Opinion
January 13, 1916.
Gillespie O'Connor [ William F. Delaney and George J. Gillespie of counsel], for the appellant.
George H. Smith [ Julien Scott of counsel], for the respondent.
Plaintiff, as assignee, brings this action to foreclose the real estate mortgage given by the defendant Dairy Products Company of New York. The defendant Schmidt, who purchased the property with the mortgage upon it, by his amended answer has set up certain alleged defenses, the plaintiff's demurrer to which has been overruled by the interlocutory judgment now under review. The opinion of the Special Term indicates that there is no doubt but some of the defenses would be demurrable were it not for the conclusion that the denials set forth in the 1st, 3d 4th and 5th paragraphs of the answer are incorporated into each of the alleged defenses. Each of the alleged defenses and counterclaims begin with these words: "Said defendant repeats all the allegations hereinbefore contained as if the same were here specifically repeated and realleged." This provision does not bring into the defense the denials previously written in the answer. A denial is not an allegation. Section 500 of the Code of Civil Procedure provides that an answer shall contain a general or a specific denial, or a statement of any new matter constituting a defense or counterclaim. The statement of the new matter represents the allegations of the answer. There was no good reason why the pleader should incorporate into the seven answers all of the denials, thus repeating the same denials six times in the same pleading. The denial constitutes no part of the defense, although perhaps in certain cases a denial may accompany affirmative allegations. It is evident, therefore, that by using the word "allegations" in the various defenses, the pleader did not intend to refer to the denials; but, if he intended to make such reference, he failed in his purpose. It is clear, therefore, that the denials are not a part of the alleged defenses. ( Pullen v. Seaboard Trading Co., 165 App. Div. 117.)
One of the alleged defenses is that when the mortgage was executed no special meeting of the stockholders of the corporation was called; neither was the consent in writing of the holders of not less than two-thirds of the capital stock obtained, nor a certificate of such consent filed in the county clerk's office, as required by section 6 of the Stock Corporation Law. The allegation of the answer, setting up a copy of the mortgage, is incorporated into this defense, and the mortgage recites that it is executed, and the seal attached by the president and secretary, "thereunto duly authorized by its board of directors and by the unamous [ sic] consent of its stockholders." Section 7 of the Stock Corporation Law provides that when a recorded mortgage recites that it has been duly consented to or authorized by the stockholders, such recital shall be presumptive evidence that the execution of such mortgage was duly and sufficiently consented to by the stockholders. The allegations of this amended answer are, therefore, unimportant, the mortgage being prima facie valid without regard to the matters stated. This alleged defense is numbered "seventh," and is followed by the second separate and distinct defense. It is probable that the subdivisions of the answer marked "second," "sixth" and "seventh" are intended together to set up that defense. While the demurrer is to the defense alleged in paragraph 6, it is probable that the numbers "second," "sixth" and "seventh" were intended not as separate defenses. On account of the confusion in the manner in which the answer is numbered, no injustice is done by treating this demurrer as applying to the allegations of the answer marked "second," "sixth" and "seventh" as one single defense.
The fifth alleged defense indicates that the plaintiff's assignor had a chattel mortgage upon 110,000 pounds of casein of the value of $9,900, which mortgage was collateral to the mortgage now sought to be foreclosed; that the casein company seized said property under its mortgage, with certain bags of the value of $165, and stored the same in its warehouse for over a year; that the casein depreciated in quality and value by reason of storage, and the market price of casein fell in the open market, and it asks that the value of said casein and bags at the time of seizure be applied upon the mortgage debt. The defense does not allege enough to show any liability upon the part of the casein company for the loss in value on account of the storage and the decline in market value, but it may be treated as an allegation that the fair value of the casein and bags should be treated as a payment upon the mortgage, and in that view said answer foreshadows a defense. The sixth alleged defense foreshadows that the mortgagee had a chattel mortgage on certain personal property as collateral to the mortgage in question, which property was in possession of the mortgagor when the mortgage became due, and that the mortgagees carelessly and negligently and in disregard of their duties and the rights of the defendant, allowed said property to be taken and sold by the receiver of the Dairy Products Company and the proceeds diverted from the mortgage. There is no allegation as to the time said property was sold, and we cannot say that the mortgagor was injured so long as the proceeds of the property went to its creditors, and it does not appear that the defendant Schmidt at the time had any interest in the property. These allegations, therefore, do not constitute a defense.
We have examined the other alleged defenses set up in the answer, and find that none of them constitute a defense. The interlocutory judgment should be reversed as to all of the alleged defenses except the fifth, and as to that defense it should be affirmed. The demurrer to the fifth defense should be overruled, with the usual permission to withdraw the demurrer or amend pleadings. No costs should be allowed.
All concurred.
Interlocutory judgment reversed as to all of the alleged defenses except the fifth, and as to that defense affirmed. The demurrer to the fifth defense overruled, with the usual permission to withdraw the demurrer or amend pleadings. No costs allowed.