Ettlinger v. Persian Rug and Carpet Co. Cridler v. Curry, 66 Barb. 337; Bort v. Snell, 39 Hun, 388; Davies v. N. Y. Concert Co., 41 Id. 492; Brinckerhoff v. Bostwick, 88 N. Y. 52; Greaves v. Gouge, 69 Id. 154, 155; Memphis City v. Dean, 8 Wall. 64; Hollenbeck v. Donnell, 94 N. Y. 342; Decker v. Gardner, 124 Id. 334; Butts v. Wood, 37 Id. 317; U. S. Trust Co. v. New York, West Shore, etc., Ry. Co., 6 Civ. Pro. R. 90; Weetjen v. Vibbard, 5 Hun, 265; Currier v. West Shore, etc., R. R. Co., 35 Id. 355; National Park Bank v. Goddard, 131 N. Y. 494; Jones on Chattel Mortgages, § 787; Beach on Receivers, $$ 538, 602; Matter of Dekay, 4 Paige, 403; Matter of Craig, 1 Barb. 33; Graham v. DeWitt, 3 Bradf. 186; Story's Equity Pleadings, § 76; Gluck & Becker on Receivers of Corporations, § 39; Crane v. Ford, Hopk. Ch. 114; Devissee v. Blackstone, 6 Blatchf. 235; First Nat. Bank of Cleveland v. Shedd, 121 U. S. 74; Smith v. Consolidated Stage Co., 28 How. Pr. 377). II. The objection to the maintenance of the action is not that the court has not jurisdiction of the subject matter or of the person, but that plaintiff had not legal capacity to sue, or has failed to join a necessary co-plaintiff, and this objection not being taken by demurrer is waived (Citing Code Civ. Pro., § 488, subds. 3, 5; Secor v. Pendleton, 47 Hun, 283; Home Insurance Co. v. Pennsylvania R. R. Co., 11 Id. 182; Sullivan v. N. Y., etc., Cement Co., 119 N. Y. 348). FINCH, J.-The determination of a single question. discussed on the argument will dispose of this appeal. The plaintiff was one of two bondholders protected by a trust mortgage. His complaint showed all the facts necessary to a judgment of foreclosure if the action had been brought by the trustee, and sought to justify his intervention as bondholder and plaintiff in the action upon the ground that the trustee had left this country, and was somewhere in foreign parts, and had become insane. On the trial the fact of such absence was shown; that the VOL. XXXI.-20 Ettlinger v. Persian Rug and Carpet Co. family of the trustee had also departed to join him abroad, and that inquiries made in natural and reasonable direc tions were answered b- the statement that the trustee had become insane. The Special Term dismissed the complaint upon the ground that the bondholder could not sue where there was a competent trustee unless the latter refused to act, and where the trustee had become incompetent it was necessary first to procure the appointment of a new trustee. The dismissal of the complaint did not go upon any failure of proof, but assuming the allegations of the complaint to have been established, still held that the plaintiff could not sue for a foreclosure. An appeal was taken to the General Term, which reversed the judgment and ordered a new trial. Instead of going back and presenting his defense so far as he had one, the defendant, who was the remaining bondholder, and for whose interest a foreclosure was as much of a necessity as for that of the plaintiff, adopted the perilous experiment of an appeal to this court, with the required stipulation for judgment absolute. It appeared on the argument that the defendant was injured only at a single point-not by the foreclosure, not by its natural and proper result, not even by the appointment of a temporary receiver, but by a sale of the property claimed to have been collusive, and which vested title in the plaintiff for less than the real value. All that could have been remedied on a new trial. A re-sale could have been ordered, or the plaintiff compelled to account for the property at its just and fair value, which would have given to the defendant everything to which he was entitled. Seeing the situation, and observing the defendant's danger, we suggested to his counsel on the argument the prudence of escaping it by a withdrawal of his appeal. He declined the suggestion, and if any hardship results it will not be the fault of the court. We are satisfied that the plaintiff had the right to Ettlinger v. Persian Rug and Carpet Co. maintain the action, and that fact alone justified the reversal of the judgment by the General Term. It is conceded that the beneficiary may sue where the trustee refuses, but that is because there is no other remedy, and the right of the bondholder otherwise would go unredressed. The doctrine does not rest rigidly upon a technical ground, but upon a substantial necessity. In the case of a corporation, a stockholder may sue, not because it refuses, but because those who represent it are the very parties who have committed the wrong (Brinckerhoff v. Bostwick, 88 N. Y. 52). In that case we said that a demand upon the corporation to sue would be "futile " and so was "unnecessary," and since the action could not be "effectually prosecuted in that form," the shareholders might sue. What occurred in the present case was tantamount to and an equivalent of a refusal by a trustee. had gone beyond the jurisdiction; the whole apprehended mischief would be consummated before he could be reached; and if reached there was sufficient reason to believe that he was incompetent. He But the Special Term say that in such event a new trustee should have been appointed. That simply reproduces the same difficulty in another form, for a court would hardly remove a trustee without notice to him and giving him an opportunity to be heard. And why should a new appointment be made when any one of the bondholders can equally do the duty of pursuing the foreclosure? The court, in such an action, takes hold of the trust, dictates and controls its performance, distributes the assets as it deems just, and it is not vitally important which of the two possible plaintiffs sets the court in motion. The bondholders are the real parties in interest; it is their right which is to be redressed, and their loss which is to be prevented; and any emergency which makes a demand upon the trustee futile or impossible, and leaves the right of the bondholder without other reasonable means of redress, should justify his appearance Larned v. Donovan. as plaintiff in a court of equity for the purpose of a foreclosure. It is unnecessary to consider or discuss other questions, which were numerous. What we have said requires us to affirm the order of the General Term and award judgment absolute against the defendant upon his stipulation, with costs. All the judges concurred. LARNED v. DONOVAN. N. Y. Supreme Court, Special Term, First District; April, 1894. 1. Judgments and decrees.] In an action against a mortgagee and his assignee to cancel a mortgage as a cloud on plaintiffs' title, on the ground that the mortgagee had satisfied the same under an agreement entered into by him with plaintiffs and his other creditors, the prior assignment of the mortgage being fraudulently concealed,—held, that on plaintiffs failing to show themselves entitled to the specific relief demanded (the assignee proving entitled to the full amount of the mortgage as a bona fide purchaser), they could not have relief by the way of a money judgment against the mortgagee, especially as the damages were unliquidated and the facts necessary to their ascertainment had not been proved. 2. Mortgages; and assignments of the debt.] Though a transfer of a mortgage without the debt secured thereby would be ineffectual, yet where a mortgage is given without a bond, note, or other evidence of the debt, merely stating that its consideration is an agreed indebtedness of a specified amount, an assignment which confers on the assignee the right to receive payment of the sum mentioned in the mortgage is a sufficient transfer of both the debt and the mortgage. 3. Recording deeds.] The recording of an assignment of a mortgage is constructive notice to a purchaser of the equity of redemption. The provision of 1 R. S. 763, § 41, that "the recording of an assignment of a mortgage shall not be deemed in itself notice of such assignment to a mortgagor, his heirs or personal Larned v. Donovan. representatives, so as to invalidate any payment made by them, or either of them, to the mortgagee," does not include a purchaser from the mortgagor.* Trial by the court without a jury. The action was brought by William Z. Larned and Anna T. E. Kirtland against Daniel E. Donovan, Patrick Golding and David B. Algie. The facts are fully stated in the opinion. Larned, Warren & Knapp, for plaintiffs. Warner W. Westervelt for defendants. PATTERSON, J.-The plaintiffs seek relief against the defendants, Donovan & Golding, under the following circumstances: In 1885 the plaintiffs were owners of certain lots of land at Ninth Avenue and Sixty-eighth Street, in the City of New York, and desiring to have them improved by building upon them, conveyed them to Daniel B. Algie for the expressed consideration of $75,000, and took back a purchase money mortgage for $74,000, at the same time entering into an agreement with Algie to make advances to him from time to time and at certain stages in the construction of the buildings, Algie agreeing to give as security for such advances a second mortgage. Algie entered upon the performance of his contract, and employed the defendant Golding to furnish and set up the bluestone required for the houses (seven in number) he had contracted to build. Golding bought bluestone to the value of about $2,400 from Donovan, and some of it was used in these houses. Algie, on January 11, 1886, was indebted to Golding, and on that day gave him a * Hence, a purchaser of the equity of redemption must search for assignments of the mortgage before paying to the mortgagee, although the heir or personal representative of the mortgagor need not do so. |