79 N.Y.S. 551 | 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 the usual covenant in the penal sum of $16,000 for the recovery of principal, interest, and costs, etc. Upon the same date he executed, as collateral security for the payment of the bond, a mortgage for the same amount, covering certain property on 133d street, in the city of New York. On or about the 10th day of September, 1897, the mortgagor conveyed the mortgaged premises to one Wronkow, subject to said mortgage; the grantee, however, not assuming
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-
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 mort
“We have held that, where the mortgagor conveys to a third party, who assumes the mortgage, the relation of principal and surety arises between the mortgagor and his vendee; and that, after notice of this relation, the mortgagee is bound to observe it, and abstain from doing any act to the prejudice of the mortgagor, or which would impair his recourse against the mortgaged premises in case he should be obliged to pay his bond and be subrogated to the mortgage. The mortgagee in such case, after notice, cannot with impunity release the land, or extend the time of payment, or do any other act to the prejudice of the mortgagor; and the prohibited acts are determined by the law of principal and surety. Calvo v. Davies, 73 N. Y. 215, 29 Am. Rep. 130.”
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 premises to a grantee, subject to the mortgage, to the exent that' the mortgagor stands in the equitable relation of surety. In other words, under such circumstances the mortgagor is protected as a surety to the extent of the value of the land, and to that extent he is entitled to the same measure of protection that obtains in the case of a suretyship, where a grantee has assumed the payment of the mortgage. As to the value of the land, the mortgagee may not do any act, or suffer it to be done, to the prejudice of the mortgagor; and, so far as such acts affect the value of the land, the mortgagor is entitled to protection. It would seem, therefore, where the land is only equal to the payment of the mortgage debt, or is in value insufficient for such purpose, and the mortgagee has been requested by the mortgagor to foreclose the mortgage and collect the-debt
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., concurs.
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
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., concurs.