Summary
In Horizon Bank v Sigrist (179 A.D.2d 1020), cited by Dime, a party purchased property subject to an existing mortgage and built improvements on it without first obtaining a release from the mortgage lien.
Summary of this case from Lincoln Savings Bank, FSB v. Amerasian Realty Corp.Opinion
January 31, 1992
Appeal from the Supreme Court, Seneca County, Falvey, J.; DePasquale, J.
Present — Denman, P.J., Callahan, Boomer, Lawton and Davis, JJ.
Order unanimously reversed on the law without costs and motion granted. Memorandum: The lien of the mortgage held by plaintiff extends to the house constructed by defendant Rossignol upon the mortgaged premises after the execution of the mortgage and is superior to any rights of defendant. Defendant entered into a contract of sale with the owner of the mortgaged premises for the purchase of a building lot, subject to the approval of the bankruptcy court. Defendant built a house thereon without obtaining approval of the court and without obtaining a release of the building lot from the lien of the mortgage. It is axiomatic that a mortgagee of real property is entitled to have his lien respected, not only concerning all that was realty when the mortgage was executed, but also concerning all accession to the realty. The same rules apply to a vendee in possession under an executory contract (see, McFadden v. Allen, 134 N.Y. 489). Indeed, the same rules apply even to strangers to the mortgaged land who erect buildings thereon (Mitchell v. Bridgman, 71 Minn. 360, 74 N.W. 142).
Supreme Court denied plaintiff's motion for summary judgment and granted to defendant, who constructed the house, an equitable lien on the property to the extent of the value of the house. The court cited no authority for granting equitable relief under the circumstances. The discretion possessed by a court of equity must not be exercised arbitrarily, but rather in accordance with the fixed principles and precedent of equity jurisprudence (55 N.Y. Jur 2d, Equity, § 6; Morris v. Morris, 138 Misc. 682, affd 234 App. Div. 187, affd 260 N.Y. 650). There is no principle of equity jurisprudence that would aid defendant. The difficulty defendant finds himself in is self-imposed. The premature construction "was the result of his own negligence and carelessness, and the fault of no one else" (Mitchell v. Bridgman, supra, 71 Minn, at 361, 74 NW, at 142). Defendant erected the house at his own peril. The recorded mortgage gave him full notice "that whatever permanent structures, or even fixtures, he put upon the land * * * would pass to the mortgagee unless the premises were redeemed" (Preston v. Briggs, 16 Vt. 124, 130). "Judged by the record, this seems to be a hard case, and that there ought to be some relief for the defendant; but upon the facts * * * and the settled rules of law, there is none" (Mitchell v. Bridgman, supra, 71 Minn, at 362, 74 NW, at 142). "`While it may be a hardship to the [defendant] to deny his right [to a lien on the property superior to the lien of the mortgagee], we cannot see our way clear to come to any other conclusion consistent with the recognized rules of law'" (Kinnear v. Scenic Rys. Co., 223 Pa. 390, 401, 72 A 808, 811).