
    Charles M. Preston, as Receiver of the New York Building Loan Banking Company, Appellant, v. Franklin C. Albee and Kate A. Albee, His Wife, Respondents, Impleaded with Lemuel J. Arthur and Others, Defendants. (Action No. 2.)
    First Department,
    June 7, 1907.
    Mortgage — receiver of building-loan association may foreclose mortgages given by borrowing member's — evidence — instruments when executed and acknowledged may be put in evidence without further proof. ' ■
    Upon the insolvency of a building-loan association', further performance of the contract with borrowing members becomes impossible, and the receiver of the association may forthwith foreclose the mortgages and adjust the amount due upon an equitable basis.
    The execution of a bond and mortgage which have been duly executed and acknowledged may be shown by putting the instruments in- evidence without further proof.
    
      The recording of a mortgage is presumptive evidence of its delivery.
    In an action by the receiver of a building-loan- association to foreclose a mortgage given by a borrowing member possession of the bond and mortgage by ' the receiver is presumptive evidence of their delivery by the mortgagor.
    In such action it is error to exclude a mortgage which has been executed, acknowledged and recorded, or the bond whenduly executed and acknowledged.
    Appeal by the. plaintiff, Charles M. Preston, -as receiver, etc,, from a judgment-of the Supreme Court in favor of the defendants Albee, entered in the office of thbyclerlc of the county of New York on the 18th -day of December, Í906, upon the report of a referee.
    
      Charles W. Dayton, Jr., for the appellant.
    
      Samuel R. Taylor of counsel (C.R. & G. F. Allison, attorneys], for the respondents.
   Clarke, J.:

This action was brought by the receiver of the New York Building-Loan Banking Company to foreclose a mortgage given to /the company by a borrowing- member thereof. The complaint presents a state of facts similar to that disclosed and discussed in the case of Preston v. Lamano (46 Misc. Rep. 304), where Mr. Justice Gaynoe laid down the rule, governing the disposition of cases growing out of the failure and dissolution of the New York Building-Loan' Banking Company in actions brought by the receiver to foreclose mortgages given by borrowing members of the company. . That case w-as followed by the Appellate Division of-the second department in Preston v. Willich (110 App. Div. 921), Preston v. Rockey (Id. 920) and Preston v. Reinhart (109 id. 781). The Rockey case, was affirmed in 185 New York, 186, and the Reinhart case in the same volume (p. 555).

' The general rule thus established is that upon 1 the insolvency of a'building and loan association, further performance, of the contract, with borrowing, members being impossible^ the receiver of the association may forthwith - foreclose the mortgages and adjust the amount due upon an equitable1 basis. As said in the Reinhart Case (supra), “ The contract as thus expressed was carried out by both parties up to the 1st of September, 1903, when the defendants neglected to make the payments then due, and on the thirteenth day of September of the same year the corporation ceased to manage its own business, the temporary receiver going into possession on the following day, and the court below has held, following the decision in Preston v. Lamano, (46 Misc. Rep. 304), that the defendants must settle according to the letter of their contract as of the 13th day of September, 1903.” ■

' The detailed rules for the adjustment of (hese equities, as set up in the Lmna/no case, are thus established as the rule of law in this State, and can readily be applied to each case.

Upon the hearing before the referee there was received in evidence a certifiéd copy of the order appointing the receiver, a certified copy of the judgment of dissolution, a printed copy ef the articles of incorporation of the ¡N ew York Building-Loan Banking Company, the bond executed and acknowledged, the mortgage executed, acknowledged and recorded, a power of attorney executed and acknowledged, authorizing the company to collect the rents of the premises referred to in the complaint, an agreement between the company and the defendant Arthur, executed and acknowledged, of employment of the said defendant to collect the rents.

One Kyle, a clerk in the employ of the receiver, who had formerly been employed by- the company as clerk and bookkeeper, .was duly sworn, and having duly qualified as to his knowledge of the signatures of defendants Arthur and his wife Mary, identified upon a paper taken from the files . of the company an application signed by the two defendants for 576 shares of the company, also the certificates of stock for said shares bearing a blank assignment executed by the defendant Arthur. The witness then testified that the amount of the .mortgage" in suit, $57,600, was made up of the prior underlying mortgage of $42,000, of $11,100 premium and $4,500 advance in cash. He then testified, in strict accordance with the rule established in the Lamano Case (supra), that the arrears of interest on this .mortgage from March 1,1903, to September 13, 1903, amounted to $1,853.77 ; the arrears of interest on the prior mortgage of $42,000 from September 13, 1903, to June 1, 1906, paid by the receiver, was $5,129.25 ; the arrears of interest qn $4,500, the amount advanced by the company,. from- September 13, 1903, to June-1, 1906, amounted to $732.75 ■; the arrears of repairs, taxes and insurance, with interest to June. 1, 1906, aínouhted to-$6,310.17; the arrears of dues to September 13, 1903, amounted, to $3,312; the arrears of fines amounted to $86.40. ■ These items added to the cash advanced of $4,500 make a total of $21,924.34.'' He -then testified that the' net rent's received from September 13, 1903, to June 1,1906, were $8,955.71, which being credited to the amount due, left a balance' of $12,968.63. The record then proceeds :. “ Q. Has this amount of $12,968.63, to which you testified, ever been paid ? A. Ho, sir. Mr. Taylor: I move to dismiss the complaint in Action Ho. 2 on the. ground that no cause of action has been made out. The Referee: Motion granted. Mr. Dayton: I except.” Thereupon •the referee made a report, upon which the judgment- appealed from was entered; in which he found and decided as facts as follows :.

1. That the plaintiff failed to establish the existence, execution or delivery of the mortgage mentioned in the complaint in this action, or of any mortgage.” The mortgage was admitted in evidence. Having been duly executed and" acknowledged by sections" 935 and 937 of the Code of Civil Procedure no further proof thereof was necessary... (Albany County Savings Bank. v. McCarty, 149 N. Y. 71.) The recording of the mortgage was presumptive evidence of its delivery. (Ten Eyck v. Whitbeck, 156 N. Y. 341.) The possession of the bond and mortgage by the receiver was presumptive evidence of their delivery. (Mercantile Deposit Co. v. Huntington, 89 Hun, 465.)
2. That the plaintiff failed to make proof of the existence, exécution. or delivery of tlie • bond mentioned and described in the complaint in this action, of of any bond, or obligation for the payment of money.” This .finding is without evidence to support it by the foregoing authorities. ' .
. 3) That the plaintiff failed to prove any indebtedness or default on the part of any defendant in this action.” The evidence to the .contrary has been hereinbefore set forth. .
“4. That the .plaintiff' duly established by proof the appointment and qualification' of Charles M. Preston as receiver,” etc., and as a conclusion of law that the action should be dismissed.

' As the findings of fact are entirely without proof to support them, a question of law is presented and the exception thereto is good. (Halpin v. Phenix Ins. Co., 118 N. Y. 165.)

The errors committed are too obvious to require comment, the judgment should be set aside and a new trial ordered before another referee, with costs to the appellant to abide the event.

Ingraham, Laughlin, Scott and Lambert, JJ., concurred.

Judgment reversed and new trial ordered before another referee, with costs to appellant to abide event. Settle order on notice.  