The opinion of the court was delivered by: JUDD
This is an action to quiet title, which was removed from the Supreme Court, Kings County, under 28 U.S.C. § 1444. Plaintiff has moved for summary judgment.
Plaintiff asserts in their complaint that 266 Siegel Street Realty Corporation acquired title to a lot 100 feet by 28.5 feet on Siegel Street, Brooklyn, on December 5, 1960; and that it defaulted in real estate taxes from the second half of 1960-61, and in water and sewer charges from the calendar year 1961. An in rem foreclosure action was begun on September 27, 1966 with respect to taxes accruing prior to July 1, 1965, and resulted in a default judgment which was implemented by a deed from the Director of Finance to the City of New York on May 8, 1967. The United States was not made a party to this foreclosure.
A mortgage of $14,800 had been made to Chase Manhattan Bank on April 4, 1961, and recorded on April 17, 1961. It was assigned to the United States on September 30, 1965, after payments were in default. The assignment was recorded on February 11, 1966, before the City began its in rem foreclosure.
The City asserts that all taxes and sewer and water charges are prior in lien to the mortgage under New York City Administrative Code, § 415(1)-7.0. It asserts that the land is now vacant and that it was worth less than the taxes (some $5,000) for which it was sold.
The City also asserts that the statute of limitations has run on the mortgage because no payments were made after September 30, 1965.
The answer admits the making of the mortgage and the assignment and that mortgage payments have not been made, but denies information and belief about most of the other allegations of the complaint. The United States asserts by way of counterclaim that the mortgage is in default and asks that it be foreclosed. The counterclaim recites that the government may have to pay taxes and water charges on the property, and asks that they be added to the sum due on the mortgage.
Other Facts from the Motion Papers
The City's motion papers show that Chase Manhattan obtained judgment for $12,026.87 on the mortgage note in the Supreme Court, New York County, on March 20, 1964; that Chase Manhattan did not foreclose the mortgage; and that it assigned the bond and mortgage and the judgment to the United States of America pursuant to a guarantee by the Federal Housing Administration (FHA) made when the mortgage was initially executed.
The City brought an action in the Supreme Court, Kings County, in 1973 to quiet title against the judgment lien which the United States held. Judgment quieting title was granted on September 20, 1973, without objection by the United States, but with a caveat written into the typewritten form. With reference to the injunction against the United States' asserting any claim under its judgment lien, the insert read, "except that it shall retain its rights as provided by the statutes of the United States of America." The title company notified the City when it was about to sell the property that the United States' mortgage must still be removed as a lien.
The City asserts that the sale at the in rem foreclosure brought less than the amount of the tax liens on the properties which were foreclosed. There are therefore no surplus moneys to satisfy the ...