North End Bank & Trust Co. v. Mandell

• Citation: 155 A. 80,113 Conn. 241
• Parties: NORTH END BANK & TRUST CO. v. MANDELL et al.
• Decision Date: 01 June 1931
• Court: Supreme Court of Connecticut

155 A. 80

113 Conn. 241

NORTH END BANK & TRUST CO. v. MANDELL et al.

Supreme Court of Errors of Connecticut.

June 1, 1931

Appeal from Superior Court, Fairfield County; Frederick M. Peasley Judge.

Suit by the North End Bank & Trust Company against Abraham H. Mandell and others, to foreclose a mortgage, and for a deficiency judgment. The case was tried to the court. From judgment of foreclosure by sale and supplemental judgment for deficiency certain of the defendants appeal.

Error in amount of deficiency, and cause remanded, with directions.

Edward J. McCarthy, of Bridgeport, for appellants.

Clarence R. Hall, of Bridgeport, for appellee.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY JJ.

AVERY J.

August 6, 1920, the plaintiff loaned to the Hibernian Building Association of Bridgeport, Inc., $15,000, taking its note, secured by a mortgage on its property in Bridgeport, for that amount. There was also received, as further security, the written several guaranty of payment of the note, signed by Daniel J. O'Connor, Frank J. Brady, James J. Rawley, William Clifford, Patrick McCarthy, James F. Whelan, James J. Small, and John F. McCarthy. December 10, 1927, the building association, by warranty deed, conveyed the mortgaged premises to Abraham H. Mandell, who, in the deed, assumed and agreed to pay the mortgage note held by the plaintiff. Between the date of the note and July 1, 1930, $5,000 was paid to the plaintiff on account, leaving an unpaid balance of $10,000. By writ returnable the first Tuesday of September, 1930, the plaintiff brought an action to foreclose the mortgage, asking for a deficiency judgment against Mandell and the guarantors who were made parties defendant. Mandell and two of the guarantors, Frank J. Brady and William Clifford, made default of appearance. The remaining guarantors filed appearances. September 5, 1930, the plaintiff filed a motion for foreclosure by sale. September 19, 1930, judgment of foreclosure by sale was entered. October 2, 1930, the appraisers appointed by the court, filed their report, appraising the premises at $12,500. Thereafter, October 15, 1930, the premises were sold, pursuant to the judgment, for $5,000. December 15, 1930, the plaintiff claimed a deficiency judgment against Mandell and the guarantors in the amount of $5,524.42, which sum represented the full amount of the plaintiff's claim with expenses and costs, less the sale price of the premises. The appearing guarantors, at the hearing, claimed there should be a further credit on their debt of $3,750, being one-half the difference between the value of the premises as found by the appraisers and the sales price as of the date of sale, and that the deficiency judgment should be reduced by deduction of the latter amount to $1,774.42. The court entered a deficiency judgment for $5,524.42, and the guarantors who had appeared duly appealed to this court.

Two questions are presented in this case: (1) Whether the provision for a further credit of one-half the difference between the appraised value and the sales price of real estate under foreclosure must be allowed before any deficiency judgment may be entered as provided in section 5116, Gen. St. (1930), when the foreclosing plaintiff makes a motion for foreclosure by sale; and (2) whether the guarantors of payment of the mortgage can require such credit when they have been made parties defendant in a foreclosure action by the plaintiff who asks a deficiency judgment against them. The statute is appended in the margin.^[1] It provides that all person " liable to pay the debt secured by such mortgage or lien may be made parties" ; and, further, " *** no judgment shall be rendered in such suit or in any other for the unpaid portion of the debt or debts of the party or parties upon whose motion the sale was ordered, nor shall the same be collected by any other means than from the proceeds of such sale until one-half of the difference between such appraised value and such selling price shall have been credited upon such debt or debts as of the date of sale; and, when there shall be two or more debts to which it is to be applied, it shall be apportioned between them." This statute was before us for consideration in Staples v. Hendrick, 89 Conn. 100, 103, 106, 93 A. 5, and Acampora v. Warner, 91 Conn. 586, 588, 101 A. 332. In these cases, the history of the legislation and the object to be accomplished thereby is discussed. In the Staples Case we said (page 103 of 89 Conn., 93 A. 5, 6): " The plain object of these provisions is to require a mortgage creditor. who appropriates the property in part payment only of his debt, to apply the actual value of the security to the debt before collecting any claimed deficiency." And further, in the same case: " The apparent object of section 4146 [5116] is to attach a condition under certain circumstances to the allowance of a deficiency judgment, or to the collection in any other manner of the unpaid portion of the debt or debts secured by the mortgage or lien thereby foreclosed. There is good reason for such a condition, for as it is reasonable and in accordance with established practice in cases of strict foreclosure to require (in case any party desires it) a foreclosing plaintiff, who appropriates the property in part satisfaction only of his debt, to apply the appraised value of the property on the debt before claiming a deficiency judgment for the amount of any alleged deficiency; so it is...