Hutchinson v. . Ward

192 N.Y. 375 | NY | 1908

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The trial court, in directing judgment for the defendants, followed the decision of the Appellate Division upon a previous appeal. (114 App. Div. 156.) It was then held that the bond and mortgage "were New Jersey contracts * * * intended by the parties that they should be controlled by the existing laws of that state;" that the plaintiff's assignor "having followed the statute in his foreclosure, and a deficiency having arisen, * * * he was bound to pursue the remedy provided by the statute for its collection and that he could not come into a foreign state * * * and sue upon the bond as a common law obligation," and that "if this action were permitted to be maintained the mortgagor would be compelled to pay the deficiency and be deprived of the right to redeem the mortgaged property." Having thus held, in effect, that the bond was not a common-law obligation and that the plaintiff was confined to the courts of the state of New Jersey in his action upon the defendants' bond, the Appellate Division, somewhat inconsistently, as it appears to me, ordered a new trial, upon reversing a judgment in plaintiff's favor, instead of ordering the dismissal of the action. I am unable to agree with the Appellate Division's view of the operation of the New Jersey statutes, as then expressed. It would seem that that court and, indeed, this court were committed to the view that such an action is maintainable upon the bond; subject to the provisions of the New Jersey statute, as read into the contract. In Stumpf v.Hallahan, (101 App. Div. 383), which was affirmed by this court, but without opinion, (185 N.Y. 550), the action was similar in its nature to the present one. What was decided in that case was that the laws of the state of New Jersey governed and that, as the action was not brought within the six months after the sale in foreclosure, the action could not be maintained. These two questions were settled, of course; but it was also settled, necessarily, that nothing forbade the bringing of an action upon the bond within this state, if the cause of action had not been destroyed.

This action was brought within the statutory period of six months after the sale of the mortgaged premises and I find nothing in the New Jersey statute, expressly, or by reasonable implication, which operates to confine the pursuit of the obligee's remedy upon his bond to the courts of that state. The provisions of the statute, undoubtedly, entered into and became a part of the contract of the parties to this bond and mortgage. The parties resided in that state; the contract was to be performed there, in legal contemplation, and the law of the place regulated the manner of performance. That law provided, when a bond and mortgage were given, that all proceedings to collect the debt should be, "first to foreclose the mortgage and if * * * the premises should not sell for a sum sufficient to satisfy the debt, * * * in such case, it should be lawful to proceed on thebond for the deficiency; that all suits on said bond shall be commenced within six months from the date of the sale," and that if "the person who is entitled to the debt shall recover a judgment * * * such recovery shall open the foreclosure sale * * * and the person, against whom the judgment has been recovered, may redeem the property, * * * provided that a suit for redemption is brought within six months after the entry of said judgment," etc. It was implied in the transaction between the parties to the bond and mortgage in question that these provisions would apply to and govern their future rights and relations. They affected the contract by requiring the mortgagee to rely, primarily, upon the mortgage for repayment of the debt and to resort to equity for its enforcement. They affected his cause of action upon the bond by making it unlawful to sue upon it, except when a deficiency had arisen upon the sale of the mortgaged premises in foreclosure and when the suit was brought within the six months. It, also, attached certain consequences to a recovery in the suit of a most material character. The operation, therefore, of the statute was not upon the remedy, merely; it was to terminate, or to extinguish, the debt itself, in a certain event, so far as it remained unpaid through the foreclosure sale; because a suit upon the bond would only be lawful, upon a compliance had with certain prescribed conditions. In such a case, upon suit being brought in another state, the lex loci contractus and not the lex fori, must govern in the construction of the agreement. (See Gans v.Frank, 36 Barb. 320; McMerty v. Morrison, 62 Mo. 140; SeaGrove, etc., Assn. v. Stockton, 148 Pa. St. 146.) It is the general rule that a statute of limitations affects only the remedy and that the lex fori is the governing law; but it should be clear where, as here, the law of the state enters into and forms a part of a contract, that that law will govern, however differing from the lex fori; if the action be transitory.

Applying and giving effect to the law of New Jersey, in our construction of the contractual relations of the parties, how does it confine the enforcement of the bond, for any balance of the debt, to the courts of that state? There is no expression to that effect. If the obligee has complied with the statute in his first proceeding to recover his debt, he is not restricted in pursuing the defendants upon their bond, as a common-law obligation; provided he commences his action within the six months. That limitation was not a general one applicable to any action; it applied to proceedings on bonds and mortgages and became an integral part of the contract. It has a reason for its application in its bearing upon the right of redemption, provided for in the statute. If it is lawful under the statute to proceed upon the bond, it must be lawful everywhere. If that were not so, the consequence would be that the right to bring the personal suit would be defeated by the change of residence of the obligor, as in the present case, and the obligee would be remediless.

We have no policy in this state which is affected by permitting the suit. It is not a case where the plaintiff is seeking to enforce some peculiar liability, or remedy, created by a foreign state; he is seeking to enforce a common-law obligation, which has not wholly lost its force. The action is transitory in its nature and is maintainable outside of the state where the contract was made. The courts of this state are open to all suitors and will enforce transitory rights of action, where the liability asserted is recognized by the common law, is contractual in its nature and is not violative of our public policy. This obligation of comity is only denied, as before suggested, where a foreign statute is sought to be enforced against a citizen, which has created a liability, or has granted a remedy, unknown to the common law, or contrary to our declared policy. (Marshall v. Sherman, 148 N.Y. 9.) It is objected, and such was the view taken by the Appellate Division, that to allow a recovery upon the bond would work injustice; inasmuch as the defendants would be compelled to pay the deficiency, arising on the mortgage sale, and would be deprived of the right to redeem the mortgaged property. I am unable to see how any such injustice would follow, upon a fair reading of the New Jersey statute. The provision is general as to any suit upon the bond and as to the effect of a recovery therein. Such a recovery is declared to open the foreclosure sale, and permits the judgment debtor to redeem the property; "provided that a suit forredemption is brought within six months after the entry ofjudgment." Nothing in the statutory provision limits the right to sue in redemption to a case where the judgment has been obtained in the New Jersey courts. For all that appears, the obligors, upon the recovery of a judgment against them in a foreign jurisdiction, may bring their action to redeem in New Jersey and set up the judgment as ground for the equitable relief demanded. We do not dictate to the courts of that state what construction shall be given to its statute; we, simply, say that, as its provisions appear, a suit on the bond is maintainable anywhere, when, according to the implied stipulation, it is brought for a deficiency arising upon a previous foreclosure of the mortgage and within the statutory period, and that the right to sue in redemption follows the recovery upon the bond. We should not, by a different interpretation, appear to impute to the legislature of New Jersey an intention to work unnecessary injustice by denying the transitory right of action, which attends, ordinarily, upon such a personal obligation. The New Jersey court appears to have regarded the operation of the statute as not affecting the common-law force inherent in the bond and mortgage, otherwise than by postponing its enforceability to a foreclosure of the mortgage. (See Mershon v. Castree, 57 N.J.L. 484.) When a judgment in this action is set up in an action to redeem, brought in the New Jersey court, it will be for that court to determine its effect upon the statutory rights of the defendants and, if our views are not agreed with, the proper construction of the statute will be given.

For these reasons, I advise the reversal of the judgment appealed from and that a new trial be ordered; with costs to abide the event.

CULLEN, Ch. J., HAIGHT, VANN, WERNER, WILLARD BARTLETT and CHASE, JJ., concur.

Judgment reversed, etc.