
    Alfred F. Bertin, Plaintiff, v. Caroline Falk and Others, Impleaded with John M. Fallon, Appellant, and Charles M. Preston, as Receiver, etc., of the New York Building-Loan Banking Company, Respondent.
    
      Mortgage held by a building arid loan Association —when a. surplus Arising on the foreclosure of a prior moi;tgage on the sarnie premises should be paid to its receiver ■ ' subject to the future adjustment of equities —when the mortgagor. 'ip not in default — he is relieved from monthly payments by the ■appointment of a receiver of the corporation. ...... ' ,
    November 7, 1900, a building and loan association, being the owner of certain . premises which were subject to a mortgage, entered into an agreement with John M. Fallón .and Maria T. Hallinan, who desired to purchase the. property,. ‘by which such parties subscribed for a number of the -shares of the capital stock of the association and paid on account of the premium and contract price §430. The capital stock so subscribed for was assigned by Fallon and Hallinan to the association as collateral security for their agreement to pay, “for a term coextensive with the term required -to mature or fully pay the aforesaid, shares of stock, which term it is estimated will be about twelve years, at the monthly rental of Thirty-four" and 35 /100 dollars, to be paid on the first of each and every month in advance during said term.” The agreement-further provided that if Fallon and Hallinan performed all the covenants contained in the agreement and made the payments as therein provided they were to have, in the meantime, "the quiet and peaceable possession of the premises, and at the expiration of the term the association was to give to them a good and sufficient, deed. It also provided that “ if any rent shall be due and unpaid for the period of sixty days or if default shall be made by the parties of the second part as to any of the covenants herein contained,” then the association might re-enter said premises and repossess the same.
    Fallon, who had acquired Hallinan’s interest in the agreement, made the monthly payments prescribed therein down to July 6, 1903. September 12,1903, a temporary receiver of the association was appointed and his appointment was made permanent February 34, 1904. Thereafter the premises were sold in an action brought to foreclose the mortgage above referred to, from which'sale a surplus resulted.
    In a proceeding instituted to determine the respective rights of Fallon and the receiver of the association to such surplus, it was '
    
      Held, that, as by the terms of the agreement, the association could not re-enter upon the premises until the monthly payments had remained unpaid “for the period of sixty days,” Fallon was not in default at the time the temporary receiver was appointed;
    That the appointment of the temporary receiver relieved.Fallon from any further obligation to make the prescribed monthly payments;
    That, consequently, Fallon’s rights under the contract were still in force;
    That the whole amount of the surplus should, however, be presently paid over to the receiver, for the reason that Fallon’s equities therein could not be determined until the assets of the association had been marshaled and its liabilities ascertained;
    That when this had been done, the rights of the respective parties, including any claim by Fallon because of improvements he had put upon the premises, - would be determined and settled according to their equities.
    Appeal by the defendant, John M. Fallon, from an order of the - Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the -15th day of August, 1904, confirming the report of a referee in surplus money proceedings upon the foreclosure of a mortgage.
    
      Emanuel Van Dernoot, for the appellant.
    
      Charles W. Dayton, Jr., for the respondent.
   McLaughlin, J.:

. The New York Building-Loan. Banking Company, a domestic corporation, on the 7th of November, 1900, was' the owner of certain real estate in the city of New York, and the appellant Fallon and one Maria T. Hallinan, desiring to purchase the same, entered into an agreement with -the association for the accomplishment of that purpose, and by which they subscribed for forty-five and eight-tenths shares of the capital stock of the association , and paid to it, on -account of the premium and contract price, $43Q. This stock was assigned to the association- as collateral security for their agreement to pay, “ for a' term coextensive with the term required to mature-or fully pay the aforesaid shares of stock, which term it is estimated will be about twelve years, at-the monthly rental of Thirty-four and 35/100 dollars, to be paid on the first of each and every month in advance during said term.” The agreement further provided that if Fallon and Hallinan performed all the covenants contained in .the agreement and made the payments as therein provided they were to have, in the meantime, the quiet and peaceable possession of the premises, and at the expiration of the term the association was to" give to them, a good and sufficient deed. It also provided that “ if any rent shall be due and unpaid for the period of sixty days or if default shall be made by the parties of the second part as to any of the covenants herein contained,” then the association might re-enter said premises ■ and repossess the same.- The'premises, at the time the agreement .was' made, were subject to. a mortgage of $3,000. On the 9th of August, 1902, in consideration of the payment of $50, the monthly payments were reduced to- $33.94. On the 17th- of September, 1902, .Hallinan transferred her interest to Fallon and he thereafter ma.de the monthly payments prescribed down to the 6th of July, 1903. On the 12th of September, 1-903, the respondent Preston was. appointed temporary receiver of the association and his appointment made permanent on the 24th of February, 1904. Thereafter the premises were sold in an' action brought to foreclose the mortgage above referred ' to and on the sale a surplus was realized over and above the amount due on the mortgage, with interest and costs, of $8941^7. This-surplus was .claimed by tlie receiver and. also by’Fallon, and a reference was ordered to determine the rights of the respective parties thereto. The referee reported that Fallon having made default in his payments thereby relinquished his right to damages against the association for breach of contract on its part to convey; that the receiver upon his appointment became the owner of the equity of redemption in the property foreclosed and by reason thereof was entitled to the whole of the surplus money, and that the capital stock of the company deposited by Fallon as security should remain “for final adjustment by the receiver.” An order was subsequently made confirming in all respects the report of the referee and Fallon has appealed.

I am of the opinion that the order appealed from should be affirmed, but only so .far as it directs the payment of the whole surplus to the receiver. At the time the receiver was appointed Fallon was not in default. He had paid the monthly payments agreed to be paid to the sixth of July. He had not paid what was due on the first of August or on the first of September, but the agreement expressly provides that the association could not re-enter until the monthly payments had remained unpaid “ for the period of sixty days.” He at most, therefore, was in default only forty-two days. His rights under the contract had not then been terminated, nor had his failure to pay for that period deprived him, upon complying with its terms, of the right to damages for a breach of it. Hor was there any obligation upon his part to make further payment after the receiver was appointed. (Rochester Savings Bank v. Whitmore, 25 App Div. 491, and cases cited.) The association was insolvent and by reason thereof, and the appointment of the receiver, had become incapable of proceeding further-under the contract, and the foreclosure of the mortgage resulting in a sale, had put it beyond the power of the receiver, even if he would have had a right to do so, to give the deed which the association had contracted to give. This relieved Fallon from further performance (Hall v. Stowell, 75 App Div. 21), and the interest of both parties in the subject-matter of the contract was thereafter to be determined according to their respective equities. These equities, however, cannot be determined until all of the assets of the association have been marshaled apd its liabilities ascertained. It is clear, upon the facts presented, that the receiver is not entitled except for the purpose of administration to' the whole surplus and it is equally .clear that the interest which Fallon - has therein carinot, at this time, be ascertained. At the hearing before the referee Fallon attempted to prove what improvements he had put. upon the premises." His efforts, however, were ineffectual, the referee excluding all evidence bearing on that subject. The evidence was properly excluded inasmuch as the referee could riot determine what allowance, if' any, should be made by reason of them. This, however, will be a proper subject for consideration on á final adjustment of the affairs tif the association when .the rights of the respective parties are determined and settled according to their equities:

The order' appealed from, therefore, should be modified as indicated in this opinion, and as thus modified affirmed, without costs to either party. -

Yak Brunt, P. J., O’Brien, Hatch and ' Lauglhin, JJ., concurred. . ' . .

Order modified as directed in opinion, and as modified affirmed, without -costs. - . ■ ■  