
    SIDENBERG v. ELY.
    
      N. Y. Court of Appeals ;
    
    
      October, 1882.
    Foreclosure of Mortgage.—Mortgage Without Tax Clause.— Money Paid to Discharge Lien.—Assignment of Eight to Recover.—-Tenant f.or Life and in Remainder.—Subrogation. —Pleading Tender.—Evidence of Refusal of Tender. —Amendment of Answer after Trial and before Judgment.—Findings as to Items, and Requests to Find.
    The rule that when the owner of mortgaged property neglects to pay taxes, assessments or liens of a like nature imposed upon it, the mortgagee or a holder of the mortgage by assignment may pay them in order to protect his security, and the amount so paid may be added to and become part of the mortgage debt enforcible upon foreclosure,—applies although there be no tax clause in the mortgage.
    
    
      It is not necessary to the application of this principle that the premises be sold for non-payment of the taxes, &c.
    Where the equity of redemption was in a tenant for life and remainder-men,—Reid, that the holders of the mortgage were not bound to delay such payment on account of the fact that the charges ought to be borne by the life tenant.
    
      It seems, that equity on a proper application could compel the life tenant to bear the burden, even after the tax lien had been discharged by such payment.
    If the holder of the mortgage has refused to receive interest except on condition that the taxes be reimbursed, and if the effect of so doing was to waive a tender of the money due upon the mortgage, the defendants must set up these facts in their answer and allege the tender.
    It is not necessarily error, for the judge to refuse to allow an amendment of the answer in this respect, when first asked for after trial though before judgment.
    Where there is a general finding as to the sum due upon the mortgage in foreclosure, it is not necessarily error to refuse to find the several items constituting the sum.
    Appeal from a judgment of the general term of the court of common pleas for the city and county of New York affirming a special term judgment for foreclosure and sale. This action was brought for the foreclosure of a mortgage made by one William Gr. Ely, deceased, in 1865, to the Etna Insurance Company, to secure the sum of $3,000.
    The mortgage foreclosed contained no “ tax clause.” In 1872 the Etna Insurance Company assigned the mortgage, together with the bond accompanying the same, to the Excelsior Life Insurance Company. This company paid, while it held the mortgage as assignee, certain taxes, assessments and water rates .upon the mortgaged premises, and to redeem the same from tax sales, which together amounted to the sum of $1,640, or thereabouts. In the year 1875 the Excelsior. Life Insurance Company assigned the bond and mortgage, with the whole amount due by reason of the payment for taxes, &c., to the plaintiff. Subsequently the plaintiff paid certain taxes and assessments, amounting to the sum of $925. At the time of the assignment to the plaintiff the sum of $934.78 was due for interest. The defendant, Catherine Ely, is the widow and executrix of the mortgagor, who died leaving a will, by which he devised her an estate for life, with remainder over in fee to the children of his brother James, who are also defendants. Upon the trial the court allowed for the taxes, assessments and water rates paid, by-adding them to the mortgage, which, with the principal and interest found due to the plaintiff, amounted to the sum of $7,365.70.
    
      William Rockwell and J. Loder, for appellants.
    
      William Strauss, for respondent.
    
      
       In addition to the authorities cited in the text, see the following recent cases :—Leland v. Collver, 34 Mich. 418; Stanclift v. Norton, 11 Kan. 218; Sharp v. Barker, Id. 381; Waterson v. Devoe, 18 Id. 223; Sharp v. Thompson, Chicago Leg. N. June 25, 1881.
      It was held in Johnson v. Payne, Neb., Northw. Rep. June, 1881, p. 81, that whatever amount of taxes is so paid, constitutes, together with what is due. upon the mortgage, a single indivisible demand which cannot be split so as to sustain several actions.
      It was held in Williams v. Townsend, 31 N. Y. 411, that the holder of the mortgage, by buying in the premises at a tax sale, did not pay the tax within the meaning of the condition, and that he was entitled to do so and hold adversely to the mortgagor. To the contrary is the recent case of Allison v. Armstrong, Minn., September 19, 1881, 9 Northw. Rep. 806.
      Where a mortgage provides that the mortgagor shall pay the taxes and assessments upon the mortgaged premises, and, in default of so doing, that the mortgagee may discharge the same, and collect them as a part of the mortgage, the failure of the mortgagor to pay the taxes is not such a breach of the condition of the mortgage as will give the mortgagee the right to foreclose, and collect the whole amount secured. Williams v. Townsend (above).
      
    
   Miller, J.

The most material question upon this appeal arises in regard to the rights of the plaintiff to the amount of taxes and assessments paid by him and his assignor, and to collect the same out of the mortgaged property. The rule seems to be established by abundant authority that when the owner of mortgaged property refuses or neglects to pay taxes and assessments or liens of a like nature which are imposed upon the mortgaged premises, the mortgagee has the right to pay the same in order to protect his security, and the amount so paid may be added to and become a part of the mortgage debt, which may be enforced . upon a foreclosure of the mortgage.

Willard, in his work on Equity Jurisprudence, at page 446, lays down the rule that taxes paid may be added to the mortgage debt, and he adds : “ So money paid by the mortgagee to redeem the premises from1 a tax sale, becomes part of the mortgage debt in equity.” He further says, at page 448, “ With regard to the amount to be paid on redeeming, it may be said, that as taxes are a legal charge upon the estate, they may, if necessarily paid by the mortgagee, be added to the mortgage debt.” The same rule is upheld in Thomas on Mortgages, at pages, 86 and 276, and in Jones on Mortgages, at sections 77 and 1134. In the last authority it is laid down that this is so although there be “ no tax clause in the mortgage.”

Numerous other cases in the reports sustain this doctrine (Eagle Fire Ins. Co. v. Pell, 2 Edw. Ch. 631; Burr v. Viedor, 3 Wend. 412; Brevoort v. Randolph, 7 How. 398 ; Faure v. Winans, Hopk Ch. 285 ; Marshal v. Davies, 78 N. Y. 414 ; Robinson v. Ryan, 28 N. Y. 320 ; Williams v. Townsend, 31 Id. 414). These cases are criticised by the counsel for the appellant, and it is claimed they do not sustain the doctrine contended for. While all of them do not entirely cover, yet they tend to the support of the principle that a mortgagee, w7ho, to save his mortgage and protect his security, is under the necessity-of paying the taxes and assessments to prevent the property from from being sold, should be allowed for the same as a part of his mortgage debt upon the foreclosure of his mortgage. Whether the doctrine of tacking, as claimed by the counsel for the appellants, has any application, is not important to consider, if the principle we have stated can be invoked to save the mortgagee from the sacrifice of the property by reason of unpaid taxes or assessments.

In accordance with the authorities already cited, it is not necessary that the premises should be sold prior to the paynient of the taxes or assessments before the mortgagee is authorized to pay the same and add the amount paid by him to his mortgage (see Eagle Fire Ins. Co. v. Pell, and Williams v. Townsend, supra).

The doctrine that neither the plaintiff nor his assignor could have any benefit from the doctrine of subrogation because they voluntarily paid the taxes and were conspirators, cannot be upheld. There is no finding in the case that either of them purchased the mortgage with the intent of paying the taxes and assessments so as to relieve the life estate and cast the burden upon the remaindermen ; they were paid evidently in self-defense and for the purpose of saving their liens as mortgagees. It cannot, therefore, be said that they were volunteers or that they acted in bad faith as to others, or to anyone who was under a legal necessity to make the payment, even if it may be urged that if the taxes had remained a lien the life tenant would have been obliged to pay them to prevent a sale of the property by the State or a return thereof, as that furnishes no reason why the plaintiff had not a perfect and complete right to protect his property from sale for the taxes. There is no rule by which the holders of the mortgage were obliged to delay the payment so as to compel the remaindermen to take action in regard to the same and relieve the property. They should have been vigilant in looking after their rights, and if they had done their duty the taxes would not have accumulated. Having failed to perform a plain duty, if they desired to protect the property against the taxes, after they have permitted the mortgagee to pay the taxes, they are in no position to object that it operates as a hardship upon them. They would have had an undoubted right to make application for the appointment of a receiver to collect the rents and apply them to the payment of the taxes (Cairns v. Chebert, 3 Edw Ch. 313 ; 1 Washburn on Real Property, 97).

In the case we are considering the taxes remained unpaid from the year 1865 to,the year 1872, and then again from 1872 to 1874, all inclusive. For eight years they were allowed to accumulate in the first instance and afterward for three years, and during that period no effort was made to pay them, nor any attempt to compel the owner of the life estate to pay them, or the appropriation of the rents for that purpose. Here was a gross neglect which would have resulted in the sale of the property, and perhaps the destruction of the estate, but for the intervention of the owner of the mortgage.

Again, if the mortgagee or his assignee had the right to pay, within the authorities to which we have referred, to protect his mortgage lien, any equity which might have existed between the life tenant and the remainderman cannot destroy or take away that right. The remainderman’s rights and his interests are subject to the right of the mortgagee, which was a prior and superior right given by the mortgagor. If the mortgagor had survived and the mortgagee had paid the taxes, the amount paid would clearly have been a claim against the mortgagor and the mortgaged premises. The devisees of the mortgagor cannot have any greater or better right than the mortgagor, and they stand in his place. There was-no evidence of any fraud or any conspiracy to impose upon the remaindermen an obligation which belonged to the life tenant to perform. The mortgage was purchased by the plaintiff in good faith, as found by the trial court, which also refused to find to the contrary. The effect of the payment was, although it increased the amount of the mortgage, to cancel and discharge the lien of the taxes for the same amount. The estate of the appellants was bound to pay-the taxes, and the payment by the mortgagee or his assignee did not add to or increase the burden imposed thereby, but in fact it operated to reduce the rate of interest on the amount of such taxes. Equity could not grant relief to the remaindermen, for the reason alone that the lien had been changed from a tax lien to that of a mortgage lien, and we are unable to see why the life tenant could not as well have been charged with the burden of the taxes afterpayment by the mortgagees as he could before such payment, and in this case no reason existed why the interest of the life tenant in the fund, after payment of the mortgage by a sale, should not have been burdened with this charge.

The defendants claim they are entitled to pay up the mortgage and to be subrogated as mortgagees, leaving the plaintiff to his remedy, or if the propel ty be ordered to be sold, that the value be computed, and only that value, less the present value of taxes and interest during the life in expectancy, be applied to the accretions, and that after applying the present value of such taxes and interest, only the remainder of the principal sum be paid out of the sale of the inheritance.

It does not appear that the defendants have applied to be subrogated as mortgagees, or placed themselves in a position which entitled them to an assignment of the mortgage ; nor was the question raised upon the trial as to the application of the interest and taxes. The plaintiff is entitled to the payment of the mortgage out of the real estate, upon a sale thereof, and the question as to the disposition of the surplus, if any there be, does not arise upon this appeal.

It is also insisted that there was error in the refusal of the court to find that the plaintiff notified one of the defendants that he would not receive the last installment of interest due upon the mortgage unless the arrears of taxes were paid. This refusal, wé think, was not error, even if the effect of such notification might be to waive a tender of the money due upon the mortgage. No tender had been pleaded, and therefore it was not available as defense. There is no force in the position of the counsel for the appellants, that they were entitled to the benefit of the alleged tender, although not pleaded, for the reason that payment of interesb was not alleged in the complaint or reply. The defendants had a perfect right to set up in their answer the actual state of the case, even if it was not correctly set forth in the complaint, and to allege that a tender had been made. Having failed to do this, they were not in a position to urge their right to the benefit of a tender upon the trial. Nor do we think that the statement in the reply to the defendant’s answer, as to the amount due, was of a character which entitled the defendants to the benefit of a tender, without having set up the same in their answer.

We also think that after a trial had been had, the findings prepared and ready to be signed by the judge, the defendants were not entitled to have the answer amended to conform to the proof, and no error was committed by the judge in refusing the application for that purpose. There was no such evidence as to the waiver of interest upon the trial'which entitled the defendants to the benefit of a tender, whether pleaded or not.

There is no merit in the position that the court had no Jurisdiction of the new defendants because there was no order of publication as to them, and the point urged is sufficiently answered in the opinion of the general term.

The refusal to find the several sums which constituted the gross sum specified in the finding, was not error. These items are covered by the general finding, and it was not necessary to state them specifically; nor does the request made embrace facts material to the issue and the proper disposition of the case.

The other points urged by the appellant’s counsel have been carefully examined and considered, but none of them present any sufficient ground for a reversal of the judgment.

There being no error, it should be affirmed.

All the judges concurred, except Rapallo and Tbacy, JJ., absent. 
      
       Assessments are not always chargeable like taxes on the life tenant. See Peck v. Sherwood, 56 N. Y. 615; Gillespie v. Brooks, 2 Redf. 350; Gunning v. Carman, 3 Id. 69.
     
      
       For a remedy by action, see Wade v. Malloy, 16 Hun, 226, and see 23 Moak's Eng. 788, and cases cited.
     