Opinion
Argued March 5, 1884
Decided March 21, 1884
Henry Bacon for appellant. E.A. Brewster for respondents.
Within well-settled rules the mortgage belonging to the plaintiff was not entitled to a priority over the mortgage held by Mackin and Verplanck as executors. The assignment of the mortgage held by them was taken without any knowledge, or notice, of the existence of the mortgage held by the plaintiff, which had been satisfied of record, and under such circumstances the plaintiff had no right to priority. The authorities settle this question beyond any controversy, and the respondents, as bona fide purchasers, were clearly entitled to a preference over the plaintiff's mortgage. ( Van Keuren v. Corkins, 66 N.Y. 77; Bacon v. Van Schoonhoven, 87 id. 446.) It follows that no error was committed by the court in holding to this effect.
The plaintiff has, however, an equity in reference to her mortgage which should be protected, if it can be done, without impairing the rights of the respondents. In the hands of a mortgagee who had notice of the existence and of the validity of the plaintiff's mortgage, the latter would be entitled to a priority. The plaintiff should not be deprived of such equitable right because the mortgage has been assigned to other parties without notice, and no reason would seem to exist why the plaintiff, in an equitable action, should not be permitted to redeem the mortgage to Ramsdell Co., and to acquire all the rights which passed by virtue of their assignment of the mortgage to the respondent, and the guaranty contained in the same, and to be subrogated in their place. The right of a junior incumbrancer to be subrogated in the place of a senior incumbrancer upon payment of the lien of the latter, rests upon the principle that justice and equity require that he should be entitled to the rights and securities of the senior incumbrancer. He is bound to pay the demand of the senior incumbrancer before his own can be liquidated, and upon so doing it is but equitable and just that he should be allowed to control the lien which stands in the way of obtaining the amount of his debt. ( Twombly v. Cassidy, 82 N.Y. 155; Cole v. Malcolm, 66 id. 363; Frost v. Yonkers Sav. Bank, 70 id. 553.) The plaintiff, it would seem, having no knowledge of the action brought for the foreclosure of the mortgage to Ramsdell Co., and not being a party to the same, had no opportunity to claim the equitable interposition of the court in her behalf. We see no reason why this cannot be done in the present action, and are of the opinion that a provision should be made in the decree by which, upon payment of the respondents' mortgage and interest and the costs which have been incurred in foreclosing the same and costs in this action, they should assign the same to the plaintiff. No injury is done to the respondents by such a provision, and Ramsdell Co. will not lose any of the legal rights which belong to them. The fact that Ramsdell Co. are not parties cannot affect this disposition of the case. The claim of the plaintiff in the action is as against the holders of the mortgage to Ramsdell Co., and it is not apparent that their rights can be unlawfully affected, or impaired, by a judgment directing the respondents to transfer the mortgage to the plaintiff. If this is done the plaintiff would be at liberty to take such measures, as she may be advised, for the protection of her rights as against Ramsdell Co., and the latter parties would be at liberty to interpose such objection, or defense, as they may have to the plaintiff's claim. In this form the rights of all the parties will be fully protected and justice done. It is no objection to granting relief to the plaintiff, by directing an assignment of the mortgage to her, that no such relief is demanded in the complaint. The action was for the foreclosure of the mortgage, and the respondents were made parties because they held an alleged subsequent incumbrance upon the premises. The answer of the respondents sets up the execution of the bond and mortgage to Ramsdell Co., and the assignment thereof to the respondents, and denies that the lien is subsequent to the mortgage of the plaintiff. No reply was necessary to this answer, and upon the trial it would appear to be entirely proper for the plaintiff to claim the right to an assignment of the bond and mortgage, and the judgment thereupon. Such a provision in the decree could not affect the rights of Ramsdell Co., for they would be at perfect liberty to contest any claim which the plaintiff might have against them by virtue of the bond and mortgage assigned and the judgment of foreclosure upon the same.
Judgment should be modified by directing that on payment by the plaintiff to the respondents, Mackin and Verplanck, executors, of the amount due for principal, interest and costs on the judgment recovered by them against McNeal, and the costs of this action and of this appeal, the plaintiff be subrogated to all the rights said respondents now have to said judgment and the bond and mortgage of McNeal, and upon the guaranty of Ramsdell Co., contained in the assignment of said mortgage to said respondents, and that on said payment being made within ninety days said respondents do assign said judgment, and said bond and mortgage and guaranty to the plaintiff.
Should the plaintiff fail to make said payments the judgment should be affirmed, with costs.
All concur, except RUGER, Ch. J., ANDREWS and DANFORTH, JJ., who are for affirmance, without modification.
Judgment in accordance with opinion.