one year, at the amount of the tax, and then filed their bill praying to be reimbursed by a sale of the mortgaged premises under a decree of foreclosure; held, that they were purchasers in their own right, and must rely upon the use of the premises, during the term, for their reimburse ment. A tax laid upon real estate in the city of New York, for the purpose of opening or improving a street, &c., takes preference of a prior mortgage. APPEAL from the Court of Chancery. The respondents are the executors of Hugh Williamson, deceased, who was the assignee of a mortgage given by Robert Fulton to one Bonsall, in June, 1814, upon certain lots in the city of New York. Pending the proceedings which had been instituted in the Court of Chancery, for the purpose of foreclosing the mortgage, the corporation of the city of New York, under the authority vested in them, for the purpose of opening and laying out streets, (2 R. L. 408, 409, &c.,) imposed upon the mortgaged premises an assessment of $1485 92, which not having been paid by the representatives of Fulton, the corporation proceeded to collect, agreeably to the provisions of the 259th section of the act in relation to the city of New York, (2 R. L. 442.) By that section the corporation are authorized, in cases in which the owners of lots, upon which assessments have been made, refuse or neglect to pay the assessment, after proper notice and demand, "to advertise the lots, and sell them at public auction, for the lowest term of years at which any person or persons shall offer to take the same, in consideration of advancing the sum assessed upon them, together with interest and all costs and charges which have accrued thereon. And the purchaser is authorized to enter upon and enjoy the premises until his term therein shall be fully complete and ended." The respondents became the purchasers of the premises in question, at the auction. for the term of one year. They took a lease from the corporation for the year. The original bill of foreclosure was filed by Williamson, and proceeded to a final decree. Williamson then died, and the above sale having been made to the respondents, his executors, they filed their bill of supplement and revivor, claiming a right to retain the amount thus paid by them, in addition to their mortgage debt, out of ALBANY, Dale V. M'Evers. the proceeds of the mortgaged premises, on the ground that if they had not become the purchasers at auction, the premises would have been sold for a long term of years, during which time the right to sell the mortgaged premises would have been suspended-that the purchase by them being compulsory, they ought to be reimbursed the amount this paid. The appellants, (the defendants below,) admitted in their answer, that an assessment of $1400, was imposed by the corporation upon the mortgaged premises-that they were put up at auction for the payment of this assessment; and that the terms of the sale were, that the person who would pay the assessment for the use of the premises during the shortest term, was to be considered the highest bidder— that the respondents became the purchasers at such sale, being the highest bidders; having agreed to pay the assessment for the use, rents and profits of the premises, for one year. They expressly denied that the respondents were compelled to purchase the premises to prevent them from being sold for a great number of years; and alleged that if the respondents had not become the purchasers, they would have been sold upon the offer of the next highest bidder, for only one year more, at all events; and, perhaps, for but a few months beyond the term of one year. They denied that they ever authorized the respondents to make the purchase on the account, or for the benefit of the appellants. No replication was filed, and the cause was heard upon bill and answer, without proof. The Chancellor decreed, that the payment by the respondents was compulsory, and formed a just and equitable charge, for which they ought to be reimbursed and indemnified out of the proceeds of the sale of the mortgaged premises; and that they be reimbursed, &c., accordingly. The appeal was from this decree. S. A. Foot, for the appellants. There was no legal necessity for the respondents to make the purchase. But suppose they were obliged to purchase in order to save themselves, they have no right to be reimbursed by the sale. This is not the ordinary case of a senior lien, which affects the whole title or interest in the property. Had it been so, perhaps the decree would have been correct. It is not necessary for us to deny, that at a sale under a lien which af fects the whole interest, the junior mortgagee may purchase, and be entitled to reimbursement out of the fund to be created on a sale upon his own lien. He would have the legal estate; and, as in other cases, might follow the fund arising from the last sale. But here, only a small part of the title is affected. What is the thing sold? Merely the use of the property for a given time. The law knows no value of property, except what it will fetch in the market, and it was worth no more to Fulton's representatives. The respondents gave the mar. ket value, and had the appellants purchased, they must have done the same. It was of no consequence where the property went for this short period. It could have been no more than the use for a few years, leaving junior liens to their full effect after the time expired. The answers positively deny the necessity of this purchase, and not being met by a replication, they must be taken as true. They say that the term in these lots was put up at auction, and sold at its fair value; and that if the respondents had not purchased, it would have been sold for but little more than the year. It would, at most, have extended to no more than two years. The ALBANY, Sept. 1823. V. M'Evers. (a) 16 Ves. Again the respondents are purchasers. They took a lease of the corporation, and we must presume they went into possession under it. On the fund coming in they asked, and were allowed by the decree, to rescind their contract, after having had the use of the property, for which they are not even required to account, at any rate. Cowell v. Simpson,(a) shows how liens are waived or removed. Court are also referred to Gilman v. Brown et al.,(b) on the same subject, and Law of Lien, ed. 1822, App. 218, &c. The case of Codwise & others v. Gelston, (c) exhibits the principle on which a fund may be followed into the Court 507. of Chancery. It rests upon the ground of a lien at law, which the party may enforce at the time of the sale; and it appears to me that he ought, if he purchases, to be confined 275. (b) 1 Mason's Rep. 212 to 219. (c) 10 John. ALBANY, Dale V. M'Evers. to what he acquires by the sale. The lien is gone by the purchase, and he cannot follow the fund. The right to follow is in virtue of the lien, and is destroyed with it. It is an acknowledged rule, that where the conduct of the party is such as to show that he does not mean to retain and rely upon his lien, it cannot be enforced. The respondents should have bought in the lien created by the assessment, or they might have paid directly, and a Court of Equity would have allowed them to stand in the place of the creditor. One of these is the course, as dictated by the authorities; but the respondents have not chosen to take them as a guide. Is it not plain, then, that they intended to look to some source of remuneration other than the fund to be created by the sale? case. J. O. Hoffman, for the respondents. It is easy to draw nice distinctions of law; but principles must always more or less depend upon the particular circumstances of each The first sale under the decree of the Court below, was set aside on the ground of surprise, (3 John. Ch. Rep. 290,) and it appears by the case that very great indulgence has been given to the appellants, as to time, in raising the money. The parties stand in the relation of mortgagee and mortgagor. The former can never hold a term upon the mortgaged premises, as an incumbrance. It would merge on becoming united with his estate as mortgagee. The mortgagee is entitled to be reimbursed, in this case, upon the same principle that would entitle him to a compensation for improvements upon the mortgaged premises. Here the respondents have, by their purchase, bettered the estate, in raising an incumbrance which would, at least, have materially reduced its value. The statute (2 R. L. 491, s. 37) makes the assessment a lien overreaching all other incumbrances, though prior in point of date. A mortgagee pays the ordinary taxes upon land: Would he not have a right to be reimbursed? The 38th section (2 R. L. 38) gives a remedy by action, where money is paid by one, which should, by law, have been paid by another. The mortgagor, in this instance, ought to have paid and kept the security good. Not having done so, payment by the mortgagee became necessary, in order to save the security. For whose use was the payment made? That of the mortgagor. That the incumbrance does not go to the whole fee, makes no difference. The object was to save the lien. If the mortgagee had stood silently by, the premises might have gone for 21 years; which would have been a virtual defeat of his claim. It is said, he might buy or sell subject to such a lease-that the incumbrance did not go to the whole fee; but the premises might be worth nothing, subject to such an incumbrance. The remedy suggested would put everything to hazard. A lease for but few years, such as the answer supposes might have been the result of our silence, would have destroyed our present lien, and increased the risk of loss. We did not, as supposed, purchase in our own right. We had no power to do this: the lease was not ours, but enured to the benefit of the mortgagor, who was bound both in justice and honor to pay it. Form should give way to substance. If there was, as the Chancellor declared, a legal necessity for securing this incumbrance in the hands of the mortgagee, it is not material, whether it was by assignment from the corporation, or payment or purchase of the term. Foot, in reply. The case is considered mere form, but it was matter of substance to the appellants. If of no importance, it was easy to stop at the bid, and never obtain the lease. That one who pays an assessment, which is justly due from another, may recover it by action, is an argument against the remedy in equity. The respondents should have paid the money, and resorted to their direct legal remedy; or, perhaps, they might then have filed their bill for relief. A year, or even six months possession of the property, might have been worth the tax, and we should have had the benefit of it, had the lease been out of the way. But the respondents bought, and by their own acknowledgment, acquired the full value of their purchase, ALBANY, Dale V. M'Evers. |