Summary
In American Mortgage Co. v. Butler (36 Misc. Rep. 253) the late Mr. Justice McADAM states the law as follows: "It cannot be inferred from the mere fact that the referee decided that Cook claimed too much that the lienor forfeited his equitable claim upon the property, nor is there anything in the evidence warranting that conclusion.
Summary of this case from Schwartz Co., Inc. v. Aimwell Co., Inc.Opinion
November, 1901.
Kenneson, Crain, Emley Rubino, for first lienor and motion.
M.A. Kursheedt, for second lienor, opposed.
The suit was to foreclose a mortgage on real property; judgment followed, the property was sold and the surplus paid to the city chamberlain. The contest as to such surplus is between the assignee of Martin V. Cook, who filed a mechanic's lien against the property, and one Andrew Mills, who filed a subsequent lien. The referee reported in favor of the Cook lien, and the present is a motion to confirm the report. The only exceptions filed were by Mills, the junior lienor, who claims that on account of an excessive claim made by Cook his lien became forfeited and unenforcible. It cannot be inferred from the mere fact that the referee decided that Cook claimed too much that the lienor forfeited his equitable claim upon the property, nor is there anything in the evidence warranting that conclusion. In Ringle v. Wallis Iron Works, 149 N.Y. 439, it is intimated that the statements that make a notice of lien ineffectual must be not only untrue, but "willfully and intentionally" false in some important or material respect. So, in Aeschlimann v. Presbyterian Hospital, 165 N.Y. 296, the court held that where in such case it appears that the plaintiffs intentionally and by pretense of a fictitious and fabricated demand enormously exaggerated their claim, with intent to defraud, no recovery could be had on the lien. The court carefully observed the obvious distinction between honest mistakes of fact as to value and willful and intentional exaggeration fraudulently made. In this respect the rule is similar to that applicable to false swearing in proofs of loss on insurance policies, which by the conditions thereof vitiates the contract, but to have this effect the swearing "must be intentionally false, whether by a fraudulent overvaluation of the goods destroyed, or a statement of items which really have no existence, or by an undervaluation of what is saved, or in other particulars." Richards Ins., § 137. An innocent mistake (Thierolf v. Universal F. Ins. Co., 110 Penn. St. 37), or an innocent though exaggerated estimate of value will not avoid the policy. Maher v. Hibernia Ins. Co., 67 N.Y. 283; Jersey City Ins. Co. v. Nichol, 35 N.J. Eq. 291; S.C., 40 Am. Rep. 625; Susquehanna M.F. I. Co. v. Staats, 102 Penn. St. 529; Towne v. Springfield M.F. M.I. Co., 145 Mass. 582. The overvaluation, in order to work a forfeiture, must be so plain that it cannot be accounted for upon the principle that every man is prone to put a favorable estimate upon the value of his own property. Sturm v. Atlantic M.I. Co., 63 N.Y. 77; Franklin F. Ins. Co. v. Vaughan, 92 U.S. 516. Where the discrepancy between the representation of the insured and the finding of the fact by the court or jury is very great, a limit may be reached where the court will intervene and decide as matter of law that the amount of the error is consistent only with bad faith. Where a house was valued at $1,400 and the evidence showed its value to be about $1,000, it was held that this difference did not establish, as matter of law, that there had been a breach of warranty against overvaluation, and that the question as to whether it was designedly excessive should be decided by the jury as one of fact and not by the court as one of law. Smith v. Home Ins. Co., 47 Hun, 30. See also Behrens v. Germania F.I. Co., 64 Iowa 19; Dogge v. Northwestern Nat. I. Co., 49 Wis. 501. In Ringle v. Wallis Iron Works, supra, a lien was sustained where the lienor, who had a contract for work amounting to $17,500, filed a lien for a balance of $3,259, although it was proved on the hearing that work to the amount of $121.90 had not been done by him. These cases demonstrate that the objections urged against the Cook lien by the junior lienor Mills are destitute of merit. Indeed, if they were held to be meritorious, the same imperfection will be found in the Mills' lien. The proofs clearly sustain the findings of the referee, the exceptions filed to his report must be overruled and the report confirmed. The moving party claims costs and an allowance in addition thereto. Motion costs and necessary disbursements are all that can be awarded to the successful party in proceedings to obtain the surplus moneys arising from the sale of real property under the foreclosure of a mortgage. No allowance to counsel can be made. Dudgeon v. Smith, 23 Wkly. Dig. 400; German Sav. Bank v. Sharer, 25 Hun, 409, 413; Matter of Gibbs, 58 How. Pr. 502, 504; Cowen v. King, 54 A.D. 331, 333. As the reference ordered was necessary to enable the lienor Cook to establish his lien and the amount due thereon, the subsequent lienor Mills should only be charged motion costs and one-half of the referee's fees, which to such extent were caused by his opposition to Cook's demand and in the effort to establish his own lien as a foundation for his claim to the surplus moneys in preference to Cook. Serve notice of settlement of order.
Ordered accordingly.