Schwinger v. . Hickok , 1873 N.Y. LEXIS 397 ( 1873 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The judgment for the deficiency remaining after the sale of the mortgaged premises was, in form, a judgment in personam against the mortgagor, and, if the court had jurisdiction to render it, warranted the sale upon execution of the land purchased by the plaintiff.

In an action for the foreclosure of a mortgage the court may adjudge and direct the payment by the mortgagor of any residue of the mortgage debt that may remain after sale of the mortgaged premises, when the mortgagor is personally liable for the debt secured by the mortgage. This rule is consonant with the general principle that the court, having jurisdiction of the cause and of the parties, will proceed to a complete determination of the right in controversy, and was expressly declared in the Revised Statutes, and is re-enacted by the Code. (2 Rev. Stat., 192, § 202; Code, § 167.)

The mortgagor in this case was a non-resident of this State when the foreclosure action was commenced, and was then, and ever since has been, a resident of Canada. The summons was served by publication and deposit of a copy in the post-office, addressed to him at his residence, and he did not appear in the action, nor did he submit himself in any way to the jurisdiction of the court. The general power residing in the court to render a personal judgment against the mortgagor for the deficiency in a foreclosure suit does not, we think, authorize such a judgment against a non-resident defendant who has neither appeared in the action or been served with process within the State. Due process of law, without which one cannot be bound by a judicial sentence, or be deprived of life, liberty or property, does not necessarily require personal service of notice of the proceedings. (Empire City Bank,18 N Y, 215.) It is upon this ground that the State subjects the property of a non-resident, within its jurisdiction, to judicial process, and appropriates it, by the judgment of the court, to the payment of the debts of the owner, or transfers the title in accordance with the legal or equitable right of claimants. The process of courts only runs within the limits of the sovereignty creating them. Personal service of process, in a legal sense, of the courts of a State cannot be made in another State; and where the property of a non-resident within a State is sought to be affected by judicial proceedings, a procedure against the property is authorized in the several States under statutes prescribing notice by publication and otherwise, calculated and designed to apprise the defendant of the proceedings. The judgment rendered in such a case is essentially a judgment inrem. The court having jurisdiction of the cause pronounces judgment which binds the property to which the action relates, or which is held to await the final process. Our statute, authorizing judicial proceedings against non-residents to be taken upon service of the summons, by publication, is to be interpreted in view of the necessity which called for its enactment, and should be limited, if consistent with the language used, so that it shall be in harmony with the general principles of jurisprudence. A statute authorizing judgment in personam against a non-resident, not personally served with process within the State, and not appearing in the action, would, at least, be exceptional, and it would require a very clear expression of legislative intent to warrant such a construction. The jurisdiction to proceed by publication against a non-resident citizen, attaches only when he has property in the State, or the suit has relation to property therein in which he has or claims an interest. (Code, § 135.) The legislature could, perhaps, have declared that judgment obtained against a non-resident, upon service by publication, might be enforced against all property of the defendant within the State. (Thomas v. Emmett, 4 McLean, 97; Bissell v. Briggs, 9 Mass., 462; Boswell's Lessee v.Otis, 9 How., 336.) Such a judgment would be in rem, and would impose no personal liability upon the defendant. The statute under which publication in this case was made, does not undertake to make the judgment obtained in the proceedings a general lien upon the property of the defendant. We are of opinion that the judgment for the deficiency in personam was unauthorized and void, and that the remedy of the mortgagee in the action was limited to the foreclosure and sale of the equity of redemption in the mortgaged premises. It follows that the sale of the land of the judgment debtor, upon execution on the deficiency judgment, was a nullity. The execution was not authorized by the judgment, for the judgment itself was void. The purchaser acquired, and could acquire no title under the sale.

The court below denied the right of the plaintiff to recover, on the ground that he had constructive notice of the invalidity of the judgment and proceedings, and that the payment of his bid was therefore voluntary.

It is doubtless true that a person claiming a right or title under a conveyance or an instrument, in execution of a power, is in general chargeable with notice of any infirmity in his title disclosed by the instrument under which he claims, or of which, by reasonable diligence, he would have become acquainted. (Cambridge Valley Bank v. Delano, 48 N.Y., 336; 2 Wn. on Real Property, 596.) The rule is adopted to determine the question of superior equities, and to protect innocent persons from being defrauded. (Le Neve v. Le Neve, 3 Atk., 646; Story Eq. Jur., § 397.) This principle is invoked in this case to debar a plaintiff who has paid his money in good faith, without actual knowledge, on a purchase under a void execution, from recovering it back of the persons to whom it was paid, and who were the plaintiffs in and procured the sale under the execution, and who, at the time of the sale, knew that the purchaser would acquire no title to the property. The principle referred to has no proper application to this case. To make out a voluntary payment, knowledge that the execution was void is imputed to the purchaser, although there was none in fact, and this for the benefit of persons having actual knowledge, and who took the plaintiff's money. The language of Lord MANSFIELD, inMoses v. Macfarlane (2 Burr., 1009), is applicable. In speaking of the equitable action for money had and received, he says: "It lies for money paid by mistake, or upon a consideration which happens to fail, or for money got through imposition, or extortion, or oppression, or an undue advantage taken of a party's situation contrary to laws made for the protection of persons under these circumstances." The plaintiff was entitled to maintain the action within the rule stated in Moses v.Macfarlane. (See also Chapman v. The City of Brooklyn,40 N Y, 372; The Kingston Bank v. Eltinge, 40 N.Y., 391.)

The judgment should be reversed and a new trial ordered, with costs to abide the event.

All concur except RAPALLO, J., not voting.

Judgment reversed.