Citations
- 263 N.Y. 110
Full opinion text
Lehman, J.
In their answer to the complaint, in an action for the foreclosure of a mortgage upon real property in the city of Albany, the defendants Louis Danzig and Charlotte Sattler have alleged, as a separate defense and counterclaim, that they are owners of a subordinate mortgage on the same property and that the holders of the subordinate mortgage, in order to protect their interest in the real property, have paid taxes and water rents which were a lien on the property. They claim that, in consequence, these holders of the subordinate mortgage l< were and are equitably subrogated to the rights and remedies of the City of Albany on account of said taxes and water rents in the amount so advanced by them.” Upon the plaintiff’s motion, the so-called “ defense and counterclaim ” has been stricken out as insufficient on its face.
Upon a sale in foreclosure the lien of both mortgages will attach to the proceeds of the sale of the mortgaged property in the same order of priority as the original liens upon the property. So too the lien of unpaid taxes or water rents, if any, will attach to the same proceeds, but in priority to the lien of the mortgages, and thus would reduce pro tanto the amount which could be applied in payment of the mortgage. Payment of the taxes by these defendants has discharged the prior lien of the city. The defendants are entitled to an allowance for the amount they have paid, as part of their mortgage debt, upon the foreclosure of the mortgage. (Sidenberg v. Ely, 90 N. Y. 257.) An allowance to them of the amount so paid “ as part of their mortgage debt ” may be of no use, if after payment of the plaintiffs’ prior mortgage no proceeds of the sale remain. Therefore, they ask that, to the extent that their payment of the taxes and the consequent discharge of the city’s prior lien has increased the proceeds of sale which will become available for payment of the plaintiffs’ mortgage, they should be subrogated to the lien of the city in priority to the lien of the plaintiffs’ mortgage.
It is well established that the lien of the city for unpaid taxes, though terminated as to the city by payment of the taxes, can be regarded, in equity, as still existent for the purpose of doing justice between a party who has paid the taxes and a party who was under an obligation to pay them or who has through such payment obtained an unfair benefit at the expense of another. (Title Guarantee & Trust Co. v. Haven, 196 N. Y. 487.) The doctrine of equitable subrogation will be applied