Commercial Cas. Ins. Co. v. Roman

• Decision Date: 08 January 1936
• Citation: 269 N.Y. 451,199 N.E. 658
• Court: New York Court of Appeals Court of Appeals
• Parties: COMMERCIAL CASUALTY INS. CO. v. ROMAN.

269 N.Y. 451

199 N.E. 658

COMMERCIAL CASUALTY INS. CO.

v.ROMAN.

Court of Appeals of New York.

Jan. 8, 1936.

Action by the Commercial Casualty Insurance Company against Harry A. Roman. Judgment of Trial Term entered on the verdict of a jury in favor of plaintiff was reversed on the law by the Appellate Division (244 App.Div. 306, 279 N.Y.S. 170), which directed judgment in favor of defendant dismissing the complaint, and plaintiff appeals.

Judgment of Appellate Division and that of Trial Term reversed, and new trial granted.

Appeal from Supreme Court, Appellate Division, First Department.

William Lurie, of New York City, and Elliot W. Isaacson, of Brooklyn, for appellant.

John E. Booth and William C. Morris, both of New York City, for respondent.

FINCH, Judge.

This is an appeal by the plaintiff from an order and judgment of the Appellate Division, First Department, which directed that a money judgment theretofore entered in favor of the plaintiff and against the defendant, after a trial before a judge and jury, be reversed and the complaint dismissed.

The complaint is by an assignee of a mortgage bond executed by the defendant to recover the principal sum of $13,000, with interest.

The defendant purchased certain real property for $275,000 and took the property subject to a first mortgage for $180,000 and a second mortgage, being a purchase-money bond and mortgage, for $70,000. Subsequently the defendant sold the property, subject to these mortgages. Through various mesne conveyances the title to the fee came to one Misrok. The purchase-money second mortgage was payable in semiannual installments of $5,000 each, the first installment to be paid January 1, 1924, which made the last installment payable July 1, [269 N.Y. 454]1930. The bond also contained a provision for the acceleration of the unpaid principal at the option of the holder of the bond, after default, among other things, in the payment of an installment.

On July 1, 1929, one Dora Floersheimer was the owner of the bond and second mortgage, and Israel Misrok was the owner of the mortgaged premises. Prior to this date $55,000 of the principal sum and accrued interest had been paid by the various grantees of the defendant, leaving the sum of $15,000 due upon the second mortgage. On July 1, 1929, there became due an installment of principal in the sum of $5,000.Misrok failed to pay that installment on its due date, but on August 5, 1929, paid $2,000 on account of this installment and all accrued interest, leaving a balance of $13,000 of the principal sum. In October, 1929, Dora Floersheimer, still being the owner of the bond and mortgage, entered into a written agreement with Misrok which recited that the balance then due and unpaid upon said mortgage, with interest from July 1, 1929, was $13,000, and extended the payment thereof until July 1, 1930. As a part of the same transaction the plaintiff herein executed a surety bond to Dora Floersheimer in the sum of $15,000, conditioned for the payment of any deficiency which may arise ‘in the event of the foreclosure of said mortgage by reason of the default on the part of the principal to pay the amount due on maturity of said mortgage as provided therein in accordance with the terms, covenants and conditions thereof.’ The property having been sold under foreclosure of the first mortgage and apparently not having brought sufficient to pay any part of the $13,000 remaining due on the second mortgage and the plaintiff having paid under its surety bond, this action was instituted on the mortgage bond against this defendant.

The answer of this defendant set up what purported to be six separate defenses. These defenses are, to a great extent, repetitious and substantially set forth but one alleged defense, namely, that the defendant had been discharged because the maturity date of the mortgage bond and mortgage had been extended and that the value of the real property at the time of the extension was in excess of the amount of the mortgage then on the property, and hence the defendant as mortgagor was discharged because his right of subrogation against the mortgaged premises had been delayed.

At the trial of the case there was no difference between the parties as to the proper rules of law to be applied in the following particular, namely, that if at the time the extension was granted the value of the real property was in excess of the amount of the combined mortgages thereon, then this defendant was discharged from liability on his bond. If, on the other hand, the value of the land was less than the amount of the combined mortgages, then this defendant remained liable to the extent of this difference. Murray v. Marshall, 94 N.Y. 611. The learned trial court in his charge to the jury properly submitted the case with reference to both these rules of law. No motion was made by the defendant at the close of the plaintiff's case, or at the close of the whole case, for a dismissal of the complaint or for a directed verdict in favor of the defendant; nor was there any objection on the part of the defendant to the submission of the issues for decision by the jury. The only testimony bearing on the value of the premises had been that of two experts, who...