Union Bank v. Rubenstein

138 N.Y.S. 644 | N.Y. Sup. Ct. | 1912

Giegerich, J.

The action is .brought to foreclose a second mortgage originally amounting to <$9,500, on which the sum of $375 was paid on the twenty-first day of February, 1910, and the further sum of $156.25 on the tenth day of May, 1910, and the further sum of $156.25 on the tenth day of August, 1910, making the aggregate payment of $687.50, and leaving due on the principal the sum of $8,832.50. The plaintiff asks for a deficiency judgment against the defendants Rubenstein and Rude, and the principal question in the case relates to the rights of the plaintiff as against these defendants, who were the owners of the property at the time the mortgage in suit was given, • and who gave their bond with the mortgage, but who subsequently conveyed the property, their grantee taking it subject to the mortgage but not assuming its payment. The mortgage in suit, with the bond accompanying it, was given by the defendants Rubenstien and Rude on the tenth day of September, 1908, and was payable on or before the tenth day of September, 1909. It was a subordinate lien to a first mortgage on the same premises amounting to $24,000. After the mortgage in suit became due, the plaintiff and the then owner of the property entered into an agreement whereby a new mortgage in the amount of $27,000 should be placed upon the premises in place of the former mortgage of $24,000, the plaintiff agreeing to subordinate the mortgage in suit to the new mortgage of $27,000, and the then owner of the property agreeing to pay the plaintiff the sum of $375 in cash and the further sum of $625 in equal installments of $156.25 each on the first days of May, August and ¡November, 1910, and on February 1, 1911. On behalf of the defendants Eubenstein and Eude it is claimed that the extension of time granted by the plaintiff, together with the increase in the amount of the prior lien from $24,000 to $27,000, had the effect of wholly relieving them of their liability upon the bond. I do not think the plaintiff’s acts have exonerated them from liability to that extent. The rule laid down in Murray v. Marshall, 94 N. Y. 611, 616, applicable to such cases, is that the grantee stands in the quasi relation of principal debtor only in respect to the land as the primary fund and to the extent of the value of the land, and, if that value is less than the mortgage debt, as to the balance he owes no duty or obligation whatever, and as to that the mortgagor stands to the end, as he was at the beginning, the sole principal debtor, and that from any such balance he is not discharged, and as to that no right of his is in any manner disturbed. The measure of his injury is his right of exoneration, and that necessarily is bounded by the value of the land. Applying that principle to the facts in the present case, the defendants Eubenstein and Eude are not relieved entirely, but only to the extent that their position has been made worse by the extension of the time of payment and by the increase of the prior lien. In other words, they are to be treated as though there had been no extension and as though the prior mortgage remained at the original figure of $24,000. As the sum of $687.50 has been paid on the second mortgage and the first mortgage has been increased by $3,000, the net result is to increase the total amount of the liens against the property $2,312.50, and this amount, with interest on the same, should be deducted from the deficiency, if any, resulting from the sale, and upon such balance only should the defendants named be adjudged personally liable. Although these defendants have pleaded in their answers that the mortgaged premises were ample security for the amount of the bond and mortgage on the day they became due, and that since that time they have depreciated in value, there was no evidence given to support those allegations, and consequently no relief can be given under that defense. I have not overlooked the argument made on behalf of the defendants that this is not a case of an extension merely, but also of an increase in the amount of the prior lien and a corresponding decrease in the security of the mortgage in suit, but I cannot see that this circumstance should be held to release the defendants wholly from their liability on the bond. In Murray v. Marshall, supra, at page 616, the Court of Appeals adverted to the fact that in the case of an extension of the time of payment not only might the land prove to be of less value at the end of the extended period than at the original maturity of the'debt, but also that the latter might be increased by an accumulation óf interest; but, notwithstanding such increase in the amount of the lien, complete exoneration was not accorded to the mortgagors. The plaintiff is, therefore, entitled to judgment of foreclosure and sale, and adjudging that the defendants Rubenstein and Rude pay any deficiency which may remain after applying all the proceeds of the sale to the payment of the amount due on the bond and mortgage, together with the costs, interest and expenses of the said sale, less the sum of $2,312.50 and interest thereon. Requests for findings should be submitted, with proof of service, within five days after the publication of this memorandum.

Judgment accordingly.