
    In the Matter of the Application of The People of the State of New York, by George S. Van Schaick, as Superintendent of Insurance of the State of New York, for an Order to Take Possession of the Property of and Rehabilitate the Bond and Mortgage Guarantee Company. In the Matter of the Application of City Bank Farmers Trust Company, as Successor Trustee under the Will of Frank Little, Deceased, Respecting Bond and Mortgage of Max Reiss, Extended by Frank Accardi, as Obligor. George S. Van Schaick, Superintendent of Insurance of the State of New York, as Rehabilitator of Bond and Mortgage Guarantee Company, in Rehabilitation, and Bond and Mortgage Guarantee Company, Appellants; City Bank Farmers Trust Company, as Successor Trustee, under the Will of Frank Little, Deceased, Respecting Bond and Mortgage of Max Reiss, Extended by Frank Accardi, as Obligor, Respondent.
   Order reversed on the law and the facts, with ten dollars costs and disbursements, and motion denied, with ten dollars costs. Respondent is the holder of a bond and mortgage guaranteed by appellant, Bond and Mortgage Guarantee Company. The owner, who was in default in the payment of interest and taxes, made payments to the mortgage company without specifying how the moneys were to be applied. The mortgage company used the moneys to reimburse itself for interest advanced to respondent. The Special Term held that the moneys should have been applied to the payment of taxes, and directed appellants to account. At the " time the mortgage company used the moneys it was not in default under its contract of guaranty. It paid the respondent the interest due and acted with reasonable promptness and attempted in good faith to compel payment of the taxes. Under the circumstances it was error to make the order appealed from. (Matter of People [Lawyers Title & Guar. Co.], 265 N. Y. 20; Matter of People [N. Y. Title & Mortgage Co.], Id. 30.) Lazansky, P. J., Young, Scudder, Tompkins and Johnston, JJ., concur.  