GELLMAN POGROTZKY vs. MAX LEVATINSKY.

LORING, J. This case comes to this court on an appeal taken by the defendant from a final decree in favor of the plaintiff. [Note p117] The many questions raised during the trial of the case have all been waived by the defendant except the question whether on the facts found by the master he is entitled to have the decree modified.

As we construe the master's report, the facts were in substance as follows: The plaintiff, a Russian who did not understand the English language and who at the time of the matters herein complained of had been in this country less than a year, was during that time living with the defendant, who was his brother in law. He had bought a lot of land, subject to a mortgage of $2,400, and was engaged in the erection of a house upon it. Being short of funds he applied to the defendant for assistance. The defendant lent him $500 on a second mortgage of the house. Later he applied to the defendant for further assistance to enable him to finish the house. The defendant, without making a definite agreement, encouraged the plaintiff to think that he would make a further loan, and in that connection requested the plaintiff to deliver to him a note held by the plaintiff for two thousand rubles (equal to $1,000), which was secured by a mortgage on personal property situate in Russia. The defendant, having obtained possession of this note, refused to make any further advances. After the plaintiff had been to New York to seek the assistance of a relative of both the plaintiff and the defendant, and after some correspondence, the defendant promised to redeliver the note to the plaintiff if the plaintiff would execute a release of all claims and demands which he had against him because of his previous detention of the note. The defendant also agreed that if the plaintiff would give him a $900 second mortgage on the real estate in place of the $500 mortgage then held by him, he would make further advances. Thereupon, the $500 mortgage was discharged and a new mortgage for $900 was executed by the plaintiff and was delivered to the defendant on May 15, 1911. At the same time the defendant presented to the plaintiff an assignment of the Russian note and mortgage, and induced

Page 118

him to sign it by a false representation that it was a release of the demands which the plaintiff had against him by reason of his previous detention of the Russian mortgage note. Thereafter the defendant refused to make any further advances to the plaintiff, and this bill in equity was brought at a date which is not shown in the record. All that appears in that connection is that the substitute bill of complaint was filed on February 6, 1912. While this suit was pending, the plaintiff's real estate was sold for the unpaid taxes of 1911, and the defendant undertook to foreclose the $900 mortgage without notice to the plaintiff. The property covered by that mortgage was sold at public auction. The master found "that the amount due on said mortgage at the time of said foreclosure was six hundred and seventy-five (675) dollars, which represents all moneys advanced thereunder by said defendant to said plaintiff."

On these facts a decree was entered declaring, first, that the Russian mortgage note and the assignment of the mortgage was obtained by the defendant through fraud practiced by him upon the plaintiff; second, that the alleged assignment of the Russian mortgage was null and void; third, ordering the defendant to deliver the Russian mortgage and note to the plaintiff forthwith and to execute, sign, seal and deliver to the plaintiff any and all papers necessary to effectually vest in the plaintiff title to them; and fourth, it was declared "that the mortgage and note for nine hundred (900) dollars set out in the plaintiff's bill of complaint was obtained from the plaintiff by fraud exercised by the defendant upon the plaintiff."

The defendant's contention is that the assignment to the plaintiff of the Russian mortgage and note and the making of the new mortgage for $900 was one and the same transaction, and that inasmuch as the master has found "that the amount due on said mortgage at the time of said foreclosure was six hundred and seventy-five (675) dollars," the plaintiff is not entitled to have the Russian mortgage and note assigned to him without paying that sum of money to the defendant. This contention is wholly without merit. At the time that the defendant, by a fraudulent misrepresentation as to the contents of the assignment executed by the plaintiff, obtained by fraud this assignment of the Russian note and mortgage, the defendant agreed to make further

Page 119

advances to the plaintiff in consideration of the then second mortgage for $500 being discharged and a new mortgage for $900 being made to him. But under the findings of the master the agreement of the defendant to make further advances was an agreement to make further advances under the new second mortgage for $900. Under the master's findings there was no agreement that the Russian mortgage should stand as security for the new advances.

The other objection to the decree is to the fourth clause, which declares that the mortgage and note for $900 was obtained from the plaintiff by fraud. This objection is well taken. For the purpose of giving the plaintiff relief it was within the power and the duty of the judge to make this finding of fact if the evidence warranted it. But no relief founded on this finding was given to the plaintiff by this decree, and the plaintiff has not appealed from it. Under those circumstances the judge had no power to make the finding.

The result is that the decree must be modified by striking out the fourth clause. So modified it is

Affirmed with costs.

E. Greenhood, for the defendant.

No counsel appeared for the plaintiff.