78 A.D. 171 | N.Y. App. Div. | 1903
Lead Opinion
On the 30th day of April, 1897, the appellant made, executed and delivered to the respondent a bond, whereby he agreed to pay the sum of $8,000 on the 30th day of April, 1900. The bond contained
We think the court was wrong in holding that there was no relation of surety between the mortgagor and his grantee of the premises. It seems to be well settled that where a mortgagor sells and conveys premises subject to the mortgage debt, with no covenant on the part of the grantee to pay the same, there is not created by such transaction the technical relation of principal and surety ; but, as the land is the primary fund for the payment of the debt, in respect thereto and to the extent of its value the grantee of the premises stands in the relation of a principal debtor, and there is raised out of such situation an equity in favor of the mortgagor similar to that of a surety. (Murray v. Marshall, 94 N. Y. 611; Antisdel v. Williamson, 165 id. 372.) Where the mortgagee, after a transfer of the title of the premises covered by the mortgage, extends the time of payment of the mortgage debt, or refuses upon the request of the mortgagor to take proceedings to collect the mortgage debt, the mortgagor will be relieved from liability for any subsequent deficiency, if it appears that the whole debt could have been collected from the land, or that it was in value equal to the mortgage debt, and pro tanto to the extent to which the property had depreciated between the time when the request was made and when the mortgage was foreclosed. (Osborne v. Heyward, 40 App. Div. 78.) Under such circumstances, to the extent of the value of the land, the mortgagor is equitably entitled to the protection of a
In view of the law, as expressed in the authorities we have cited, it is clear that the mortgagor would be entitled to a deduction from the deficiency judgment to the extent that there was depreciation in the value of the land after notice was given to foreclose the same, and that the equitable relation of surety for the mortgage debt arose. The court was, therefore, wrong in holding and deciding that such relation did not exist, and that no relief could be granted on account thereof. If the defendant has shown himself upon the present appeal to be aggrieved by such ruling, then it is clear that the judgment based thereon for the deficiency cannot be sustained, and will either be wiped out wholly or pro ta/nto.
This case, however, presents a somewhat different situation from any case which has been called to our attention, or which our research has enabled us to find. There is no proof in the present case showing that the land has depreciated in value from what it was at the time when the mortgage was given, or that after the request was made to foreclose the same after maturity there was any depreciation in its value; consequently nothing is made to appear, so far as the technical value of the land is concerned, which entitled the appellant to any relief whatever. What does appear, however, is that after the request was made to foreclose the mortgage, the mortgagee permitted the grantee of the premises to collect the rents
It is evident that if this be the duty and obligation of the mortgagor in a case where the grantee from a mortgagor has assumed the payment of the mortgage debt, in principle it must follow and be applied to the case of a mortgagor who has conveyed the prem
We conclude, therefore, that the defendant Jungmann was entitled to have such sums deducted from the deficiency judgment as were represented by the amount of the taxes, water rates and interest, which was permitted to accumulate after the notice to foreclose was given; and also to be allowed for rents which might have been impounded. In measuring this right, however, it is clear that the plaintiff is to be allowed only such sums as would have accrued, if, acting with reasonable diligence, she had foreclosed the mortgage
It follows, therefore, that the judgment for the deficiency should be reversed, and a new trial granted, with costs to the appellant to abide the event.
Laughlin, J., concurred; Yan Brunt, P. J., and Patterson, J., dissented.
Concurrence Opinion
I concur with Mr. Justice Hatch, except in so far as he holds that the defendant was liable for the rents that were collected by the owner of the property after notice to foreclose the mortgage was given by the appellant. There is nothing to show in this record that the mortgagee would have been entitled to the appointment of a receiver of the mortgaged premises had she promptly commenced to enforce the mortgage. There is no allegation or proof that at the time the notice was given the property was insufficient to secure the amount due on the mortgage. It seems to be assumed that because, upon a subsequent sale under the judgment there was a deficiency, the mortgagee would at the time when she should have commenced her action to foreclose have been entitled to a receiver; but I can find no evidence to justify such an assumption. Nor do I consider that it was the duty of the mortgagee to apply for a receiver. When the notice to foreclose was given it was her duty to take the usual and customary steps to enforce the mortgage, and it is the damages sustained by a failure to perform that duty that the appellant is entitled to recover. If the mortgagee had at once commenced her action to foreclose the mortgage, and prosecuted the same with diligence, she would not have been liable because upon a subsequent sale there was a deficiency and the owner of the property had been able to collect the rents in the meantime. The plaintiff was liable for the damages sustained by reason of her failure to do what the plaintiff requested her to do, viz., to at once proceed to foreclose the mortgage. Upon the record it would seem that the damage thus sustained was the interest upon the mortgagor’s debt for the time she delayed in commencing the foreclosure action and the liens for taxes and the water rates that accrued during that period, and that, I think, is the extent of her liability.
Dissenting Opinion
I dissent from the conclusion arrived at by the majority of the court. While, as between the mortgagor and the property, the mortgagor had the right to claim that the property should be first applied to the payment of the debt before recourse should be had to him, yet no such relation existed as between the mortgagor and the mortgagee as to entitle him to any of the rights of a surety. The case is entirely different from one where the grantee of premises assumes the payment of the mortgage. In that case he becomes the principal debtor and the original mortgagor becomes the surety. If, in this case, the mortgagor desired to prevent depreciation in the property upon which he had given the mortgage, it was a simple matter for him to pay his debt, which was the original obligation that he assumed, nobody being liable for any deficiency but himself. If he had done this, of course he would have the right to be subrogated to the security; and this was the true relation of the parties, and there was none of the elements of suretyship existing.
Patterson, J., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.