Frank v. Davis

• Decision Date: 31 October 1892
• Citation: 135 N.Y. 275,31 N.E. 1100
• Parties: FRANK v. DAVIS.
• Court: New York Supreme Court

135 N.Y. 275

31 N.E. 1100

FRANK

v.DAVIS.

Supreme Court, New York County, New York.

October, 1892.

Appeal from an order of the General Term of the Supreme Court, First Department, which reversed an order granting an application by the plaintiff for leave to enter a deficiency judgment in an action of foreclosure.

Action for the foreclosure of a mortgage brought by Julius J. Frank against Edward A. Davis.

The ordinary judgment of foreclosure and sale was given, containing the usual provision for a deficiency judgment and execution thereon. The defendant appealed from the judgment to the General Term and to this court, and the judgment was here affirmed (127 N. Y. 673). During the pendency of the appeals, proceedings on the judgment were stayed. After the appeal had been taken to this court, an action was commenced to foreclose a prior mortgage upon the same premises, to which the parties to this action were made defendants, and that action resulted in a foreclosure judgment, and the premises were sold under that judgment while the appeal in this action was pending in this court, and a surplus was produced after satisfying the prior mortgage. In a proceeding for the distribution of such surplus upon the application of this plaintiff, about the sum of $4,000 was applied upon his judgment, and there was still left unpaid thereon upwards of $3,000.

The Special Term, upon the authority of Siewert v. Hamel (33 Hun, 44), granted plaintiff's motion for an order directing the clerk to enter and docket a judgment in his favor for the amount of such deficiency, and granting him execution therefor.

The General Term reversed the order made by the Special Term upon the ground that no deficiency judgment could be entered under Code Civ. Pro. §§ 1626, 1627, because the lien sought to be foreclosed had been destroyed by virtue of the foreclosure of the prior lien, and there could, therefore, be no sale of the mortgaged property; following Loeb v. Willis (22 Hun, 508), and disapproving Siewart v. Hamel (33 Id. 44). [Reported in 61 Hun, 496;S. C., 16 N. Y. Supp. 496.]

The plaintiff appeals to this court.

Julius J. Frank ( Samuel W. Weiss, attorney), for appellant.

I. Where a court of equity once obtains jurisdiction it will give such relief as the facts require in order to terminate the litigation between the parties (citing McGean v. Metropolitan Elevated R. R. Co., 133 N. Y. 9;Lynch v. Metropolitan Elevated R. R. Co., 129 Id. 274).

II. The surplus over the prior mortgage must be regarded as land (citing Matthews v. Duryee, 4 Keyes, 525; Dunning v. Ocean National Bank, 61 N. Y. 497).

Benjamin M. Cardozo ( Donohue, Newcombe & Cardozo, attorneys) for respondent.

I. A foreclosure in equity is not intended to act in personam, but is in the nature of a proceeding in rem; and without the aid of some statutory authority, the only proper remedy for a deficiency is by an action at law upon the bond (citing Dunkley v. Van Buren, 3 Johns. Ch. 330;Sprague v. Jones, 9 Paige, 395;Burroughs v. Tostevan, 75 N. Y. 567;Orchard v. Hughes, 1 Wall. 73;Noonan v. Lee, 2 Black. 499; 2 Jones on Mortgages, §§ 1709, 1711; Code Civ. Pro. §§ 1626, 1627).

II. The order of the General Term was discretionary, and is, therefore, not appealable to this court (citing Withers v. Morrell, 3 Edw. Ch. 560;North Am. Fire Ins. Co. v. Handy, 2 Sandf. Ch. 492;Schell v. Mayor, 128 N. Y. 67;Farmers' Loan & Trust Co. v. Bankers' & Merchants' Telegraph Co., 109 Id. 342).

EARL, Ch. J.

The judge at Special Term granted plaintiff's motion upon the authority of the case of Siewert v. Hamel (33 Hun, 44). The General Term disapproved of the decision in that case and held that the jurisdiction of an equity court to enter a deficiency judgment in an action to foreclose a mortgage is strictly statutory, and that such a judgment can be entered only after a sale under the foreclosure judgment and a deficiency thus resulting and ascertained.

In England, and in this State, prior to the revised statutes, the court of chancery, in an action to foreclose a mortgage, was not supposed to have jurisdiction to render a personal judgment against the mortgagor upon his bond or covenant to pay the mortgage debt, and such a judgment could only be obtained by an action at law (Noonan v. Lee, 2 Black. 499, 501;Orchard v. Hughes, 1 Wall. 73;Dunkley v. Van Buren, 3 Johns. Ch. 330;Jones v. Conde, 6 Johns. Ch. 77;Globe Ins. Co. v. Lansing, 5 Cow. 380;Sprague v. Jones, 9 Paige, 395;Equitable Life Ins. Soc. v. Stevens, 63 N. Y. 341, 344;Burroughs v. Tostevan, 75 N. Y. 567, 572). This was an exception to the general rule that where a court of equity obtains jurisdiction of an action it will retain it and administer full relief both legal and equitable, so far as it pertains to the same transactions or the same subject matter (Lynch v. Metropolitan Elevated Railroad Co., 129 N. Y. 274;McGean v. Same, 133 Id. 9). The purpose of this rule was to relieve parties from the expense and vexation of two suits, one equitable and the other legal, where the whole controversy could be adjusted in the one suit. There was no reason, so far as we can perceive, for taking the case of a mortgage foreclosure out of this convenient and beneficial rule; and the lawmakers of this State took early occasion to change the law by providing that a personal judgment for a deficiency may be given in the foreclosure action against any party liable for the mortgage debt (2 R. S. 19, §§ 151, 154). They went further than the equitable rule and authorized a personal judgment, not only against the mortgagor, as to whom equitable relief could be had, but also against any other person who was obligated for the payment of the same debt. It was early held that a contingent decree for the...