
    Cyrus B. Elsworth, Plaintiff, v. Edward J. Woolsey and Others, Defendants. George B. Lauck, Appellant; George W. Cotterill, Respondent.
    
      Surplus moneys on mortgage foreclosure — rights as between the holder of a sheriff’s certificate of sale and, a second mortgagee — determined as of the date of the foreclosure sale.
    
    Where, under a mortgage foreclosure sale, a surplus is realized, and the premises are at the time of such sale subject to a second mortgage and have been already sold under a money judgment against the owner of the equity of redemption, the time to redeem from which by the owner of the equity of redemption has not expired, and by the second mortgagee has not commenced to run at the date of the mortgage foreclosure sale, the respective rights of the purchaser at the execution sale (although he has subsequently obtained a sheriffs deed of the premises) and of the second mortgagee to the surplus will be determined as of the date of the foreclosure sale.
    Appeal by the claimant, George B. Lanck, from an order of the Supreme Court, made at the ¡New York Special Term aud entered in the office of the clerk of the county of New York on the 7th day of April, 1897, overruling his exceptions to the report of a referee appointed to ascertain the liens upon the surplus money in the action and confirming said report.
    This was a proceeding to ascertain liens upon surplus money realized upon the sale under foreclosure of a mortgage upon premises in the city of New York, which sale occurred on July 8, 1895, and upon which a surplus was realized amounting to $1,632.63, the title to which is the subject of the present controversy. There are two claimants to thé fund, and the facts are not disputed.
    ' On June 14, 1894, one William H. Sehecker recovered a judgment in the Supreme Court, against Edward J. Woolsey, the then owner of the equity of redemption,. for the sum of $3,726.08. Thereafter, and on the 8th day of February, 1895, by virtue of an execution issued to him upon the judgment, the sheriff sold all of the right, title and interest of Woolsey for the sum of $500, and on February 18, 1895, delivered to Sehecker a certificate of such sale.
    On the 11th day of March, 1895, Sehecker brought suit against Woolsey to. enforce- his judgment by setting . aside as fraudulent- a deed to Ins wife of real , estate on which the judgment was'a lien, arid this resulted in a decree on the 9th of September,. 18.95,; whereby, among -other things, the sum of $3,225 was paid on the judgment, which was assigned to Mrs. Woolsey, and on September 25, 1895, she satisfied the same of record. On October 1,1895, sheriff’s certificate of - sale was assigned by Schecker to the claimant George B. Lauck, On the.13th day of May, 1896, the. sheriff executed his deed to Lauck and delivered it on May fourteenth ; and on the 15tli of May, 1896, Lauck .filed a notice of his claim to the surplus moneys. ■
    On the 16th day of October, 1894, Edward J. Woolsey and wife executed a mortgage to George W. Cotterill in.the sum of $4,250 on the property .which was sold on the foreclosure of the, first.inort-.: gage upon- which the surplus arises in this proceeding. On the -3d day of October, 1895, Cotterill, in-virtue of. his second mortgage, filed his notice of claim to the surplus.-moneys. Shortly summarized, therefore, the material facts, in their sequence in order of time, are as- follows: 1894, June' 14,' judgment of Schecker v. Woolsey for $3,726.08 ; 1894,- October 29, Woolsey makes mortgage to Cotterill; 1895, February 8, premises sold by-sheriff under execution on Schecker judgment; 1895, July 8, premises" sold under foreclosure of mortgage, executed and recorded prior to docketing of Schecker judgment and Cotterill mortgage, and surplus realized .of $1,632.63; 1895, September 25, bálance due on Schecker. judgment satisfied of record.; 1895, October 1, assignment by Schecker to Lauck of'certificate .of sale; Í896, May 14, sheriff executed to Lauck; ■Under Schecker "judgment, deed of interest of Woolsey.
    
      Wilfrid H. O'Neill and Henry G. Ahwater, for the appellant.
    
      George W. Cotterill, respondent, in person.
   O’Brien, J.:

On the day of salé under the first inortgage from which the- surplus arose, the time for redemption by Woolsey had not expired, nor ' had the time for the second mortgagee, Cotterill, to redeem.arrived. ■ The effect of the sale was to transfer the title to a stranger, and to suspend the rights and remedies of the second mortgagee-and of the person holding the certificate of sale from the sheriff as against the property, and such conld only he enforced, therefore, as against any surplus that might arise. On and after the sale it would have heen useless for the second mortgagee to proceed either to foreclose his mortgage or to arrange, when the time should arrive, to redeem from the sheriff’s sale, because the property had been placed beyond his reach and his rights upon that date transferred to whatever surplus might arise upon the sale.

By the 64th court rule it is provided that “ on filing the report of the sale any party to the suit, or any person who had a lien on the mortgaged premises at the time of the sale,” may file his notice of claim to the surplus. This was deposited on August 26, 1895, and was thus placed in the custody of the court, because deposited to the credit of the action and subject to the court’s power to determine all claims to the fund. Inasmuch as the rule fixes the lien as of the time of the sale under the mortgage foreclosure, the amount of the lien is thus to be determined as of that time. From the dates it will be seen that the surplus was deposited with the chamberlain before the time for Woolsey to redeem from the sheriff’s sale had expired, and prior to the time when the second mortgagee had the right to redeem. It ■ is true that the Cotterill second mortgage was subsequent to the lien of the Schecker judgment, and if it were not for the foreclosure of the first mortgage, which effected a change in the title to the property, the subsequent deed by the sheriff would have related back, as provided by section 1440 of the Code of Civil Procedure, to the time when the judgment became a lien on the property, and would have taken precedence of the second mortgage. By section 1440 it is provided : But if the property is not redeemed, and a deed is executed in pursuance of the sale, the grantee in the deed is deemed to have been vested with the legal estate from the time of the sale.” As stated, however, at the date of the sale, the time of Woolsey, the then owner of the equity, to redeem from the sale on execution had not expired, nor had the time arrived when the second mortgagee could redeem, because under the statute the latter’s right only accrued one year from date of sale, and continúes from the expiration of the year, three months. (Code Civ. Proc. §§ 1449, 1450.) When such time to redeem arrived, however, the property had passed from Woolsey by virtue of the sale under the first mortgage, and- ah attempt to take advantage of the- right of redemption under ■ the statute would have been a useless ceremony, -because there was¡ nothing for Cotterill to redeem.

It is suggested that while the statutory method of redemption was gone there could have been an equitable redemption by paying the amount, of the bid. But as the holder of the sheriff’s certificate had a claim to the surplus at the time it was deposited to the extent of what he had bid, and could have it paid out of such surplus with interest, there is no good reason suggested why it was necessary, in order to prevent such holder from getting any greater rights as against Cotterill, that thé latter should pay him the amount and thus go through the form.of what the appellant suggests would; be an- equitable redemption. While the surplus 'arising out of foreclosure is regarded in, some aspects as realty, it was ..not" the: exact equivalent of" the property sold in the sense that the parties: were obliged to move, either the holder of the sheriff’s certificate "to obtain the deed of the property or the second mortgagee to tender the amount of the bid, m pursuance of the law as to a statutory. redemption, because at the date of the sale their rights were then fixed and their remedies in other directions suspended, and they were relegated to an enforcement of their then lien for their respective -claims against the surplus. It being both just and equitable that their rights should; be thus fixed as of the date of sale, they should be adjusted accordingly.

How, at -the date of sale, the holder of the sheriff’s certificate had a. claim against such surplus to the amount that had been paid upon the sheriff’s sale, and upon the pajunent of that amount or permit-... ting it to be taken from the ¡surplus, thé holder of ¡such certificate receives just what he would have'been entitled to from the owner of the equity of redemption or- from the second mortgagee if the property had not been'sold and' either had been at liberty to pursue-the statutory-method of redemption. Having thus, obtained his just due, there is no' reason why, to the disadvantage of the mortgagee, he should get more; or why the second mortgagee, in order •to get the benefit of the same rule of having his rights fixed as of the date of. sale and in order to preserve them, should be obliged- to go. through the form of redeeming, property which was no longer the subject of redemption. . It is unnecessary to elaborate the reasoning to show that this is a just solution, and we might well rest our decision upon the rule which is taken from the cases and well summarized in Jones on Mortgages (§ 1934): “ If at the time of the sale under a trust deed the property has been sold under a junior judgment and the title has become absolute in the purchaser by the expiration of the time allowed for redemption, so that he has received a deed of the property, or is entitled to one, he is then entitled to receive the whole of any surplus there may be after discharging the debt secured by the trust deed and the expenses ; but if the land has been sold under execution and the time for redemption has not expired, and the purchaser is not entitled at the time of the sale under the trust deed to a deed conferring the title upon him, he then has only a lien upon the surplus, and is entitled to only so much of it as will satisfy the amount of his bid and the interest thereon allowed by statute. In the latter case, the grantor in the trust deed is entitled to the remainder after satisfying the judgment lien, although his right to redeem has expired, but the purchaser’s right has not become absolute by the expiration of the time within which there can be a redemption from him by any one else;' as where twelve months are allowed the debtor for redemption, and three months more for redemption by a creditor, and the sale under the trust deed takes place during those three months.”

Our conclusion, therefore, is that the order appealed from should be affirmed,- with costs and disbursements.

"Van Brunt, P. J., Williams, Patterson and Ingraham, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.  