Cresco Realty Company, Respondent, v. Edmund Clark, Appellant, Impleaded with Rosabel P. Clark and Others, Defendants

Cresco Realty Company, Respondent, v. Edmund Clark, Appellant, Impleaded with Rosabel P. Clark and Others, Defendants. Second Department, October 16, 1908. Mortgage — assignment as security — election to declare mortgage due — assignor and assignee must act jointly—acts not showing election "by assignee — tender. On the assignment of a mortgage as security for a loan, the mortgagee and his assignee are in equity joint owners, and both must join in an election to treat the principal- as due for a default in paying interest. An election by the assignor alone is not sufficient. An assignee holding a mortgage merely as security for a loan made to the assignor, by appearing as defendant in an action of foreclosure brought by the assignor and consenting to the judgment, does not elect to treat the principal as due, for such election must be shown by an affirmative act. An election to declare a mortgage due for failure to pay interest must be seasonably made, and where one to whom such mortgage has been assigned as security for a loan has not so elected, and the mortgagor tenders the interest to the assignee prior to an action of foreclosure by the mortgagee, the action is barred. Such tender of interest need not be kept, good by payment into court in order to -be available as a defense to foreclosure. Appeal by the defendant, Edmund Clark, from a judgment of the County Court .of Kings county in favor of the plaintiff, entered in the office of the clerk of said county on the 17th day of April, 1908, upon the decision of the court rendered after a trial before the court without a jury. This suit is by the mortgagee to foreclose a bond and mortgage for principal and interest. The mortgage was for $11,650, and was assigned, by the mortgagee to the Borough Bank as security for thé payment of a loan of $6,000. The said bank was placed in the hands of receivers before the commencement of this action. The complaint alleges that the interest which became due on November 6th, 1907, was not paid, and that after 20 days had elapsed the plaintiff elected that the principal become due and payable for nonpayment of interest, as permitted by the terms of the bond and mortgage, and also that the said receivers so elected. It also alleges that the plaintiff requested the said receivers to bring this action, which they refused to do, whereupon they were made defendants. No one answered but the appellant, who is the fee owner. Other facts appear in the opinion. John M. O’Neill [Charles C. Suffren with him on the brief], for the appellant. Hedley V. Cooke, for the respondent. [MAJORITY — Gaynor, J.:] Gaynor, J.: The appeal is on the judgment roll only. Although the assignment was absolute on its face, it was in fact only as collateral security for a debt of $6,000. If it. were an' absolute assignment, the election to treat the principal as due on the default to pay interest, as the terms of the bond and mortgage permitted (and also the suit to foreclose) would of course have to be by the assignee, but being an assignment only pro tanto, the assignor and the assignee were in equity joint owners of the bond and mortgage, and the election could not be made by the assignor alone; the assignee had to join with him (Shaw v. Wellman, 59 Hun, 447). There is a finding in the regular findings that the plaintiff elected, and that the receivers of the assignee “assented thereto”, viz., assented to the plaintiff’s election. Possibly .an attempt might be made to spell an election by the receivers out of this, except for the broad, explicit and inconsistent finding of fact made at the appellant’s request, that at no time did the assign e¿ or its receivers elect to deem the principal due for failure to pay the interest. There is, it is true,, a finding that the receivers appeared at the trial and consented to the taking of the judgment prayed for in the complaint, although they did not answer. But this cannot supply the lack of an election, for there was a tender here before suit brought; if indeed, it could in the absence of such a tender. The election to deem the principal due is an affirmative thing and has to be made in some way. It may be made before the suit is brought, or by the bringing of the suit itself, i. e., in the complaint (Hothorn v. Louis, 52 App. Div. 218 ; 170 N. Y. 576; Pizer v. Herzig, 120 App. Div. 102; Cole v. Hinck, Id. 355). The right to maintain the suit depends on such election being seasonably made. Until it is made, nothing is due but the interest, and therefore a tender of the interest is in time and must be accepted. The answer pleads a tender of the interest to the assignee, and there is a finding of fact, made, at the appellant’s request, that before the action was begun against him he duly tendered ” to the receivers the amount of the interest due. JSTo election having been made by the assignee or its receivers, the tender was good and barred their right thereafter to elect that the principal become due for non-payment of interest. The lien of the mortgage for the amount of such interest was discharged by such tender and refusal, and to be available as a defence against foreclosure the tender did not have to be kept good by payment into court (Kortright v. Cady, 21 N. Y. 343; Cass v. Higenbotam, 100 id. 248 ; Breunich v. Weselman Id. 609). The judgment should be reversed; Woodward, Jenks, Hooker and Rich, JJ., concurred. .Judgment of the County Court of Kings county reversed and new trial ordered, costs to abide the event.