(concurring). I concur with Johnston, J. I am further of opinion that the order should be reversed on the law and the motion in all respects denied.
As Carswell, J., points out in his opinion, this complaint is precisely similar to that upheld by settled authority, typified by Rochester Trust & Safe Deposit Co. v. Hatch (273 N. Y. 507), wherein similar set-off defenses were held insufficient, with the exception, however, that in this case such defense, and that of merger, are predicated on the fact that prior to the service of the amended complaint changing the nature of the action from one in equity for foreclosure to one at law on the bond, the plaintiff-mortgagee became the owner of the fee of the mortgaged premises. That circumstance renders the defense of merger sufficient. The doctrine of merger, although not generally favored, prevails at law irrespective of intention when different estates meet in the same person, but a different rule prevails in equity. (Sheldon v. Edwards, 35 N. Y. 279, 285.) As' stated in Smith v. Roberts (91 N. Y. 470, 475): “ But while a merger at law follows inevitably upon the union of a greater and lesser estate in the same ownership it does not so follow in equity. ’ ’ This distinction has been uniformly observed. (Curtis v. Moore, 152 N. Y. 159, 165; Rae Co. v. Courtney, 250 N. Y. 271, 274; Dunkum v. Maceck Building Corp., 256 N. Y. 275, 281; Hennessy v. King, 225 App. Div. 152, 154, 155, affd. 252 N. Y. 570.)
In equity all the factors may be taken into consideration, particularly that of intent to keep the mortgage alive (Clift v. White, 12 N. Y. 519, 536), in arriving at a just determination. We are dealing here with a law action, however, and my view is that the reduction of the mortgaged property to ownership in the mortgagee, without the consent of and without notice to the mortgagor, extinguished any remedy which the mortgagee might otherwise have had at law. If this be not so, and the mortgage is to be regarded as a five and independent entity, the result would be that a mortgagee as owner of the property could suffer defaults of payment of interest on his own mortgage and in the payment of taxes, and charge these defaults, under the literal terms of the bond and mortgage, to the mortgagor.
If merger at law be not deemed to have been effected, circuitous litigation would result by reason of the payment of the debt by the mortgagor, with resultant subrogation to it of the mortgage and foreclosure thereof by the mortgagor (Calvo v. *252Davies, 73 N. Y. 211, 215) against the mortgagee as owner of the fee. (Matter of Wilbur v. Warren, 104 N. Y. 192, 197.)
Even where the mortgagor expressly agreed with the mortgagee that a mortgage was not to merge in the fee, creating a situation where there was a direct agreement between the parties against merger, an action on the bond was held properly dismissed on the ground that foreclosure, at least in the first instance, was the only available remedy. (Eagan v. Engeman, 125 App. Div. 743.)
In the light' of my belief that the defense of merger is controlling and that foreclosure is the only remedy available to the plaintiff, I am unwilling to accept as binding any oral statement on the argument that that defense was abandoned. The defense appears in the answers and the defendants have specifically appealed from that part of the order striking it out. There is no statement in the brief of the appellants that the defense has been abandoned and, on the contrary, it is urged in appellants’ fourth point that plaintiff should be relegated to foreclosure as a remedy. The failure of a party to invoke a controlling theory heretofore has not deterred us from basing our determination on it. (Goodheart v. American Airlines, Inc., 252 App. Div. 660; Cobb v. Gramatan Nat. Bank 3 Trust Co., 261 App. Div. 1086.)
In the earlier authorities cited by Johnston, J., in his opinion (Spencer v. Harford, 4 Wend. 381, 385; Herkimer M. and H. Co. v. Small, 21 Wend. 273, 276, affd. 2 Hill, 127, revd. on other grounds, 2 N. Y. 330) it appears that the defendants were at least entitled to set off against the causes of action of the plaintiffs the reasonable value of the property at the time of the conveyance to the plaintiff. This is inconsistent with the doctrine of merger, but these cases do not seem to have considered that doctrine except where there had been a foreclosure without a sale. In any event, if I am in error as to the applicability of the doctrine of merger, then, for the reasons advanced in the opinion of Johnston, J., particularly that under the circumstances the land has become the primary fund for the payment of the claim, my opinion is that the defense of set-off should be upheld.