Opinion
January Term, 1897.
Hector M. Hitchings, for the appellants.
Hugo S. Mack, for the respondent.
The purchase-money mortgage for the sum of $14,000, given by Judson to Cole, and by the latter assigned to the plaintiff, was unaffected by any conditions of any character or by any collateral engagements of Cole to Judson or to any other person. When plaintiff consented to discharge that mortgage he received no consideration for so doing, except the mortgage of $17,000, which was made subordinate to the lien of the bank's mortgage. The legal effect of that transaction did not change the character of the mortgage security which plaintiff received in substitution of his purchase-money mortgage. The substituted mortgage remained a purchase-money mortgage to the extent of the sum secured by the first mortgage. ( Jones v. Parker, 51 Wis. 218; Austin v. Underwood, 37 Ill. 438.)
As to the present defendants, therefore, their lien, without regard to any equitable rights existing between Cole and Judson by virtue of their agreement, is made subject to the lien of the mortgage under the well-settled principles governing purchase-money mortgages. ( Spring v. Short, 90 N.Y. 538; Stow v. Tifft, 15 Johns. 458; Fisk v. Potter, 2 Keyes, 64.)
It was not pretended that the transaction was intended by any of the parties to work any other change in plaintiff's security than such as was necessary to make it subordinate to the lien of the bank's mortgage. But as to the parties and all other subsequent incumbrances it remained as though no change had been made. The evidence given upon the trial warranted the court in finding that default was made in payment according to the terms of the mortgage, and with this established the legal right to resort to the remedy of foreclosure was complete, and whether plaintiff exercised the right at once or delayed his right cannot be made the subject of complaint by the mortgagor or by the defendants here. To the extent, therefore, of the sum of $14,000, and it is only to this extent that the right is sought to be exercised, the plaintiff has the sanction of law for his action and was entitled to the judgment rendered herein.
We might well rest our decision here as a complete answer to defendant's claim. But the assertion is vigorously made that the agreement between Cole and Judson, when coupled with the provision as to payment contained in the mortgage, is in effect an agreement not to foreclose which equity will enforce by denying foreclosure. The maturity clause of the mortgage is that the sum secured shall be due and payable on demand, or in the alternative on the 27th day of April, 1896. The evidence was sufficient to show that demand for payment was made and the court so found. There is nothing in the agreement upon the subject of the foreclosure of the mortgage. How, then, can any reasonable claim be made that there existed an agreement not to foreclose? As between Cole and Judson, if there has been a breach of the contract to advance the sum of $3,000, we are unable to perceive how it can affect the plaintiff. He was not a party to the contract and his mortgage was not subject to it. There was never any privity of contract between plaintiff and Judson, and the lien filed by defendants does not operate to the creation of that relation. In Alyea v. Citizens' Savings Bank ( 12 App. Div. 574) this question was fully considered, and it was there held that the defendants could not avail themselves of a breach of contract upon the part of the bank in failing to advance money to Judson. In that case the agreement was direct between Judson and the bank. The principle is decisive in the present case. Conditions which would not avail to obtain relief cannot be made effective to resist the assertion of a legal right where the right to relief and the assertion of the claim rest upon the same basis. But this case is still stronger, for here there was no privity of contract between plaintiff and Judson to advance any sum whatever. But, assuming that Judson has a legal claim against Cole, and that plaintiff is bound by notice of such claim, and that the defendants occupy Judson's position, it would not avail to defeat this foreclosure. At the most, the breach could only be set up by way of recoupment. ( Sandford v. Travers, 40 N.Y. 140. ) And even this right has been held to be limited to a recovery of nominal damages. ( Dart v. McAdam, 27 Barb. 187.)
But in this case there exists no right in the defendants to interpose any defense, for reasons already stated. If Judson has any remedy it is by way of action against Cole for breach of contract. What right the defendants have in that connection we do not now consider. Much was said upon the argument in assertion of the existence of a conspiracy between Cole, Judson and the plaintiff to foreclose this mortgage for the purpose of cutting off plaintiff's lien. Such claim found no support in the evidence, and the court found against it.
It follows that the judgment should be affirmed, with costs.
All concurred.
Judgment affirmed, with costs.