Opinion
June 4, 1909.
Alexander Rosenthal, for the appellants.
A. Freyer and I. Maurice Wormser, for the respondent.
Judgment affirmed, with costs, on the opinion of Mr. Justice CARR at Special Term.
HIRSCHBERG, P.J., WOODWARD, BURR and RICH, JJ., concurred.
The following is the opinion delivered at Special Term:
This is an action to foreclose a second mortgage. All the parties defendant are in default except the defendants Frank and Danowitz, who were made parties because they had guaranteed the payment of the mortgage debt. They are proper parties defendant in this action. ( Robert v. Kidansky, 111 App. Div. 475.) These defendants resist judgment on the ground that the bond and mortgage were not due at the beginning of the action. The period of maturity provided by the bond and mortgage is August 1, 1911. The plaintiff sues upon the claim that by reason of a default on the part of the owners of the property in paying the interest on a prior or first mortgage he had the right to and did elect that the second mortgage should become immediately due and payable. The important question in the case arises upon the construction to be given to a clause in the second mortgage which is said to give such right of election. This question is to be determined according to the manifest intention of the parties as shown by writing.
The parties to the second mortgage used a printed form, such as law stationers sell, and which are in common use by the legal profession. This form contained a clause marked "Seventh" which provided as follows: "Seventh: And the said mortgagor does further covenant and agree that in default of the payment of all taxes, charges and assessments which may be imposed by law upon the said mortgaged premises or any part thereof, that it shall and may be lawful for the said mortgagee, without notice to or demand from the mortgagor, to pay the amount of any such tax, charge or assessment with any expenses attending the same, and any amount so paid the said mortgagor covenants and agrees to repay to the said mortgagee, with interest thereon, without notice or demand, and the same shall be a lien on the said premises and be secured by the said bond and by these presents; and the whole amount hereby secured, if not then due, shall thereupon if the said mortgagee so elect become due and payable forthwith."
As there was a prior mortgage on the premises, specifically referred to in this instrument in question, the draftsman of the second mortgage inserted in the "Seventh" clause of the printed form the words "interest on prior mortgage," so that the clause read: "And the said mortgagor does further covenant and agree that in default of the payment of all taxes, interest on prior mortgage, charges and assessments which may be imposed by law upon the said mortgaged premises or any part thereof, that it shall and may be lawful for the said mortgagee, without notice to or demand from the mortgagor, to pay the amount of any such tax, charge or assessment," etc.
The draftsman, however, neglected to reinsert the words "interest on prior mortgage" in subsequent lines of the mortgage, where the words "tax, charge or assessment" appear. As a result of this omission the defendants contend that the final provision of the clause, "and the whole amount hereby secured, if not then due, shall thereupon, if the said mortgagee so elect, become due and payable forthwith," does not apply to a case where there has been a default in the payment of interest on prior mortgage. A default did occur in the payment of interest on prior mortgage, and the plaintiff, to protect his security, paid some $1,400 as accrued interest on the first or prior mortgage. This first mortgage was in the sum of $52,500, on which interest was payable half yearly in amounts of $1,443.75.
If the defendants' contention as to the effect of the clause in the second mortgage is correct, then the mortgagors were in a position that they could stand by and compel their mortgagee to pay the interest on the first mortgage every time it accrued in order to protect his security of the second mortgage without having any remedy against them except by subrogation at the fixed maturity of the mortgage. This result will be so extraordinary as to require the plainest evidence that the parties so contracted.
It seems to me, on the contrary, that the parties to the second mortgage never so intended. The "Seventh" clause in the second mortgage, which is the one in suit, gives the mortgagee the right to pay the interest on the first mortgage whenever it becomes due, and the last provision of that clause related back to a default in the payment of the "interest on prior mortgage," as well as to a default in the payment of "all taxes," etc. The word "all" here is used in the sense of "any," as is shown by the latter use in the same clause of the words, "any such tax, charge or assessment."
The defendants further contend that inasmuch as the plaintiff began this action four days after he paid the interest on the first mortgage this court should deny him relief on the ground that his election to treat his mortgage as immediately due and payable is inequitable and oppressive on defendants. They urge the decision in Germania Life Ins. Co. v. Potter ( 124 App. Div. 814) as sanctioning a dismissal of the plaintiff's complaint on this ground. That case must be confined to its precise facts where the court held that the plaintiff's course of dealing with the defendant misled the defendant. Without such a finding that decision would be in flat opposition with a long line of authorities which settled the law on this point for several generations. ( Smith v. Lamb, 59 Misc. Rep. 568.)
I find no satisfactory evidence in this case that the plaintiff in any way misled the defendants. Judgment is directed for the plaintiff against all the defendants for a foreclosure of the mortgage in suit. Provision is to be made in the findings and judgment defining the contingent liability of these two defendants as guarantors to the amount stated in their written guaranty.