Wadsworth v. . Lyon

The first question which demands consideration in this case is, whether the claim of the plaintiff, which is sought to be enforced herein, is barred by the judgment and the sale made upon the foreclosure of the mortgage, collateral to the bond in suit, by Fellows, the former owner and from whom title was acquired by the plaintiff, by virtue of several intermediate assignments. Said judgment recited the amount due upon the bond, and directed a sale of the mortgaged premises, the payment of the moneys arising therefrom upon the judgment, in the usual form, and, in case of a deficiency that the respondents, who *Page 216 were defendants in said action, should be personally liable therefor.

The premises were offered for sale and bid off by the appellant, who was the highest bidder, there being other bidders at the time, for an amount sufficient to satisfy the mortgage, and the costs and expenses of the foreclosure. The amount of the bid was not paid by the appellant, the premises were not conveyed to him, and no report of sale was made and filed. Subsequently the owner of the judgment, and of the bond and mortgage, assigned the same to one Curtiss. After this the premises were sold at a receiver's sale, upon a judgment against one Beck, who was adjudged at the time to be an owner, to the appellant, and at a still later period the appellant became the assignee of the bond and mortgage and of the judgment.

It is insisted by the appellant's counsel that there was no sale or report of sale, no deficiency on the sale, or confirmation of the report, and no judgment upon the bond in which the debt could merge, and that there was no merger or extinguishment of the debt or judgment upon the bond, and the latter was not merged in the judgment. So far as the proceedings on the foreclosure of the mortgage and the judgment thereupon, and the sale under the same are concerned, we are unable to discover any such irregularity or defect as would render them inoperative and without force. The action was brought to foreclose the mortgage, and the complaint set forth the bond and mortgage as the basis of the cause of action and alleges that no proceedings at law had been had for the recovery of the same. The decree, as already stated, provided for a sale and the payment of the amount due upon the bond and mortgage, and in case that was insufficient to pay the same, that the deficiency be specified in the report of sale, and upon filing the report, the respondents in this action, who were adjudged to be personally liable therefor, should pay the same. The respondents were made parties in that action as mortgagors, and as liable upon the bond, and were adjudged to be personally liable. The grantee of the mortgagors, under whom the plaintiff claims, *Page 217 was a party in that action, and the rights of all the parties thereto, whether legal or equitable, were the subject of consideration, and the court had full power and jurisdiction of all questions which were presented, within the object and purpose for which the action was instituted, and its judgment and determination were binding as an estoppel against any other action on the bond and mortgage, upon the parties thereto, their privies and all persons who might succeed to their rights. (Clemens v. Clemens, 37 N.Y. 59; Bloomer v. Sturges, 58 id. 168.)

The principle laid down cannot be denied, and applying it to the case before us, it is difficult to see why the judgment and proceedings in the foreclosure action, with the sale to the plaintiff for the full amount of the bond and mortgage, is not a bar to this action, and a merger of all the rights which the plaintiff had acquired by virtue of the assignment of the bond and mortgage to him or from any other source. Whatever equitable rights he had as owner arising from the bond and mortgage, its lien upon the land, and its covenant in the deed of Lyon to Mrs. Beck, were derived from parties in the foreclosure action, and were proper subjects for consideration and determination in that suit. The sale therein disposed of the title and interest of the mortgagors in the land. The amount bid covered the entire sum due on the bond and mortgage, and the plaintiff, as the purchaser, took the land and acquired a right to a conveyance thereof by the purchase which he had made. He was entitled to the land in payment of the mortgage, which with the bond became extinguished by the sale, and the mortgage was canceled and discharged as a lien thereon. It is not apparent, after having thus become the purchaser with the right to a conveyance of the mortgaged premises, what claim remains in the plaintiff by virtue of the bond and mortgage against the mortgagors. The sale and the bid made by the plaintiff were actually and virtually in the nature of a payment which canceled all claims under the mortgage or right to enforce the bond personally against the respondents. *Page 218

The plaintiff claims that the judgment for a deficiency was no part of the decree, but collateral and contingent, and until a sale is had and a deficiency is ascertained and the report confirmed there can be no personal judgment. We think that this position is not well founded, and none of the authorities cited in support of it uphold the rule contended for. They relate to the formal part of the proceeding and do not affect the question considered and discussed. It is a full answer to the proposition asserted that the judgment was a full and absolute determination of all the rights of the parties which were involved, and the subsequent proceedings were only necessary to carry out and enforce the provisions contained in the final decree adjudicating the rights of the parties. Such a judgment is held to be final, and not interlocutory, and leaves nothing further to be adjudicated or revived. (Morris v. Morange, 38 N.Y. 172. See, also, Smith v. Smith, 79 id. 634; Jordan v. Van Epps, 85 id. 427, 436.) Nor can it make any difference because the judgment in the foreclosure suit has never been executed by the sale of the land and the exact amount of the defendants' liability for any deficiency fixed. It is the judgment which fixes the rights of the parties and a sale is not required for that purpose. The authorities cited to sustain the position that the judgment was not final do not uphold that doctrine. (Champney v. Coope, 34 Barb. 539; affirmed, 32 N.Y. 543;Harbeck v. Vanderbilt, 20 id. 395.)

The order of the court which allowed the plaintiff to bring the action upon the bond cannot be regarded as any thing more than a permission to prosecute the bond with a view of testing the question as to the right of the plaintiff to sue upon the same after the foreclosure and sale by virtue of the mortgage, and the purchase of the premises by the plaintiff.

The claim that the bidding in of the property was not a sale, as no money was paid, or memorandum or contract signed, or report of sale made or confirmed, is not meritorious. It does not appear why the plaintiff did not pay his bid, or take a deed from the sheriff, or that he refused upon any of *Page 219 the grounds we have stated, or that his failure was in any way attributable to any fault upon the part of the defendants. The sale being duly made upon a judgment in a judicial proceeding, it must be regarded as the execution of its provisions which are binding upon the purchaser, and that the defendants are entitled to the protection which is thereby created. It cannot be rendered of no avail, because the plaintiff, who was the purchaser, failed to complete the purchase. The plaintiff in the foreclosure suit could have compelled the purchaser to pay, for any thing which is made to appear, and the plaintiff here could have compelled the execution of a conveyance to him. The mortgage and bond were paid by the sale, and the land bid off by the plaintiff was a payment, or took the place of the amount due on the bond and mortgage, and canceled and discharged the same, and his neglect to enforce a conveyance cannot prejudice the defendants' right to insist that the sale had the effect to cancel, and operated as a satisfaction of the mortgage.

The authorities cited by the appellant's counsel in this connection do not uphold the doctrine contended for, and as there was a bona fide sale for the whole amount unpaid and due upon the mortgage, it is very obvious that it must be regarded as a satisfaction of the judgment of foreclosure upon which it was founded. The sheriff who sold the property was an officer of the court, and if he failed to perform his duty in respect to the sale, upon an application for that purpose, the court would by order have compelled him to sign the terms of sale nunc protunc and to make a report of sale and execute a conveyance to the purchaser. In a sale by a sheriff or referee it is not necessary that the purchaser should sign the terms of sale to make it valid, and the statute of frauds does not require any such signature. (Miller v. Collyer, 36 Barb. 250; Willets v. Van Alst, 26 How. Pr. 325; National Fire Ins. Co. v.Loomis, 11 Paige, 431.) The purchaser, by bidding at the sale, places himself under the jurisdiction of the court, and may be compelled to fulfill or be punished for contempt for not doing so. In 11 Paige (supra), the chancellors *Page 220 lay down the rule that the report of sale is enough, and the bidder, being under the jurisdiction of the court, is liable for contempt in refusing to complete his purchase. There would, therefore, be no difficulty in this case in compelling the sheriff to report, and in carrying out the sale, and the plaintiff is not in a position to insist that there was a failure to comply with the terms of the sale, and he is estopped from claiming that the sale was invalid. It is enough to bind him that he could have enforced a conveyance and has sustained no injury by the failure of himself to sign the terms of sale or the sheriff to make a report. It does not rest with him to insist that the sale has been abandoned. He has no power or authority to abandon the sale to the detriment of other parties in the action; and such abandonment could be had only by the consent of all the parties and by an order entered setting aside the sale. As this was not done it remains in full force, to be executed whenever the appellant and owner of the bond and mortgage requires it. The claim that the respondents were not injured by the failure to enforce the sale, and have no right to the benefit arising from the same, and that it must be regarded as entirely out of the case, cannot be upheld. It constitutes a part of the record before us and cannot be ignored or disregarded. To hold that it is of no consequence is not warranted by any sound principle of law. The plaintiff has been more than reimbursed for all the money which he has paid on account of the mortgaged premises and the bond and mortgage. His claim is a technical one and must be determined according to strict legal rules. He has no equity as against the defendants and the case should be disposed of, having in view only the principles of law which are applicable to the same.

The appellant's counsel also claims that he occupied the position of a surety for the debt, and if the sale was good the debt would not have been extinguished because the purchase by the surety of his own premises would be nothing more than a redemption. We think that the rule contended for has no application when the real estate covered by a mortgage *Page 221 has been sold and bid off upon a foreclosure sale of the same for the amount due upon the mortgage. The sale of the property in such a case is an extinguishment, or a payment of the demand, and the plaintiff is in no position to claim the benefit of the rule contended for. The holder of the bond and mortgage in his complaint claimed to recover on the bond as well as the mortgage. The foreclosure sale was made accordingly. A sum sufficient was bid to pay the amount of the bond and mortgage, the plaintiff being the purchaser and at the time having no interest in the mortgage. That he was not compelled, and did not of his own volition complete the purchase, and by means of his own wrong seek to avoid the sale confers upon him no additional right as a surety, and places him in no better or different condition than any other purchaser would have occupied under similar circumstances.

It should also be observed in this connection that at the time of the sale under the foreclosure judgment, plaintiff had no title to, or interest in, the premises. He acquired the interest under which he claims the rights of a surety, by virtue of a deed dated August 12, 1876, from Mrs. Beck, the former owner, and the deed from the receiver appointed in the creditor's suit, executed the 14th day of October, 1876.

It is claimed by the appellant's counsel that when defendants conveyed the mortgaged premises to Sarah Beck they remained primarily liable on the bond to pay the debt, and the land was a mere surety collateral and secondary to the bond, and several authorities are cited to sustain this position. The case ofBarnes v. Mott (64 N.Y. 397) is particularly relied upon, and while the rule there laid down in the opinion may be regarded as applicable to the case there considered, we are unable to perceive how it applies to the circumstances which are developed in this case. That action was brought to restrain the sale, upon an execution, of certain premises owned by the plaintiff, and to have the lien of the judgment upon said premises discharged; also to restore the lien of the mortgage upon said premises, alleged to have been satisfied by mistake. The facts presented a case where the plaintiff was clearly entitled *Page 222 to the relief granted, and the rule laid down might well be held to apply, but we think that case is not analogous in any of its leading features to the one at bar. The rule stated in the opinion cannot be invoked in this case. That case does not hold and cannot be regarded as an authority for the doctrine that an action can be maintained upon the bond under the circumstances which are here presented. The other authorities which are relied upon have received a careful examination, and we are unable to perceive how they can affect the case considered. We do not deem it necessary to discuss them at length and it is enough to say they are not in point.

Another answer to the claim of the plaintiff in this action is that the action is at law on the bond, and there is no rule which allows the equities to be brought in in such a case. To entitle the plaintiff to relief, if he had any claim, he should have brought his action in equity at the proper time to redeem the land or to be subrogated; in which action the equities of the parties could have been properly adjudicated. Having failed to do this it is too late now to claim that in an action on the bond he can obtain equitable relief. It is no answer to this position to say that the point was not taken upon the trial. It appears that it was adjudged that the complaint be dismissed as to the defendants, no ground being stated. Under such circumstances the decision should be upheld if it can be sustained upon any valid ground. It may also be observed that if the plaintiff has any remedy it is upon the covenant in the deed and not by an action upon the bond. The deed from Sarah Beck to the plaintiff was a quit-claim deed without any covenants, and which only conveys her reversionary interest after the payment of the judgments against her husband. The deed to Mrs. Beck contained a covenant by which James Lyon did covenant to warrant and defend the said Sarah Beck in the quiet and peaceable possession of the premises. Under this covenant, if at all, plaintiff alone can maintain his claim and has no remedy against the defendants upon the bond. In such a case the rule is well settled that a party is remitted back *Page 223 to his covenants in his deed, and has no other remedy. (2 Kent Com. 473.)

We are unable to discover, after full consideration, any ground upon which the plaintiff can maintain this action.

The judgment was, therefore, right and should be affirmed.