliged to raise an amount sufficient to enable them to pay the amount bid, when the result would be that the surplus would be paid over to them, less the expense which they might be subjected to under proceedings to obtain the surplus. There was no claimant for the surplus. The Madison Avenue Congregational Church was certainly not prejudiced by this provision, and there is no suggestion of any reason for striking the provision from the judgment. It was a wise provision, and one which protected a religious society from much expense and the necessity for resorting to legal proceedings.

Eugene S. Pomeroy, attorney and of counsel for defendant, respondent, The Trustees of the .Gospel Tabernacle :

I. There is no valid ground stated in the affidavit

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upon which the motion was based for the granting of the motion. It is submitted that upon such a motion it was the duty of the moving party to show sufficient reasons for striking out the provision objected to. He should have shown at least by his affidavit the provision objected to was prejudicial to the rights of the moving party. The simple fact that the counsel did not know that the provision was to be inserted is no ground for granting a motion to strike the provision out.

II. It is submitted that so long as the judgment stands as the judgment of the court, and is not appealed from, that an appeal from an order denying a motion to amend the judgment will not be of any avail to the appellant. The judgment establishes the law of the case. If erroneous, it should have been appealed from: The absence of an appeal will be deemed an acquiescence in the judgment by all parties to the action.

III. The provision was inserted on the application of a religious society, a.nd the effect of the provision was to make it unnecessary for that society, if it became the purchaser upon the sale, to raise any more than sufficient to pay the amount due to the plaintiff. The Madison Avenue Congregational Church was certainly not prejudiced by any such provision, because it was not in any sense entitled to any surplus. The judgment has been executed ; the property has been sold; no application for a stay of the sale was made by the Madison Avenue Congregational Church, and it is submitted that now the judgment should not be modified, as asked by the Congregational Church.

The action was for foreclosure of a mortgage of real estate. The plaintiff was the assignee of the mortgage. It had been made by the appellant, The Madison Avenue Congregational Church. The latter had conveyed to The Trustees of the Gospel Tabernacle, on condition that the property should be used for church and evangelical purposes

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for five years, from May 29, 1886, and that on breach of the condition, the property should revert to the grantor, and the grantee as part of the consideration of said conveyance, assumed and agreed to pay the mortgage.

The complaint did not aver the above condition or assumption. It averred the mortgage, etc., that the defendants claimed an interest in the premises, and demanded the usual judgment in foreclosure, including a provision “ that the moneys arising from the sale may be brought into court,” and not asking for judgment for deficiency against either of the defendants.

The appellant, The Madison Avenue Congregational Church, answered, setting up the conveyance and its condition and the clause of assumption. It further averred that the action was “ not brought for the purpose of obtaining the payment of the said mortgage, but that it is brought by collusion between the plaintiff and the defendant, The Trustees of the Gospel Tabernacle, etc., in order that the said defendant, The Trustees of the Gospel Tabernacle, or some one in its behalf, may buy the said property at the foreclosure sale and so become the owner thereof, free from the condition above referred to, wherefore this defendant demands the surplus arising from the sale, and prays for such other and further relief as to the court may seem just.”

The plaintiff thereupon made a motion, giving notice of it to appellant’s attorney, the other defendant not-having appeared, that the plaintiff have judgment upon the answer of The Madison Avenue Congregational Church, as frivolous, and for judgment for the relief demanded in the complaint. This motion was granted. Before judgment was entered The Trustees of the Gospel Tabernacle appeared by attorney. The plaintiff thereupon gave notice to the appellant’s attorney of motion for confirmation of the referee’s report, and that the judgment would be at. the same time settled.

The appellant claims that the notice was too short.

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This is not material, for the motion below was not to open the default or for a new hearing.

On the return day the attorney for defendant, The Trustees of the Gospel Tabernacle, appeared, but the attorney of the appellant made default. On the application of the defendant'who appeared, there was allowed to be inserted in the judgment the following provision:

“ That in case the defendant The Trustees of the Gospel Tabernacle, becomes the purchaser at such sale, the referee herein on payment to him of the amount due to the plaintiff, with interest, costs and the expenses of sale, be and he hereby is authorized, empowered and directed to deliver the deed of said premises to said The Trustees of the Gospel Tabernacle, and to give credit on the amount bid by them to the said The Trustees of the Gospel Tabernacle, as owners of the equity of redemption in said premises, without the actual payment thereof, any amount which may be bidden by said The Trustees of the Gospel Tabernacle over and above the amount necessary, as aforesaid, to discharge the amount due to the plaintiff, with interest, costs and expenses of the sale.” The plaintiff made no objection, to this being inserted. The appellant made afterwards the motion below, that this provision be stricken from the judgment.

One ground for the motion is a claim that the appellant has a right to whatever surplus may arise from a •sale, under the conditions contemplated by the clause objected to. I do not perceive any substance in this. If the surplus be in the stead of the real estate’, The Gospel Tabernacle has a right to the possession of the' real estate, until a breach of the condition occur. The Madison Avenue Congregational Church, has no more right to the possession, or control, or impounding of the surplus than of the real estate.

Another ground intimated rather than asserted, is taken upon the following consideration: As The Gospel Tabernacle, assumed to pay, it is bound to the other

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corporation to pay. This would leave the condition of the conveyance unaffected. But the provision objected to gives a color of an adjudication, or of a result, that by force of the provision, The Gospel Tabernacle, while in reality paying the mortgage, would gain the rights that a third person, who was under no obligation to The Madison Avenue Congregational Church would gain, namely, the title and right of the mortgagor and mortgagee.

As to this, it is to be said that if the provision was of a kind competently made, while the issue stood as between the plaintiff and The Gospel Tabernacle only, the appellant should have not made default, but should have appeared, objected, and in case the provision was then inserted, should have appealed.

If the provision does not refer to a matter within the proper scope of jurisdiction, the appellant is not bound by it, and may make yet any claim of action of an equitable kind, that it may have against The Gospel Tabernacle. As I understand the condition, it may be performed although the property is owned by another than The Gospel Tabernacle.- If performed, it would be indifferent to The Madison Avenue Congregational Church, whether the other corporation holds under their obligation to pay the mortgage, or not. There is no intention, however, of definitely passing upon the nature of the condition and the right of the parties under it.

As I am of opinion that the appellant is not aggrieved by the provision, the order should be affirmed, with $10 costs.

Truax, J., concurred, Dugro, J., not voting.

Cases cited

Denton v. Nanny 8 Barb. 618 N.Y. Sup. Ct. 1850-06-03 p. 330