
    Charles F. Goodwin, Resp’t, v. Josephine Thompson, App’lt.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed July 6, 1895.)
    
    1. Mortgage — Estoppel.
    The rule that, where a mortgage is taken subject to a prior mortgage, the junior mortgage is estopped from attacking the prior one for invalidity, does not necessarily apply to defeat a defense founded in fraud against a party not an assignee in good faith of the prior mortgage.
    3. Pleading — Sham.
    The granting of a motion to strike out an answer, or a portion thereof, as sham is justified only when the pleading is sham, in the sense of being a mere pretense set up in bad faith, without color of fact.
    8. Same.
    When a party sets up matters by allegations constituting, if true, a substantial defense, he cannot he compelled to submit to have the issues, or the truth of the matters so alleged, determined upon motion by affidavits, but is entitled to have them tried in the usual manner.
    Appeal from an order, granting a motion to strike out certain paragraphs of the answer as sham and the residue of -the answer as frivolous and for judgment.
    
      C. J. Browning, for app’lt; S. D. Bentley, for resp’t.
   Bradley, J.

— The action was brought to foreclose a mortgage, made by Ella H. Clements to Charles O. Peckens, of date May 1, 1894, on certain premises situated on the south side of Raymond street, in the city of Rochester, to secure the payment of $1,700. The mortgage with the bond was assigned by Peckens to the plaintiff August 10, 1894. The complaint alleges that the defendant Thompson, has or claims to have some interest in or claim upon the premises, which accrued subsequently to the lien of the mortgage. The defendant by her answer alleges that, on or about July 10,1894, she made to Ella H. Clements a deed of certain premises situate on the west side of Saratoga avenue, in the city of Rochester; and, as security for the payment of $1,000 of the purchase money, she received from the grantee her bond, with a mortgage on the Raymond street property, being then advised that ■there was a prior mortgage of $1,700 on the premises; that the negotiation which resulted in the sale and conveyance by the defendant of her premises to Clements, and the taking of the mortgage, was had with her by Charles O. Peckens, the plaintiff’s assignor of the mortgage in suit. And the defendant alleged that ■she was induced, by the fraudulent representations of Peckens, to make the deed to, and take the mortgage from, Clements, and that the transaction on the part of Peckens in procuring the defendant to part with her title and take such security was a scheme, within the purpose of a conspiracy, between Peckens, one Sears, Mary Wheeler, Ella H. Clements, and others, to perpetuate frauds to the prejudice of others. Apparently, and in practical effect, the mortgage, as then understood by the defendant, was made upon the equity of redemption of Clements in the Raymond street property, and subject only to the $1,700 mortgage. But the defendant charges that she was induced to make the conveyance and take the mortgage by the false and fraudulent representations of Peckens, that Clements, who was and became liable to pay the moneys secured by the mortgages, was pecuniarly responsible, and worth $80,000 and upwards, and that the value of the Raymond street property was upwards of $4,000; but that, in fact, Clements was utterly irresponsible, to the knowledge of Peckens, and that she was made the depositary of the title of both properties, for the purpose of giving the mortgages, in aid of, and to consummate a scheme for the advantage of those persons, so united iu purpose to defraud others, including the defendant. And the defendant, also, in substance, charges that the $1,700 mortgage in question, on the Raymond street property, was not given or intended to secure any valid debt, but was given and intended as a fraudulent cover to enable Peckens and others to carry out the fraudulent scheme mentioned in her answer; and that it, with another mortgage thereon, of which she was not advised, of $550, prior to that given to her, was greater in amount than the value of the property.

Those facts do not concern the plaintiff, provided he is a bona fide purchaser of the bond and mortgage for a valuable consideration. Moore v. Bank, 55 N. Y. 41; Simpson v. Del Hoyo, 94 id. 189. A different question would arise in an action by an assignee of the defendant’s mortgage. Hill v. Hoole, 116 N. Y. 299; 26 St. Rep. 657- The defendant, by the seventh and eighth paragraphs of her answer, upon information and belief alleges, in substance, that, pursuant to such conspiracy, and with such fraudulent purpose, those conspirators caused Peckens to made a “nominal assignment” of the bond and mortgage to the plaintiff, that it might be foreclosed by an outside party, and thus defeat the rights which the defendant might otherwise have in the Raymond street property as against the mortgage; that the plaintiff is not the real party in interest, and that the real persons in interest are “the said Charles O. Peckens, Mary Wheeler, and others of the said conspirators.” Those two paragraphs, seven and eight, were stricken out as sham; upon motion founded upon affidavits, by which, among other facts stated in them, it is made to appear that the plaintiff purchased the bond and mortgage in good faith, and paid the full amount thereof for them. The relief given by the order appealed from may, in a proper case, be granted on motion. Code Civ. Proc. §§ 537, 538.

The matters of the answer, exclusive of the allegations in the seventh and eighth paragraphs, constitute no defense, as against the plaintiff. But with those of the latter, to the effect that he is' not an assignee in good faith of the bond and mortgage, there is sufficient alleged to present a defense; and, if the alleged fraud, including the alleged fact that they were without valid consideration, is established, the burden of proving that the plaintiff is a bonafidk assignee for value will be cast upon him. Simpson v. De Holyo, 94 N. Y. 288; Starin v. Kelly, 88 id. 418.

‘ The want of ample consideration for that bond and mortgage is an essential element in the alleged defense. The general proposition that when a mortgage is taken subject to a prior one the junior mortgage is estopped from attacking the prior one for invalidity is not necessarily applicable to defeat the defense founded in fraud, as against a party not an assignee in good faith of the prior mortgage. The question, therefore, is whether those paragraphs 7 and 8, for the purposes of relief, upon the motion founded upon affidavits, were properly stricken out as sham. In the legal sense, a defense is sham when “it is so clearly false in fact as that it does not in reality involve any matter of substantial litigation.” People v. McCumber, 18 N. Y. 320. The allegations in those two paragraphs alone constitute no defense. The effect of them as such is dependent upon the matter of fraud charged in other portions of the answer, and both are essential to the alleged defense. In view of the fact that the. defendant was advised of the prior mortgage in suit at the time she took hers upon the property, and of the facts stated in the affidavits upon which the motion was made, it is difficult to see that the defendant can reasonably entertain any hopes of making a defense to the action. But in recognition of the rule applicable to such motions, it is not seen that the motion can well be supported.

When a party sets up matters by allegations constituting, if true, a substantial defense, he cannot be compelled to submit to have the issues or the truth of the matters so alleged determined upon motion by affidavits. The granting such motion is justified onty when the pleading is sham, and therefore false, in the sense of being a mere pretense set up in bad faith, without color of fact.. Kiefer v. Thomass, 6 Abb. Pr. (N. S.) 42; Garnsworth v. Halstead, 18 Civ. Proc. 227; Webb v. Foster, 45 N. Y. Supr. Ct. 311. It does not necessarily appear that the defendant may not have had some information and belief of the matters alleged in the answer. It is verified, and by affidavit she states, that the answer was interposed in good faith; and, although it appears by the facts as staled in the affidavits on the part of the plaintiff very specifically, with circumstances in detail of the transaction of the purchase, that the plaintiff is assignee in good faith, and for a valuable and ample consideration, the defendant cannot be required to submit to the disposition of the issues upon adffidavits, but is entitled to have them tried in the usual manner. The adoption of any less stringent rule in its application to the present case could be treated as holding that the determination of the question of the truth or falsity of affirmative matter of defense by affidavits upon motion is subject to the discretion of the court, and the result made dependent upon the preponderance of fact in that manner presented upon the motion. It is unnecessary to consider the question relating to the service of the amended answer, as there is no essential difference between it and the original one.

The otder should be reversed, and the motion denied.

All concur.  