Davis v. Flagg

The opinion of the court was delivered by Beasley, C. J.

The facts to which the court in this case is to apply the law, are these:

Mrs. Flagg was the owner of certain premises, upon which she gave two certain mortgages of different dates, the first, in the order of priority,'being executed in favor of the Mutual Life Insurance Company of New York, and the second to Abram H. Baldwin. This latter-named mortgagee filed a bill to foreclose his mortgage, and to that bill Mrs. Flagg, the mortgagor, put in an answer setting up a defence. It is alleged, and for present purposes it will be assumed, that it has been proved that Baldwin then procured the above-mentioned first mortgage to be assigned by the Mutual Life Insurance Company to one McCoon, and subsequently by him to Erwin Davis, the appellant in these proceedings. In this state of the facts Mr. Davis proceeded to foreclose this first mortgage, making Mrs. Flagg, and her. husband, and Baldwin, the holder of the second mortgage, parties. It further appeared that after this first encumbrance had been assigned to McCoon, an offer was made, in the interest of Mrs. Flagg, to pay the money due on such mortgage, provided an assignment should be made to the third person so advancing the money. This requisition was not complied with, and there *494 upon the counsel' of Mrs. Flagg obtained an order on Davis to show cause why his foreclosure suit should not be stayed. And testimony having been taken under that rule, and the foregoing facts having been substantially developed, an order was granted which was essentially to this effect: that if upon a.tender made by the defendant Mrs. Flagg, or by any one in her behalf, of the full amount of the principal and interest due upon the mortgage held by Davis, together with his taxed costs, the said Davis should refuse to assign his bond and mortgage to such person or corporation as Mrs. Flagg might designate, all further proceedings in such foreclosure suit should be stayed, provided said tender be made within ten days from the date of said order, and that said Davis, on receiving the money and making the assignment, should enter an order dismissing his bill.

The order appealed from cannot stand. It proceeds upon the principle that although a second mortgagee has a right, as a general rule, to buy in a first mortgage and proceed to foreclose under it, yet if his motives are bad in acquiring such interest, equity will not permit him to prosecute such suit. This view, it seems to me, is founded on the fallacy that equity can base its action on a state of mind, irrespectively df the fact that the conduct induced by it is entirely lawful, and in a legal sense, equitable. The legal pursuit of one’s right, no matter what may be the motive of the promoter of the action, cannot be deemed either illegal or inequitable. In the present case, whatever the purpose of this second mortgagee may have been, he did no illegal act; the purchase of the first mortgage was legal, and the prosecution founded on it was legal; and the consequence is, that his suit cannot be stayed unless the rule is to be sanctioned, that an assignee of a mortgage has no right to foreclose it, provided it be shown that in obtaining such encumbrance he was actuated by ill-will or other immoral feeling. The abstract precepts of the moral code, disconnected from property and the rights of persons, are neither enforced nor noticed by courts of law or by courts of equity. It is true that this second mortgagee, or, what is the same thing, the person who represented his interest in this affair, refused to accept the money due on the first encumbrance *495 and assign such instrument to a third person. But, again, that refusal was neither illegal nor inequitable; so that we have but the option to set aside the order made in this case, or to sanction the rule that a legal and equitable right is not enforceable in a court of chancery, if the motive leading to the acquisition of such right has been immoral ot otherwise censurable. But the adoption of such rule would be, as it would seem, quite at variance with some of the most primary principles of our system of •jurisprudence.

As the foregoing view has been justified by a reference to the fundamental ground of the law, it does not seem to be at all necessary to fortify it by a reference to adjudged cases, but as some of the remarks of the court in Morris v. Tuthill, 72 N. Y. 575 , a case contained in the brief of the counsel of the appellant, are so apt to the matter in hand, a quotation of some of them will not be out of place, as it will obviate the necessity of further discussion. The case referred to arose in a foreclosure suit, the answer setting up a conspiracy to prevent ‘the defendants from raising the money to pay the two mortgages in suit; that to pay such mortgages it was necessary to raise a large part of the money on the credit of the premises, and that a savings bank had agreed to make the necessary advances on the security of these mortgages, and that the complainant had fraudulently promised an assignment of such security. In reference to these matters the court said : “ The motives of the former owner of the mortgages in selling, or of the plaintiffs in buying them, are not material, and the appellant has no concern with the consideration of the assignment. It is sufficient that the mortgage debt is due, and is now owned by the plaintiff. He may have bought the mortgages from motives of malice toward the defendant and'solely with a view to sue upon them, and the former owner from a like motive may have transferred them without consideration, but this would not constitute a defence to the action. The appellant can only arrest the action by paying the amount due, or tendering the same and bringing it into court. The facts stated do not constitute an equitable defence.”

*496 This, it seems to me, is a correct statement of the law on this subject.

But it is claimed by the counsel of the respondent that the order in question is not an appealable decision. This position is not sustainable. The order is founded on a denial of the equitable right of the complainant to prosecute his suit, and imposes a condition upon him, and arrests his proceeding for an indefinite time. And this judicial action'does not even purport to have been made as an exercise of discretion, but is an adjudication founded on the supposed equities of the case viewed in the light of established rules. Such a decision, according to a train of decisions in this court, is plainly the subject of an appeal.

The decree should be reversed.

Decree unanimously reversed.