Mortgagee Affiliates, Inc. v. Jerder Realty Corp.

• Citation: 62 A.D.2d 591,406 N.Y.S.2d 326
• Parties: MORTGAGEE AFFILIATES, INC., et al., Respondents, v. JERDER REALTY CORP. et al., Defendants, and Murray Marcovitz et al., Appellants.
• Decision Date: 12 June 1978
• Court: New York Supreme Court Appellate Division

Page 326

406 N.Y.S.2d 326

62 A.D.2d 591

MORTGAGEE AFFILIATES, INC., et al., Respondents, v. JERDER REALTY CORP. et al., Defendants and Murray Marcovitz et al., Appellants.

Supreme Court, Appellate Division,Second Department.

June 12, 1978.

Julius Zizmor, New York City, for appellant Marcovitz.

Gutman & Gutman, Jamaica (S. Mac Gutman, Jamaica, of counsel), for appellant Durante.

Shea, Gould, Climenko & Casey, New York City (Martin I. Shelton and John B Grant, Jr., New York City, of counsel), for respondents.

Before DAMIANI, J. P., and SUOZZI, GULOTTA and O'CONNOR, JJ.

DAMIANI, Justice Presiding.

The defendants Marcovitz and Durante are guarantors of a mortgage given by defendant Jerder Realty Services, Inc. to plaintiff Mortgagee Affiliates Corp. Jerder Realty defaulted and plaintiffs commenced a foreclosure action against it and the guarantors. Judgment of foreclosure was granted in favor of the plaintiffs and, at the sale held on March 3, 1977, the property was sold for less than the outstanding debt. On March 15, 1977 the deed was delivered to the purchaser. On June 9, 1977, some 86 days later, plaintiffs obtained an order requiring only the guarantors to show cause why a deficiency judgment should not be entered. Personal service of the order to show cause upon Marcovitz and upon the attorneys for Durante was required by June 13, 1977. Durante was served within the time specified, but Marcovitz was not served until June 15, 1977, the 92nd day after delivery of the deed.

Marcovitz opposed the motion to enter a deficiency judgment against him on the ground that service of the order to show cause had been untimely. CPLR 2211 specifically provides that a motion brought on by order to show cause is made when served and not when signed.

Section 1371 of the Real Property Actions and Proceedings Law, which governs motions to enter a deficiency judgment, requires that such a motion be made within 90 days after the consummation of the sale and, in so doing, it sets forth a Statute of Limitations (see Jamaica Sav. Bank v. Risian Realty Corp., 165 Misc. 372, 300 N.Y.S. 553). The requirement is procedural and not jurisdictional (Jamaica Sav. Bank v. Risian Realty Corp., supra; Tompkins County Trust Co. v. Herrick, 171 Misc. 929, 13 N.Y.S.2d 825), which simply means that an objection to the plaintiff's failure to make the motion within the required 90-day period must be specifically pleaded or raised as an objection in response to the motion, and may not be raised at any time thereafter (Jamaica Sav. Bank v. Risian Realty Corp., supra, 165 Misc. p. 374, 300 N.Y.S. p. 555). Here, Marcovitz raised timely objection.

Thus, we are faced with a situation in which the plaintiffs have served their motion papers beyond the 90-day period of the Statute of Limitations and Marcovitz has timely raised the limitation as a bar to further deficiency proceedings against him. The dissent purports to find some exception to the normal consequences of the failure to comply with a statute of limitations and suggests that Special Term "possessed the discretion to excuse noncompliance with the statutory period". The source of this discretion is not claimed to be found in any statute. Similarly, the cases cited in the dissent do not support the proposition that the courts have the discretion to excuse untimely service.

In the cases of Catholic Women's Benevolent Legion v. Burke, 253 App.Div. 261, 1 N.Y.S.2d 720 and Berkman v. Silverstein, 245 App.Div. 891, 282 N.Y.S. 375, the motions to enter deficiency judgments were made and the papers were served within the 90-day period, but by some unauthorized method of service. Notice of the motion was in fact received by the defendants and the courts excused use of the improper method of service and validated the method actually used nunc pro tunc. In Tompkins County Trust Co. v. Herrick, 171 Misc. 929, 13 N.Y.S.2d 825, supra the application to enter a deficiency judgment was also made within the 90-day period, but under the procedure established by a statute which had since been amended. The court stated (p. 936, 13 N.Y.S.2d p. 833): "Having acted in time, * * * plaintiff's right to an adjudication on the merits is not affected" (emphasis supplied). The case of Jamaica Sav. Bank v. Risian Realty Corp., 165 Misc. 372, 300 N.Y.S. 553, supra involved a situation in which the motion to enter a deficiency judgment was made beyond the 90-day period, but in which the defendant waived the Statute of Limitations by failing to raise a timely objection. The case of United States v. Merrick Sponsor Corp., D.C.N.Y., 294 F.Supp. 1048 is not in point because it merely holds that the 90-day Statute of Limitations set forth in the statute (Real Property Actions and Proceedings Law, § 1371) does not apply where the United States is the party plaintiff seeking a deficiency judgment. It is "well settled that the United States is not bound by state statutes of limitation or subject to the defense of laches in enforcing its rights" (United States v. Summerlin, 310 U.S. 414, 416, 60 S.Ct. 1019, 1020, 84 L.Ed. 1283). Thus, the cases cited in the dissent do not support the proposition that the court, as opposed to the defendant himself, has the power to excuse untimely service.

There is no proof in this record that defendant Marcovitz had actual knowledge of any attempt to make service of the order to show cause upon him or that he attempted to avoid such service (see 3 Carmody-Wait 2d, § 24:46). The failure of the plaintiffs to effectuate service in accordance with the terms of the order to show cause within the 90-day time limit is a complete bar to the entry of a deficiency judgment against defendant Marcovitz (see City Bank Farmers Trust Co. v. Cohen, 300 N.Y. 361, 91 N.E.2d 57, dsmg. app. from 275 App.Div. 656, 86 N.Y.S.2d 228).

Accordingly, the application of the defendant Marcovitz to dismiss the motion to enter a deficiency judgment as against him should have been granted.

The appeal of defendant Durante should be dismissed because it was not perfected in accordance with the rules of this court (see Howe Ave. Nursing Home v. Nafus, 54 A.D.2d 686, 687, 387 N.Y.S.2d 272, 273). Had the said appeal been properly perfected, we would have nonetheless dismissed it since (1) no appeal lies from an order directing a reference to hear and report (Brinkman v. Brinkman, 13 A.D.2d 1024, 217 N.Y.S.2d 240; De Matteis v. De Matteis, 21 A.D.2d 783, 250 N.Y.S.2d 499) and (2) the said defendant does not have the standing of an aggrieved party (CPLR 5511) to appeal from the denial of the application of the defendant Marcovitz since he did not join in that application.

On the appeal by defendant Marcovitz, order of the Supreme Court, Richmond County, dated October 24, 1977, modified, on the law, by adding thereto a provision granting the application of defendant Marcovitz to dismiss the proceeding as against him on the ground of the Statute of Limitations. As so modified, order affirmed insofar as appealed from by defendant Marcovitz, with $50 costs and disbursements to said defendant payable by plaintiffs. Appeal by defendant Durante dismissed, without costs but with disbursements payable by said defendant to plaintiffs for their brief submitted in response to his brief.

SUOZZI and GULOTTA, JJ., concur in the opinion of DAMIANI, J.

O'CONNOR, J., concurs in part and dissents in part, with an opinion.

O'CONNOR, Justice (concurring in part and dissenting in part).

I concur with the disposition made with regard to the appeal of defendant Durante. However, I respectfully dissent and would affirm the order of Special Term insofar as it has been appealed from by defendant Marcovitz.

The failure to serve Marcovitz until the 92nd day after the delivery of the deed was not fatal to plaintiff Mortgagee Affiliates Inc.'s (Affiliates) effort to enter a deficiency judgment. Affiliates, despite its "diligent attempts" to serve Marcovitz, was unable to locate him within the 90-day time limitation set forth in section 1371 (subd. 2) of the Real Property Actions and Proceedings Law. It certainly would...