
    United States Title Guaranty and Indemnity Company and Petee Cook, Plaintiffs, v. Annie Donohue and Others, Defendants. August Schieck, Claimant, Appellant; Lizzie F. Henderson and Mary L. McDevitt, Claimants, Respondents.
    First Department,
    June 15, 1906.
    Foreclosure — surplus proceedings—when lien of second mortgage not extinguished by judgment of foreclosure subsequently reversed — receipt, when not conclusive.
    On a reference to determine the rights of claimants to- a-surplus left after the foreclosure of a first mortgage on real estate, it was shown that one claimant had'owned a second mortgage on the premises, and .foreclosed the same and signed a receipt for the amount due,-but that subsequently said judgment of / foreclosure was reversed, and in another action brought by the owner of the equity of redemption it was decreed that the deed given on said foreclosure ■ Was null and void.
    Held, that said reversal and cancellation of the deed restored the lien of the second mortgage, and that the mortgagee was entitled to be paid out of the surplus arising on the foreclosure of the first mortgage;
    That the receipt given by said mortgagee was not conclusive as to the payment of his- mortgage, being-explained by said judgment of reversal introduced in evidence. v
    Appeal by the claimant, August Schieck, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 5th day of July, 1905, confirming the report of a referee appointed to determine the title to certain- surplus moneys.
    
      August P. Wagener, for the appellant.
    
      J. Wilson Bryant, for the respondents.
   Ingraham, J.:

. This action wasbrought-to foreclose a- mortgage upon property in the city of Hew York, in which a judgment'of foreclosure and sale was entered'on Hovember 26, 1904, and-subsequently the property was sold and- conveyed by the referee. After the payment of the amount due on the mortgage there was a surplus of $5,238.34. .To this surplus there were three claimants. The appellant Schieck claimed $2,000 and interest under a mortgage executed by the owner of the equity of redemption on April 6, 1900, which was claimed to be a second mortgage upon the premises next to the mortgage foreclosed in this action. The respondent Henderson claimed $1,100 , with interest from' October 25, 1900, by virtue of a mortgage made by the owner of the equity of redemption, and Mary L. McDevitt claimed as the assignee of the owner of the equity of redemption. It was referred to a referee to ascertain and report to the court the amount due to those who had liens on the mortgaged premises at the time of the sale, and to ascertain the priorities of the several liens.

The referee reported that the respondent Henderson be paid the amount of the mortgage and that the balance of the surplus might be paid to respondent McDevitt. He also reported that the appellant Schieck was paid the amount of his mortgage of $2,000. This was based upon a receipt executed by Schieck to a referee in an action to foreclose his mortgage, in which Schieck was plaintiff and-Donohue, the owner of the equity óf redemption, was defendant. . This report was excepted to, but-was confirmed by the court.

Upon the proceedings before the referee, counsel for the appellant offered in evidence a mortgage made by Annie Donohue, the owner of the equity of redemption, to August Schieck, dated April 6, 1900, and recorded on the 18tli day of May, 1900, to secure the payment of $2,000 and the bond to secure which tiiat mortgage was given. It was then admitted that no interest had been paid on the bond and mortgage of Schieclc’s. There was then introduced in evidence a judgment roll in an action in the Supreme Court in which Scliieclc was plaintiff against Annie Donohue, the owner of the equity of redemption, filed June 23, 1901, directing a foreclosure of this mortgage, and it was stipulated that this judgment had not been paid. This judgment was to foreclose this mortgage for $2,000. Judgment was entered directing a foreclosure and sale by a referee. Upon this proof the appellant Scliieclc, rested.

The facts upon which the referee had found that the appellant’s mortgage had been paid are as follows : The appellant commenced an action against the owner of the equity of redemption to foreclose this $2,000 mortgage; he obtained a judgment in that action,"and the property was sold by the referee, and was purchased at that sale by the appellant; the appellant thereupon assigned his bid to one Toensing, who took á conveyance' óf the property fro til the'referee, and as part consideration for that conveyance to Toensing, the plaintiff "in that action (the-appellant here) signed ia receipt for'the amount due on the mortgage. Subsequently the judgment in that action was reversed, and by a judgment entered in an action wherein the owner of the equity óf redemption was plaintiff, it was adjudged that the "referee's deed was void, and ,the owner of the equity of redemption was awarded possession of the property and recovered' as against .this appellant and the purchaser the mesne profits. . It was there found and adjudged in that action that the defendant"Toensing took title to the property in question and held it merely as.a dummy of Schieck, the mortgagee; and the plaintiff in that action was awarded possession of the property upon the ground that Schieck was the real purchaser, and the judgment of foreclosure and sale under which thé sale was made was declared null and-void, and the deed given by the referee under said judgment was'dii'ected to be given up, canceled and discharged of record as null and void. We, therefore, have a concededly valid mortgage in favor of Schieck. He attempted to foreclose that mortgage, and obtained a judgment under which he became the purchaser. As a part of that proceeding he gave a receipt to the referee for the amount due upon that mortgage. The judgment under which the property was sold was reversed' and subsequently in an - action brought by the owner of the equity of redemption it was adjudged that Schieck waé the purchaser at that sale,, and that judgment having been reversed, the deed by the referee was null and void. The' judgment in the action in which the receipt was given and the deed executed in pursuance of its provisions were set aside, and the plain-tiff awarded possession of the property ; and yet, a receipt given in that action, which was .in substance a receipt for the payment of the mortgage by a conveyance of the property, has been held to be a payment of the mortage,-although the conveyance of the property has been declared void and set aside, and the judgment under vyhich the conveyance was made has also been declared void and set aside. By the reversal of the judgment1 of1 foreclosure and the recovery of the property by the owner of the equity of redemption and the annulment of the judgment of. foreclosure and the deed of the referee, the whole foundation for the claim that the mortgage was satisfied or discharged in that proceeding was taken away; and it is quite clear that that mortgage remained an existing incumbrance upon the property. The referee seems to have held that this receipt was controlling, because the appellant personally did not attend to explain it, but it was fully explained by the orders and judgments in the action between the parties -which were introduced in evidence. The existence of this mortgage was also established by the judgment entered on the 23d day of June, 1904, which directed a foreclosure of this mortgage. It was certainly an adjudication that the mortgage was in existence and unpaid at the date of the entry of that judgment, arid the parties stipulated that that judgment had not been paid. It seems to me clear that the record conclusively established the fact that the mortgage for $2,000 had not been paid, and the appellant was entitled to be paid the amount of that mortgage and interest.

It follows that the order appealed from must be reversed, the exceptions to the report by the appellant sustained and the final order modified by directing that the appellant Schieck be first paid the amount of his mortgage and interest to the date of payment; that the respondent Henderson be then paid the amount due on her mortgage and interest, and the balance of the surplus money be paid to the respondent McDevitt, with ten dollars costs and disbursements of this appeal to the appellant, payable out of the fund. .

O’Brien, P. J., McLaughlin, Clarke and Houghton, JJ., concurred.

Order reversed, appellant’s exceptions. to report sustained, and final order modified as directed in opinion, with ten dollars costs and disbursements of this appeal payable out of the fund. Settle order on notice.  