Mahoney v. McWalters

DYKMAN, J.

This is an appeal from a judgment entered upon a decision of the court after trial at special term, setting aside a bond and mortgage executed by the defendant Reddington and wife to the defendant McWalters. The facts are these: The defendant Reddington is the owner of the premises on the corner of Washington and Vernon avenues in Long Island City. In the spring of 1894 he employed the defendant James McWalters to erect the building on those premises at the agreed price of $6,000. During the progress of the work he paid McWalters $2,000 in cash. In order to raise the other $4,000, he made application for a loan for that amount, to be secured by his bond and mortgage covering the same premises. That application was rejected, and thereafter McWalters agreed to take a mortgage on the premises for $4,000 in satisfaction of the balance due him on the contract. By McWalter’s direction this mortgage was executed to his wife, Mary McWalters, on the 26th day of September, 1896, and a receipt in full was given to Reddington by McWalters. The plaintiff is a subcontractor who did the plastering on the building under the contract with McWalters, and claims the sum of $521 to be still due him for his work. The defendant Mathews is a subcontractor, and filed a lien for $252.42 against the premises. The defendants John O. Orr & Co. had furnished McWalters with material which he used in the erection of this building, amounting to $849.72. The mortgage of Reddington was made and received in payment of the balance remaining unpaid upon the contract for building his house, and the insertion of the name of Mary McWalters was by the direction of James McWalters, the creditor, and he thereupon satisfied his claim. That transaction would have been valid, as between the parties, if the rights of creditors had not intervened; but it operated as a fraud upon other creditors, and as to them it was void. It put $4,000 of the property of Reddington beyond the reach of his creditors, and it placed the mortgage beyond the reach of the creditors of McWalters, of whom the plaintiff is one. McWalters had built a house for Reddington at a cost of $6,000. The plaintiff did the plastering, and Mathews and John C. Orr & Co. furnished materials for the house. They were all creditors of McWalters, and were also entitled to acquire liens upon the property; and the postponement of them, and their subordination to the mortgage, was a fraud upon their rights, and the wrong was aggravated by placing the mortgage itself beyond their reach. Under such circumstances, the mortgage was inequitable, and could not be permitted to stand in the way of the creditors. Its destruction let in the liens in their regular order, and justice was wrought out.

There is also an appeal from an order denying a motion to amend the judgment entered in the action canceling the lien of the Ulster Bluestone Company, one of the defendants in the action. Neither the appellants nor any party to the action, except the plaintiff, served notice of trial upon the stone company. They were not, therefore, in a position to make any move against that company upon the trial. The plaintiff made none, and asks nothing now, except to have the judgment stand as entered. There is no authority for the cancellation of a lien in this way, and the motion was properly denied.

The judgment must be affirmed, with costs, and the order must be affirmed, with $10 costs and disbursements. All concur.