
    Mary F. White, as Committee of the Person and Property of Milton W. Hazelton, an Incompetent, Respondent, v. Joseph H. Glennon, Appellant.
    Third Department,
    January 5, 1916.
    Mortgage — foreclosure — counterclaim — when discontinuance improper — parties.
    Where, in an action for the foreclosure of a purchase-money mortgage, the answer sets up three counterclaims, the first for damages by being deprived of possession and of the right to receive the rents and profits by reason of a lease executed by the mortgagor, subsequent to a deed to the mortgagee containing covenants of warranty and of quiet enjoyment; second, for costs and disbursements in actions to foreclose prior mortgages, which amount the mortgagor had agreed to pay, and had given the mortgagee the right to set off; and third,, for expenses incurred in procuring the cancellation of a lease which the mortgagor had agreed to pay on his failure to secure such cancellation, an order of discontinuance should not be granted.
    In such a case the persons necessary to a complete determination of the matters in controversy should be brought in as parties. •
    
      Appeal by the defendant, Joseph H. Glennon, from an order of the Supreme Court, made at the Broome Special Term and entered in the office of the clerk of the county of Otsego on the 13th day of September, 1915, discontinuing this action and vacating the lis pendens heretofore filed upon payment by the plaintiff to the defendant of the costs of the action.
    
      Edson A. Hayward, for the appellant.
    
      Thompson & Van Woert [«/. F. Thompson of counsel], for the respondent.
   Lyon, J.:

This action was brought for the foreclosure of a purchase-money mortgage given by the defendant to Milton W. Hazelton for $6,709.85 covering real property situated in the city of Oneonta, M". T. The answer set up three counterclaims aggregating about $13,000. As the first counterclaim the defendant alleges that said Hazelton, in September, 1913, and prior to being adjudged incompetent, conveyed to the defendant the mortgaged property by deed containing covenants of warranty and of quiet enjoyment, “ Subject to such rights as one Lloyd Spencer may have, if any, under a lease made by said Hazel-ton to said Spencer bearing date of October 23,1909, and expiring December 1, 1914,” and also subject to three mortgages aggregating $11,300; that thereafter and in December, 1911, said Hazelton leased the said premises, reserving the top floor, to said Spencer for the term of fifteen years, for the yearly rental of $1,700; and that by reason of said leasings the defendant has not been permitted to occupy and enjoy said premises or to receive the rents and profits thereof, in accordance with said covenants, to his damage in the sum of at least $10,000.

As the second counterclaim the defendant alleges that prior to the time of being adjudged to be incompetent, said Hazel-ton in writing agreed that if the defendant or the holder of said three prior mortgages should deem it advantageous to foreclose said mortgages for the purpose of securing a perfect title, or to relieve the property from the incumbrances of certain existing leases executed by said Hazelton, said Hazel-ton would hold the defendant or the holder of said mortgages

harmless from the payment of costs, expenses and disbursements incurred in actions to foreclose said prior mortgages; and that any person to whom he might be so indebted, or the defendant, might have the right to offset such costs, expenses and disbursements against any sum which might become due upon said purchase-money mortgage sought to be foreclosed herein; that the defendant deeming the foreclosure of said mortgages to be advantageous, caused them to be assigned and foreclosure proceedings to be instituted in which the defendant incurred expenses to the amount of $1,500, no part of which has been repaid, and which sum he desires to offset against the claim made by the plaintiff in this action. Such foreclosure proceedings resulted in the direction by this court that said mortgages be assigned by the defendant upon receiving the amount thereof with certain costs. (Glennon v. Spencer, 163 App. Div. 820.)

As the third counterclaim the defendant alleges that it was agreed between Hazelton and the defendant at the time of the purchase of the property by. the defendant that the defendant should make an effort to have the fifteen-year lease canceled, and that in the event of his failure to do so, the defendant should be repaid all his expenses incurred in such effort, together with all sums of money paid by the defendant on account of the purchase price, and in addition thereto the sum of $2,000 as liquidated damages; and that the defendant expended on such effort $1,500, no part of which or of the liquidated damages had been repaid him, but constitute a just and proper offset against the plaintiff’s demand.

It appears by an affidavit of defendant’s attorney, verified September 6, 1915, and submitted by the defendant, that both the plaintiff and said Hazelton stated to the affiant that they lived in Oalifornia, and wanted to go back there, and that said Hazelton has no property except the mortgage being foreclosed, and some investment in a Oalifornia real estate company, which probably would not produce anything. While it is claimed by the plaintiff that she and said Hazelton are residents of the city of Oneonta, said Hazelton, in his affidavit of December 9, 1913, states his residence to be Los Angeles, Oal., and his age as eighty-seven years.

We think the order of discontinuance should not have been granted, and further that it is in the interest of both the plaintiff and the defendant that the persons necessary to a complete determination of the matters in controversy be brought in as parties to this action to the end that a complete determination of all the issues may be had.

The order should be reversed, and Us pendens restored, with ten dollars costs and disbursements to the appellant.

All concurred; Smith, P. J., not being a member of the court at the time of the decision; Cochrane, J., not sitting.

Order reversed, and Us pendens restored, with ten dollars costs and disbursements to appellant.  