[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 260 When this action was before us on a previous appeal no question arose as to the payment of the legacies, or as to the evidence by which such payment was regarded as established. The main controversy then related to the priority of the liens upon the assumption that they were all unpaid, and we held that the lien of the legacies was prior and superior to that of the mortgage. (Conkling v. Weatherwax, *Page 262 173 N Y 43.) Our judgment of reversal opened the issue as to the payment of the legacies, and upon the trial now under review the plaintiff assumed the burden of proving the allegation in her complaint that her legacy had not been paid. Apparently she found it a matter of some difficulty, owing to the lapse of thirty-two years since the death of her father, and of more than thirty years since her legacy became due. Her brother Charles was dead, and neither she nor her sister were sworn, as both were regarded as incompetent to testify. The only evidence she produced upon the question of payment consisted of the declarations of her deceased brother, the devisee and mortgagor of the farm, made in June, 1900, when payment of the legacies was demanded of him, as the executor of his father's will. The witness who made such demand was allowed to testify that Charles said in substance that the legacies had not been paid, although objection was duly made by the defendant Hidley upon the ground that the unsworn statements of the mortgagor, made in her absence years after the execution and delivery of the mortgage to her, were hearsay, incompetent and not binding upon her. The objection was overruled and the defendant excepted.
The oral declarations of a deceased mortgagor, which have no relation to the res gestæ or to the character or extent of his possession of the realty, made in the absence of the mortgagee many years after the mortgage was given, are incompetent to affect or defeat the lien of the mortgage when there is no identity of interest between the mortgagor and mortgagee. (Foote v. Beecher, 78 N.Y. 155; Merkle v. Beidleman,165 N.Y. 21; Vrooman v. King, 36 N.Y. 477; Padgett v.Lawrence, 10 Paige, 170; Paige v. Cagwin, 7 Hill, 361;Duane v. Paige, 31 N.Y. Supp. 310; Man v. Snow, 32 N Y St. Rep. 356; Burlingame v. Robbins, 21 Barb. 327, 329.) Such testimony is a mere narrative by a third party of a past event and violates the rule which excludes hearsay evidence, requires the sanction of an oath and secures the right of cross-examination. It would open the door to fraud, promote litigation and render titles insecure. No owner of a mortgage *Page 263 would feel safe and the value of securities in general use would be seriously impaired. There was no identity of legal obligation between the mortgagor and mortgagee, so as to bring the declarations of the former within the exception founded upon a community of interest. (2 Wigmore on Ev. § 1077.) Mrs. Hidley claimed under Charles as devisee and was not in privity with him as executor and he could not take away her estate by his admissions made in any capacity. (Mooers v. White, 6 Johns. Ch. 360, 373; Elwood v. Diefendorf, 5 Barb. 398, 407;Burnham v. Burnham, 46 App. Div. 513, 514.)
It is insisted, however, that while the objection taken to this testimony was good, the ruling did no harm because the evidence was immaterial, as payment is an affirmative defense and the burden of proving it was upon the defendant. This raises a mooted and difficult question, for the law upon the subject of alleging and proving payment is in some confusion. Quite recently it was held in an action upon contract that the plaintiff need not prove the negative fact of non-payment and that the defendant had the burden of establishing payment. (Lerche v. Brasher, 104 N.Y. 157,161.) No authority was cited and the discussion was limited, but the point was distinctly presented and decided. To the same effect are Keteltas v. Myers (19 N.Y. 231); Salisbury v.Stinson (10 Hun, 242); Ralley v. O'Connor (71 App. Div. 328), and Hicks-Alixanian v. Walton (14 App. Div. 199).
On the other hand, it has been held more recently, in an action at law, but not upon contract, that an allegation of non-payment is essential and that without it the complaint is subject to demurrer for failing to state facts sufficient to constitute a cause of action. (Lent v. N.Y. Mass. Ry. Co., 130 N.Y. 504. ) This case was carefully considered and many leading authorities were reviewed, to which we will make no further reference. It was said that breach of contract is the essence of the cause of action and that non-payment is "a fact material to the plaintiff's cause of action and essential to be proved to entitle the plaintiff to a judgment." Since the question arose upon a demurrer to the complaint, the statement *Page 264 as to the necessity of proving the allegation of non-payment might be regarded as obiter, were it not for the general rule that whatever it is necessary to allege it is necessary to prove. At any rate, the decision stands as the law in relation to the necessity of alleging a breach of the obligation by failing to pay it, and the logical result is that the burden of proof rests upon the party compelled to so allege. The case of Lerche v.Brasher was not considered and it does not appear to have been called to the attention of the court.
In Cochran v. Reich (91 Hun, 440) it was held necessary to allege and prove non-payment in an action for breach of a covenant to pay rent reserved in a lease. (See, also, Krower v.Reynolds, 99 N.Y. 245, 249; Tracy v. Tracy, 35 N.Y. St. Rep. 167, and Witherhead v. Allen, 4 Abb. Ct. App. Dec. 628, 633.)
The conflict of authority extends to other states. (State exrel. Spaulding v. Peterson, 142 Mo. 526; Wheeler WilsonMfg. Co. v. Tinsley, 75 Mo. 458; McElwee v. Hutchinson,10 S. Car. 436; Hubler v. Pullen, 9 Ind. 273; Frisch v.Caler, 21 Cal. 71; Garretson v. Bitzer, 57 Iowa 469;Junge v. Bowman, 72 Iowa 648; Esbensen v. Hover, 3 Col. App. 467.)
An effort has been made to establish as the true rule "that the plaintiff should prove, not non-payment generally, but non-payment when due or at maturity, or, in other words, a breach of the contract sued on," leaving it to the defendant to allege, as new matter, payments made after the breach. (16 Enc. Pl. Pr. 179; Douglass v. Central Land Co., 12 W. Va. 508; PowesheikCounty v. Mickel, 10 Iowa 76.)
The learned Appellate Division drew a distinction between actions at law and suits in equity in regard to the burden of proving, in the first instance, payment or non-payment. It declared that "the distinction in the rule as to proof of non-payment in equitable actions to enforce a lien and in ordinary actions for recovery of money, is shown by the fact that in an action for the foreclosure of a mortgage given as collateral to a bond, non-payment upon the bond must be proved, while in an action on the bond alone this is unnecessary." The following *Page 265 authorities, cited in support of this position, tend to sustain it. (Coulter v. Bower, 11 Daly, 303, VAN BRUNT, J.; Davies v. N.Y. Concert Co., 41 Hun, 492, DANIELS, J.)
While in an action upon contract for the payment of money only the allegation and proof of the promise and that it has matured creates the presumption of non-payment and throws the burden of proving payment upon the one who asserts it, there are certain cases in which proof of non-payment is essential to a recovery, because it is part of the cause of action. Such was Knapp v.Roche (94 N.Y. 329), where the receiver of an insolvent savings bank sought to recover damages from its officers on account of illegal loans made by them. It was held insufficient to allege and prove the illegal loans merely and that it was necessary to show that the loans had not been paid.
Lent v. N.Y. Mass. Ry. Co. (supra) belongs to the same class, for that was an action upon an award made by commissioners in a proceeding to condemn lands for railroad purposes. Where one sues for a balance of indebtedness for services performed at an agreed price over and above all payments made, no payment being specified, a general denial permits proof of payment without pleading it, because the plaintiff voluntarily invited "examination into the amount of indebtedness and the extent of the reduction thereof by payments." (Quin v. Lloyd, 41 N.Y. 349. )
In White v. Smith (46 N.Y. 418) the complaint set forth an account for work, labor and services amounting to the sum of $541.90 and alleged a balance due of $175.75, after deducting all payments, and it was held that the defendant, under a general denial, could prove such payments as he had made. The "balance due" could not be ascertained without going into the subject of payment.
In an action against the individual members of a joint-stock association under a statute authorizing a recovery after the remedy at law against the company itself had been exhausted (L. 1853, ch. 153), a complaint which alleged an indebtedness against the company for goods sold and delivered *Page 266 was held defective upon demurrer, because there was no allegation of non-payment. (Witherhead v. Allen, 4 Abb. Ct. App. Dec. 628, 633.)
In Krower v. Reynolds (99 N.Y. 245, 249), which was an action on a covenant to pay a mortgage, Judge ANDREWS, speaking for the court, said: "The complaint does not contain the averments necessary to a complete cause of action on the covenant. It alleges the making and the consideration of the covenant and that the defendant thereby became liable to pay the mortgage. But there was no breach alleged. This was necessary." (Citing Marie v. Garrison, 83 N.Y. 23.) The same rule was laid down in Schlesinger v. Hexter (2 J. S. 499, 503). So in the foreclosure of mortgages and mechanics' liens, as well as in the enforcement of all other liens, including creditor's actions, the practice of alleging and proving the amount due and unpaid is universal, for otherwise there is no lien to enforce. Proof that a lien once existed does not prove that it still exists, and the cause of action rests upon the existence of the lien when the action is commenced. Hence the complaint must allege and the evidence must show that there is a lien on the property at the time when the effort is made to sell it in order to pay the lien. (2 Jones on Mortgages, §§ 1452, 1471, and cases cited.)
The action now before us was not brought to recover damages for the breach of a contract to pay money, or for the breach of any contract. No effort was made to recover the amount of the legacies from the executor under the Code of Civil Procedure, or from the devisee or his estate upon the ground that by accepting the devise he became liable personally to pay the legacies. The plaintiff does not seek to enforce a personal obligation against any one, but to foreclose a lien upon land. The action is in the nature of a proceeding in rem. It was necessary for the plaintiff to establish the lien, not as one in existence over thirty years ago, but as existing when the action was brought. One of the parties defendant and the only one who joined issue with the plaintiff, was the owner of a mortgage subsequent in lien to her legacy, if that *Page 267 was still unpaid. That party was in no position to know, unless by hearsay, whether the legacy had been paid or not, while the subject was within the peculiar knowledge of the plaintiff and her family. The loan secured by the mortgage in question was large enough to pay all the legacies, yet it did not appear what was done with the money. The right of the plaintiff to her legacy arose over thirty years before the action was brought, which gave rise to a presumption of fact that it had been paid. (Macaulay v. Palmer, 125 N.Y. 742; Bean v. Tonnele, 94 N.Y. 381;Jackson v. Sackett, 7 Wend. 94; Jackson v. Pierce, 10 Johns. 413, 417; Lawson on Presumptive Ev. 370, 382; Buswell on Limitations, § 335; Jones on Mortgages, § 915.)
"An unexplained neglect to enforce an alleged right, for a long period, casts suspicion upon the existence of the right itself," and "it is the law of courts of equity, independent of positive legislative limitations, that they will not entertain stale demands." (Bean v. Tonnele, 94 N.Y. 381, 386; Matter ofNeilley, 95 N.Y. 382, 390; Calhoun v. Millard, 121 N.Y. 69,82.) The time of payment "was fixed by the testator not with reference to his wife's death but his own," although the farm could not be sold during her life without her consent. The testator doubtless intended that the legacy should be paid out of the income from the farm and the time of payment was postponed for that purpose. More than thirty years had passed after the legacy was made payable by the terms of the will before this action was commenced.
The existence of this lien depended upon the will which made the legacy a charge upon the land and the fact that the land had not been relieved by payment of the charge. A legacy which had been paid would not support the action, because there would be no lien. The same is true of a legacy presumed as matter of fact to have been paid in the absence of evidence to rebut the presumption. Under these circumstances it was necessary to prove non-payment the same as in an action upon a stale demand or of foreclosure or upon a covenant to pay a mortgage or to recover against the officers *Page 268 of a bank or the members of a joint-stock association in the cases cited.
I think, however, that we should go farther and attempt to reconcile the conflict of authority upon the general subject by laying down the following rules as fairly deducible from the adjudged cases:
1. In an action upon contract for the payment of money only, where the complaint does not allege a balance due over and above all payments made, it is sufficient for the plaintiff to allege and prove a breach of the obligation by the non-payment thereof when it matured, as the presumption of non-payment continues until met by the allegation and proof of payment.
2. When the complaint sets forth a balance in excess of all payments, owing to the structure of the pleading, it is necessary for the plaintiff to prove the allegation as made and this leaves the amount of the payments open to the defendant under a general denial.
3. When the action is not upon contract for the payment of money, but is upon an obligation created by operation of law, or is for the enforcement of a lien where non-payment of the amount secured is part of the cause of action, it is necessary both to allege and prove the fact of non-payment.
The case before us falls under the third paragraph of this classification, and hence the exception to the ruling which admitted the declarations of the deceased mortgagor against the objection of the mortgagee, raised reversible error, aside from the effect of such evidence in tending to rebut the presumption of payment from the lapse of time. The order of the Appellate Division should be affirmed and judgment absolute rendered against the appellants upon their stipulation, with costs in all courts.