(183 N.Y.S.)

date on which the debt may become due is in a certain sense accelerated at the mortgagee's option in a default in the payment of the taxes and assessments; but such advance date of the accrual of the indebtedness is privileged to be fixed by the mortgagee as a penalty or forfeiture for the nonpayment of the taxes or assessments, for a failure to keep the security collateral to the debt intact, and not because there has been any default in the payment of the debt. The stipulation as to default in the payment of taxes and assessments is in the nature of a penalty or forfeiture, and upon such a default a court of equity will grant relief from the penalty or forfeiture to be incurred thereby if such default is not willful. In Shaw v. Wellman, 59 Hun, 447, at page 448, 13 N. Y. Supp. 527 at page 528, the court, referring to the provisions as to the payment of taxes, said:

"The object to be attained by this part of the mortgage was to prevent the security from being reduced or diminished by the unnecessary existence of taxes upon the property. It was for the benefit of the security and its complete preservation."

In that case:

"The action was commenced in or about the month of May, 1889, because of a default by the mortgagors in the payment of the taxes for the years 1886, 1887, and 1888. The mortgage provided, in case of such a default for the space of 60 days, that the principal sum secured should, at the option of the mortgagee or his legal representative, become due and payable immediately."

The court further said, 59 Hun, at page 449, 13 N. Y. Supp. at page 528:

"It further appeared that these taxes were paid on the 21st of October, 1889, and that fact was alleged by a supplemental answer as a defense to the action. This payment in its effect fully restored all the rights intended to be protected by this part of the mortgage. It indemnified both the plaintiff and his assignee against all possible prejudice or loss arising from the default. And when that appears to be the fact, it is the policy of courts of equity to consider the default to have been redeemed by the payment. 2 Story's Eq. (5th Ed.) § 1314. When indemnity can, in this manner, be secured, and that shall in fact be made, then the rule in equity is not to enforce the forfeiture otherwise coming into existence. Id. § 1319. On this fact of payment of the taxes a defense was also presented to the action."

See, also, Gilbert v. Shaw, 63 Hun, 148, 154, 17 N. Y. Supp. 621; Noyes v. Anderson, 124 N. Y. 175, 26 N. E. 316, 21 Am. St. Rep. 657; Giles v. Austin, 62 N. Y. 486; Germania Life Ins. Co. v. Potter, 124 App. Div. 814, 109 N. Y. Supp. 435; Ver Planck v. Godfrey, 42 App. Div. 16, 58 N. Y. Supp. 784; Pizer v. Herzig, 120 App. Div. 102, 106, 105 N. Y. Supp. 38; Strange v. Rosenberg, 101 Misc. Rep. 618, 167 N. Y. Supp. 838.

[6, 7] In the present case neither the Malex Realty Corporation nor the College Holding Company assumed the prior mortgage nor agreed to pay the interest on the prior mortgage. The College Holding Company is interested in paying it only to preserve its property, and the plaintiff is concerned in the payment only to preserve his security intact. If this be so, what, then, is the right of plaintiff to elect the whole mortgage debt to be due if the interest on the prior mortgage is not paid but a privilege to claim a forfeiture of the continuation of the

indebtedness because of a failure to maintain the security in the condition as provided for in the mortgage? I can see no reason why the same rule of law should not be applied to a default in the payment of the interest on the first mortgage as would be applied to a default in nonpayment of taxes and assessments. They are both inserted in the mortgage for the same purpose, and the results are the same. In the present case no notice was given by the plaintiff nor by the prior mortgagee to the mortgagor or the College Holding Company that the interest on the first mortgage would become due on March 1, 1919, nor was notice given prior to the commencement of this action of an election that the whole debt was deemed immediately due because of this default. No notice of an election, however, under the decisions of this state is necessary. Some affirmative act or the commencement of an action for the foreclosure of the mortgage is sufficient notice. The filing of the notice of the pendency of the action is not the commencement of the action. Cohen v. Biber, 123 App. Div. 528, 108 N. Y. Supp. 249. Neither is the filing of the summons and complaint in the office of the clerk. Haynes v. Önderdonk, 2 Hun, 619. Not until personal service, or by publication of the summons, or summons and complaint upon one of the defendants, is a foreclosure action commenced.

[8] In this case it appears that the mortgage in suit does not specify what the rate of interest was or when it became due and payable. The mortgagor, or the College Holding Company, would thus be obliged to look outside of this mortgage to ascertain these facts. The second mortgage only recites that the first mortgage was recorded in the office of the register of the county of New York, in a certain liber and section and also at a certain page. I think, under all the circumstances of the case, the owner of the property was misled by the different dates fixed in the various mortgages for the payment of the interest, and that there was no willful neglect on its part in not paying such interest on the first mortgage within the 10 days of grace allowed in the second mortgage. As soon as such corporation became aware of the due date of such interest it paid the same, and within half an hour after this action was commenced. On March 26th, by the payment by the College Holding Company of the interest due on the first mortgage, all the rights of the plaintiff were protected, the security was restored intact, and the plaintiff fully indemnified. In fact, under the terms of the first mortgage, no foreclosure could have been brought for the whole indebtedness until April 1, 1919. I fail to see how plaintiff was in any way prejudiced by this default in the payment of such interest. Since the commencement of this action the owner has paid all the installments of principal due and all interest up to the time of trial, of course, without prejudice. We have thus at the time of the trial not a cent past due on the bond and mortgage; all the taxes and assessments and all the interest on first mortgage then due paid.

It is for the technical default in the payment of the interest on the first mortgage within the days of grace that the plaintiff seeks to foreclose the owner of this mortgage debt. This forfeiture incurred

(183 N.Y.S.)

by such default, however, was redeemed by the payment of the interest on March 26, 1919. It is peculiar that within two months after the sale of this property by plaintiff he should have taken advantage of the default without some notice, especially as the owner of the premises had reduced the first mortgage by a payment of $2,500 prior to the commencement of this action. Such action on behalf of the College Holding Company showed its intention to carry out its contract and goes to disprove any willful neglect on its part in not paying the interest.

There should be judgment for defendant relieving it of the forfeiture by reason of its default on payment of taxable costs to plaintiff and providing in such case the complaint be dismissed, and on failing to pay such costs, judgment be directed for plaintiff, with costs. The respective parties may submit any requests to find they may desire.

Ordered accordingly.

EDWARD J. BARTON LIGHTERAGE CO. v. JARVIS STORES, Inc. (Supreme Court, Appellate Term, First Department. June 24, 1920.)

1. Shipping 132 (5)—Evidence held to sustain finding that injury was caused by unloading goods during rain.

In an action for lighterage charges, where defendant counterclaimed for damage to the goods, a finding that the damage was caused by unloading at defendant's orders during a rain held sustained by evidence that it was raining when the goods were unloaded, though it was shown that it did not rain on the dates on which plaintiff claimed to have unloaded the goods.

2. Stipulations 14 (12) -Credit should be given for amount paid under stipulation.

Where, after suit was brought, defendant paid the amount admitted to be due, under a stipulation for such payment without prejudice to plaintiff's right to recover the balance, it was error to render judgment for amount claimed by plaintiff, without giving credit for the payment. Appeal from Municipal Court, Borough of Manhattan, First District.

Action by the Edward J. Barton Lighterage Company against the Jarvis Stores, Incorporated. Judgment for plaintiff for $501.09, and defendant appeals. Modified, by reducing the judgment by the amount paid under stipulation before trial, and, as modified, affirmed.

Argued June term, 1920, before BIJUR, DELEHANTY, and WAGNER, JJ.

Kellogg & Rose, of New York City (Asa B. Kellogg, of New York City, of counsel), for appellant.

Macklin, Brown, Purdy & Van Wyck, of New York City (Joseph A. McCaffrey, of New York City, of counsel), for respondent.

DELEHANTY, J. Plaintiff sued to recover for lighterage and demurrage in transporting tobacco from Staten Island to the North River in New York City, and a judgment has been rendered in its

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

favor for $501.09 by the court below sitting without a jury. Defendant interposed a counterclaim in the sum of $282.41 damages alleged to have been sustained by reason of defendant's negligence in handling the goods. After the action was brought, plaintiff and defendant entered into a stipulation under which the latter paid the former the sum of $185.68, without prejudice to plaintiff's rights for the balance. [1] The controversy on this appeal is chiefly on the counterclaim. It is not disputed that the tobacco was injured in transportation in the amount claimed by the defendant. The plaintiff urges, however, that this was due to instructions given by the owner of the goods to unload the same during a rain. Evidence was introduced to show that, on the dates upon which plaintiff claimed the goods were unloaded, it did not rain. However, the record shows that the goods were unloaded on days when it did rain, and, assuming that the dates mentioned were incorrect, the story as otherwise told gives the impression of truthfulness. I think, therefore, that the finding of fact in the respect named should not be disturbed.

[2] The court erred, however, in failing to give the defendant credit for $185.68, paid to and accepted by the plaintiff out of court. A reading of the stipulation discloses that the parties intended that plaintiff's claim, over and above the amount paid, might be litigated at the option of the plaintiff, and in the circumstances allowance should have been made to defendant accordingly, and judgment entered for the balance.

Judgment modified, by reducing the same to the sum of $282.41, and, as so modified, affirmed, with appropriate costs in the court below, and $15 costs on this appeal to the respondent. All concur.

(112 Misc. Rep. 445)

ALTERMAN v. HOME INS. CO.

(Supreme Court, Appellate Term, First Department. June 29, 1920.) 1. Insurance 146 (1)—Effect given to intention of parties.

An insurance contract is not unlike any other, and is to be interpreted so as to give effect to the intention of the parties, ascertained from the language used in the instrument as a whole, and aided by the examination of other surrounding facts and circumstances, which may have a legitimate bearing on or tendency to disclose such intention.

2. Insurance 146 (2) —Every material word to be given effect.

An insurance contract should be construed in a manner which will give effect to every material word used within its bounds, if such a construction is not patently inconsistent with other parts of the contract, or incompatible with the attendant circumstances or the subject-matter. 3. Insurance 163 (2)-"Extension" in fire policy referred to separate building on lot.

A fire policy covering a brick building and extension thereto occupied as store and dwelling, etc., held to include a building on the back of the lot not attached to the front building.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Extension.]

Appeal from Municipal Court, Borough of Manhattan, Fifth District.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(183 N.Y.S.)

Action by Jennie Alterman against the Home Insurance Company. From a judgment for plaintiff upon an agreed statement of facts, defendant appeals. Affirmed.

Argued April term, 1920, before GUY, FINCH, and WAGNER, JJ.

Robert A. Fosdick, of Stamford, Conn., for appellant.

Jacob I. Berman, of New York City, for respondent.

WAGNER, J. To recover for a conceded loss sustained by fire, the plaintiff sued under two insurance policies issued by the defendant company and covering

"the brick building and extension thereto occupied as store and dwelling, situate No. 529 East Eleventh street, borough of Manhattan, city of New York, including also all fixtures; also stoops, sidewalk, mason and iron work in front, fences, and yard fixtures in rear thereof."

There were two brick buildings on the lot, one four stories in height, located on the front, and the other two stories in height, lo cated on the rear, of the premises; the latter distant from the former about 25 feet, and physically separate and detached therefrom. The front building was occupied as a store and dwelling, and was known by the street number 529. The back building was not used as a store and dwelling. Indeed, to what use it was put does not appear in the agreed statement of facts. The fire occurred only in the rear building, and defendant disclaimed liability upon the ground that damage to the rear building was not covered by the above description in the policies. Prior to the time of the issuance of the policies, the defendant admittedly had an atlas or map of buildings in the city of New York, from which it appeared that there was a building on the front and another on the rear of the premises, and the defendant admitted that it knew of the existence of both buildings. Further, it based its premium upon the rate fixed by the Board of Fire Underwriters, and conceded that no extra rate of premium for insurance would have been charged, had the policies specifically described the front and rear buildings, in which case defendant would simply have apportioned the amounts to each building.

No inspection or independent examination of the premises was made by defendant at the time the policies were issued. The same buildings had stood upon the present lot-the usual city lot, 25 feet in width. by 100 feet in depth-for a period of more than 30 years. The only means of effecting entrance to the rear structure was by means of the front building.

The case presents an interesting question of construction, namely: Did the policies include the rear building where the fire occurred? Or did they only appertain to a portion of the premises, viz. the front building?

[1-3] An insurance contract is not unlike any other, and is to be interpreted so as to give effect to the intention of the parties, ascertained from the language used in the instrument as a whole, and aided by the examination of other surrounding facts and circumstances which may have a legitimate bearing on or tendency to disclose such