Jemzura v. Jemzura
| Citation | 36 N.Y.2d 496,330 N.E.2d 414,369 N.Y.S.2d 400 |
| Parties | , 330 N.E.2d 414 Raymond JEMZURA, Appellant, v. George JEMZURA et al., Defendants, and Katherine Griffin, Respondent. |
| Decision Date | 05 May 1975 |
| Court | New York Court of Appeals |
Kehoe, Murnane & Garramone, Utica, for appellant.
Joe Schapiro, Hamilton, and Bruce B. Roswig, Syracuse, for respondent.
Plaintiff Raymond Jemzura instituted this action to foreclose a mortgage in the face amount of $10,000 on a hundred-acre farm in Madison County. The mortgage was executed on August 17, 1954 by John Jemzura in favor of defendant George Jemzura, who assigned it on June 17, 1964 to plaintiff. On May 1, 1963, $500 was paid by John Jemzura on account of the mortgage indebtedness. Later that month, John died intestate so that his children, the plaintiff and defendants Gorton, Griffin and George Jemzura, all became tenants in common of the farm, apparently decedent's only asset. Defendant Gorton deeded her interest in the premises to defendant Griffin and defendant George Jemzura defaulted in answering and appeared at trial as plaintiff's witness, leaving Griffin as the only true defendant.
Except for a period when in the service, Raymond lived on the farm practically all his life. Since the father's death, he alone resided on the property, where he kept a vegetable garden for his own use, cut some hay, collected a small amount of maple syrup and stored some stove wood in a farm building.
Trial Term stated that plaintiff at all times herein had exclusively retained possession of the premises; that there was no claim or evidence that rent was ever paid by or demanded of plaintiff; that beginning in 1964 plaintiff paid the taxes ($2,128.69) on the premises, except for two years which were due and owing at the time of trial; and that plaintiff never requested contribution from the cotenants for their share of the taxes, mortgage principal or interest. It found, discernible to equity on the acts and conduct of the parties, an implied agreement by the parties that plaintiff was to pay the taxes, maintain the premises and waive interest on the net mortgage debt in return for his possession, use and occupancy of the premises. It held that the mortgage was valid and enforceable and found that the principal balance due thereon, after deducting the $500 payment, three $100 payments barred by the Statute of Limitations and plaintiff's own share of the mortgage debt (as a cotenant in common and found to be waived by him) was in the sum of $6,600. The Appellate Division affirmed without opinion.
The judgment entered decrees 'that the plaintiff herein have judgment against all of the defendants for the sum of $6,600.00 with interest thereon from the date of entry of this judgment,' and orders that the first, second and fourth defenses and counterclaims of defendant Griffin's answer be dismissed. The third counterclaim, seeking an accounting of the amount to be credited on the mortgage debt by virtue of plaintiff's use of the premises, was not dismissed. Briefly and among other things, the judgment contains customary clauses in regard to sale of the premises by a named referee, payments of taxes which may become liens at the time of sale, the deposit of the balance of the proceeds of sale and the payment of the referee's fees, expenses of sale and $425.45 costs and disbursements to plaintiff or his attorney and 'also the sum of $6,600.000, the amount so reported due as aforesaid together with the legal interest thereon from the date of entry of this judgment or so much thereof as the purchase money of the mortgaged premises will pay of the same.'
EPTL 3--3.6 entitled 'Encumbrances on property of decedent or on proceeds of insurance policy on life of decedent not chargeable against assets of decedent's estate', as it presently reads, became effective on September 1, 1967 (L.1967, ch. 472, § 2; as amd. by L.1967, ch. 686, § 21; see L.1966, ch. 952). Said section provides in part:
'(a) Where any property, subject, at the time of decedent's death, to any lien, security interest or other charge * * * passes to a distributee * * * the personal representative is not responsible for the satisfaction of such encumbrance out of the property of the decedent's estate, except as provided in SCPA 1811 * * *.
'(c) Where any lien, security interest or other charge encumbers:
'(1) Property passing to two or more persons, the interest of each such person shall, only as between such persons, bear its proportionate share of the total encumbrance.'
Thus, at the present time under said section, a distributee, not having executed the bond and mortgage nor having assumed or agreed in some fashion to pay the indebtedness (see Schwartz v. Cahill, 220 N.Y. 174, 178, 115 N.E. 451, 452; Smith v. Cornell, 111 N.Y. 554, 558--559, 19 N.E. 271, 272; Belmont v. Coman, 22 N.Y. 438; Levy v. Comfort, Co.Ct., 13 N.Y.S.2d 845, 847, affd. 257 App.Div. 1037, 13 N.Y.S.2d 847), would not be personally liable for the underlying mortgage debt.
EPTL 3--3.6 re-enacts, without substantive change, section 20 of the Decedent Estate Law (), the latter of which was completely revamped in 1965, effective September 1, 1974 (L.1965, ch. 588), and, in the process, section 250 of the Real Property Law was repealed and its general content embraced (1965 McKinney's Session Laws of New York, p. 838). Said section 250, chapter 265 of the Laws of 1946, effective March 30, 1946, and entitled 'Mortgages and other charges on real property inherited or devised', provided in pertinent part: 'Where real property, subject to a mortgage executed by any ancestor * * * descends to a distributee * * * such distributee * * * must satisfy and discharge the mortgage * * * out of his own property, without resorting to the * * * administrator of his ancestor * * * Where such real property is distributed * * * to two or more persons, the interest in the real property so distributed * * * to each of these persons shall, as between such distributees * * * bear its proportionate share of the total mortgage'. Prior to the enactment of section 20 of the Decedent Estate Law and EPTL 3--3.6, it was held uniformly that section 250 of the Real Property Law created no personal liability on the part of a distributee and that the section merely contemplated that the liability of the distributee should be measured by and not exceed the value of the property which descended to him and should be determined only after the mortgagee resorted to foreclosure and had reduced his claim to a deficiency judgment (Mutual Life Ins. Co. of N.Y. v. Weil, 278 App.Div. 238, 240, 104 N.Y.S.2d 169, 170--171, affd. 304 N.Y. 569, 107 N.E.2d 72; Levy v. Comfort, 13 N.Y.S.2d 845, Supra; Satchell v. De Veer, Sup., 52 N.Y.S.2d 594; Doyle v. Graves, 172 Misc. 838, 841, 16 N.Y.S.2d 554, 557; cf. Seamen's Bank for Sav. v. Smadbeck, 293 N.Y. 91, 97, 56 N.E.2d 46, 48; see Olmstead v. Latimer, 158 N.Y. 313, 317, 53 N.E. 5, 6; Hauselt v. Patterson, 124 N.Y. 349, 356--358, 26 N.E. 937, 938--939; 4 A.L.R.3d 1023, 1051--1053).
The effect of EPTL 3--3.6, as well as that of said precursor sections, upon real property subject to a mortgage executed by an ancestor or testator and which descends to a distributee or passes to a testamentary beneficiary, is to make the mortgaged premises, as between the distributee or testamentary beneficiary and in the absence of a different testamentary direction, the primary source for payment of the mortgage debt (Matter of Burrows, 283 N.Y. 540, 544, 29 N.E.2d 77, 79; Mutual Life Ins. Co. of N.Y. v. Weil, supra). The holder of the mortgage is required to first proceed against the real property by instituting an action to foreclose the mortgage (Emigrant Ind. Sav. Bank v. New Rochelle Trust Co., 267 App.Div. 124, 126, 44 N.Y.S.2d 748, 749--750, mot. for lv. to app. den. 292 N.Y. 724, 54 N.E.2d 697; Emigrant Ind. Sav. Bank v. New Rochelle Trust Co., Sup., 38 N.Y.S.2d 193, affd. 266 App.Div. 1021, 45 N.Y.S.2d 608, mot. for lv. to app. den. 292 N.Y. 724, 54 N.E.2d 697; Onondaga County Sav. Bank v. Markson Bros., 182 Misc. 954, 52 N.Y.S.2d 148, affd. 263 App.Div. 794, 32 N.Y.S.2d 109).
Entry of a judgment of foreclosure and sale results in extinguishing the title or interest of the distributee or testamenta beneficiary in the mortgaged premises (Buckley v. Beaver, 99 Misc. 643, 645, 166 N.Y.S. 131, 132, affd. 182 App.Div. 888,168 N.Y.S. 1103). If the foreclosure sale results in a deficiency, then a deficiency judgment may be entered against the personal estate of the deceased obligor, such as a mortgagor, a grantee who had assumed the mortgage or a guarantor of the mortgage debt, and the amount thereof may be recovered out of the assets of the estate (Olmstead v. Latimer, 158 N.Y. 313, 317, 53 N.E. 5, 6, Supra; New Rochelle Trust Co. v. Hinton, Sup., 9 N.Y.S.2d 861, affd. 256 App.Div. 724, 11 N.Y.S.2d 707; Matter of Coston, 172 Misc. 494, 496--497, 15 N.Y.S.2d 870, 872--873; see Real Property Actions and Proceedings Law, § 1371). The primary liability for payment of the deficiency judgment rests upon decedent's estate (Matter of Burrows, supra; Mutual Life Ins. Co. of N.Y. v. Weil, supra; cf. Equitable Life Assur. Soc. of U.S. v. Wilds, 184 App.Div. 435, 439--440, 171 N.Y.S. 505, 508), and, if there is insufficient property of the estate available in the hands of the personal representative to satisfy the deficiency judgment, then it may be collected from the distributees and testamentary beneficiaries to the extent of the value of any property...
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