Respondent contends that under the moratory statutes a mortgagee may sue in one action — pleading separate causes of action — for interest, taxes, water charges and principal, and the defense of set-off of market value is available only as against a cause of action for the principal. In support of this contention respondent cites Rochester Trust Safe Deposit Co. v. Hatch ( 273 N.Y. 507); Johnson v. Meyer ( 242 App. Div. 798, affd. 268 N.Y. 701); Weinstein v. Empire Title GuaranteeCo. ( 257 App. Div. 867); Erie County Savings Bank v. Levi ( 255 App. Div. 438); Westchester Trust Co. v. Estate of Underhill, Inc. ( 255 App. Div. 1013); Buell v. Sullivan ( 250 App. Div. 780); Union Trust Co. of Rochester v. Kaplan ( 249 App. Div. 280).
Motion for reargument denied, with ten dollars costs and necessary printing disbursements. (See 273 N.Y. 507.)
The foregoing conclusion is not inconsistent with those decisions holding that an action may be maintained for the recovery of unpaid interest and taxes even though the principal indebtedness is due and enforcible; that such items within the purview of the moratorium statute are deemed severable from the principal indebtedness so as to permit separate suit thereon free of the consequences attending the splitting of a cause of action ( Union Trust Co. of Rochester v. Kaplan, 249 A.D. 280; Westchester Trust Co. v. Estate of Underhill, Inc., 255 A.D. 101 3) and without being subject to the statutory offset provided by section 1083-b. ( Johnson v. Meyer, 242 A.D. 798, affd. 268 N.Y. 701; Rochester Trust Safe Deposit Co. v. Hatch, 273 N.Y. 507, 581.) As was said in White v. Wielandt ( 259 A.D. 676, 678-679, affd. 286 N.Y. 609): "The rationale behind all these cases is that interest and taxes are not affected by the moratorium statutes, which suspend actions on bonds for default in the payment of principal only, and which allow the fair value of the property to be offset when an action is brought to recover the indebtedness secured by a mortgage and which originated simultaneously therewith; that interest and taxes are not affected because they did not originate simultaneously with the indebtedness and, hence, they are not part of such indebtedness within the purview of these statutes, and an action is maintainable for their recovery without prejudice to the mortgagee's right to maintain a subsequent action to recover the debt.
It has been held that, despite the moratorium statutes (Civ. Prac. Act, §§ 1077-b, 1083-b), the mortgagee may maintain an independent action at law for the recovery of unpaid interest or taxes paid by him; that in such an action the mortgagor may not set off the value of the property; and that the prosecution of such an action is without prejudice to a subsequent action by the mortgagee to recover the principal or to foreclose the mortgage. ( Johnson v. Meyer, 242 App. Div. 798; affd., 268 N.Y. 701; Werbelovsky v. Rosen Bros. News Agency, Inc., 249 App. Div. 758; Buell v. Sullivan, 250 id. 780; Westchester Trust Co. v. Estate of Underhill, Inc., 255 id. 1013; Weinstein v. Empire Title Guarantee Co., 257 id. 867; Rochester Trust Safe Deposit Co. v. Hatch, 273 N.Y. 507; Erie County Savings Bank v. Levi, 255 App. Div. 438; Union Trust Co. of Rochester v. Kaplan, 249 id. 280.) In some of these cases causes of action to recover the interest and taxes were alleged in addition to a cause of action to recover the principal, and the three causes of action were incorporated in one complaint.
Present — Sears, P.J., Crosby, Lewis, Taylor and Dowling, JJ. Order so far as appealed from affirmed, with ten dollars costs and disbursements, on the authority of Rochester Trust Safe Deposit Co. v. Hatch ( 273 N.Y. 507) and Johnson v. Meyer (268 id. 701). All concur. (The order grants a motion to strike out parts of an answer, in an action by a mortgagee under a bond to recover taxes paid and interest due.)
A mortgagor is liable in an action at law for unpaid interest and moneys advanced by the mortgagee for the payment of taxes on the property covered by the mortgage despite the provisions of the so-called moratorium law. ( Johnson v. Meyer, 242 A.D. 798, affd. 268 N.Y. 701; Rochester Trust and Safe Deposit Co. v. Hatch, 273 N.Y. 507, motion for reargument denied 273 N.Y. 581.) The grantee in a deed who has assumed and agreed to pay a mortgage on the real property conveyed to him is liable in such an action ( Clonick v. Gordon, 11 N.Y.S.2d 703).
This decision further confirms what was said above, namely, that the word "indebtedness," as used in the statute, referred to the principal of the bond and mortgage alone and not to that principal plus arrears of interest, and that, in the case of a bond and mortgage, the maker thereof assumes three obligations, namely, to pay the principal, to pay the interest and to pay the taxes, which are separate obligations and may be sued upon separately. In the following month, January, 1937, this was confirmed by the Court of Appeals ( Rochester Trust Safe Deposit Co. v. Hatch, 248 A.D. 945; revd. without opinion, 273 N.Y. 507). The complaint there alleged seven causes of action, the first to recover the principal of the bond, the second, third and fourth to recover several unpaid installments of interest, and the fifth, sixth and seventh to recover accrued taxes which had been paid by the plaintiff.
That a suit for interest may be maintained, notwithstanding the emergency statutes, is no longer open to question. (See Rochester Trust Safe Deposit Co. v. Hatch, 273 N.Y. 507; Johnson v. Meyer, 242 A.D. 798; affd., 268 N.Y. 701.) Defendant claims to be entitled to a setoff to the extent of securities which plaintiff has received or may receive in the reorganization proceedings. It is not shown that the plaintiff has received any such securities.