Staples v. Hendrick

• Decision Date: 23 February 1915
• Citation: 93 A. 5,89 Conn. 100
• Court: Connecticut Supreme Court
• Parties: STAPLES et al. v. HENDRICK.

93 A. 5

89 Conn. 100

STAPLES et al.

v. HENDRICK.

Supreme Court of Errors of Connecticut.

Feb. 23, 1915.

Appeal from Superior Court, New London County; Milton A. Shumway, Judge.

Action by Frank T. Staples and others against Philip E. Hendrick. Judgment for defendant, and plaintiffs appeal. Error, and new trial ordered.

Thomas M. Shields, of Norwich, for appellants. Charles V. James, of Norwich, for appellee.

BEACH, J. The defendant indorsed to the plaintiffs a promissory note for $600, made by one P. C. Hendrick to the order of the defendant. The note was dishonored, and the plaintiffs recovered judgment against the maker, and filed a judgment lien against certain lands of the maker, which were subject to a prior mortgage in favor of the Jewett City Savings Bank. The bank brought a suit to foreclose its mortgage and made the plaintiffs parties, and the plaintiffs moved for a foreclosure by sale, which was ordered. The property was appraised, pursuant to the statute, at $16,900, and was thereafter sold for $10,000, and the court rendered a deficiency judgment in favor of the Jewett City Savings Bank for $4,148.62.

The defendant claimed, and the superior court held, that the taking of judgment and filing a judgment lien discharged the indorser from his obligation on the note, and also that under section 4146 of the General Statutes the plaintiffs, on whose motion the sale was ordered, are barred against bringing any action to collect the debt against the maker until one-half the difference between the appraised value of the land and its selling price has been credited on the debt. Such a credit would wholly extinguish the plaintiffs' claim against the maker, and therefore the court holds that the indorser's liability is gone.

The ruling that the taking of judgment and filing a judgment lien upon the maker's land operated ipso facto as a discharge of the indorser rests upon a misunderstanding of the case of Couch v. Waring, 9 Conn. 261. In that case the holder of the note obtained judgment against the maker, who succeeded in staying the collection of the judgment for three or four years by proceedings in chancery. The chancery suit was then abandoned, and judgment was rendered in the original action on the note for the amount of the former judgment, with interest, so far as the ad damnum clause in the original declaration would permit. But the amount demanded was not large enough to include the whole of the interest which had accumulated during the delay, and as to this deficiency the indorser was held to be discharged, because it was due to the plaintiffs' voluntary act in omitting to make his original demand large enough.

In this case there has been no satisfaction of the judgment against the maker. The filing of a judgment lien was only the first step in a special kind of execution, which might or might not result in full or partial satisfaction. Section 124 of the rules under the Practice Act provides that, where the plaintiff may at his option join several as defendants or sue them separately, judgment without satisfaction against one shall not bar a suit against another; and section 119 expressly provides that the maker and indorser of a promissory note may be sued jointly. These sections cover the present case, so far as the effect of the judgment and judgment lien are concerned.

The other ruling of the court brings up the question whether section 4146 requires the plaintiffs, before collecting the judgment, to credit thereon one-half of the difference between the appraised value and the selling price of the land sold under the decree in the foreclosure suit. Prior to 1833 the foreclosure of a mortgage operated as a bar to any subsequent action on the note. Derby Bank v. Landon, 3 Conn. 62; Swift v. Edson, 5 Conn. 531, 534. Chapter 18 of the Public Acts of 1833 removed this bar, and ever since then the right of a mortgagee to a deficiency judgment after strict foreclosure has always been coupled in this state with some provision for fixing the actual value of the property as of the date of the foreclosure, and for making that valuation a conclusive basis for determining the existence and amount of any claimed deficiency. Rev. 1849, tit. 12, c. 3, § 27; Rev. 1866, tit. 18, c. 3, § 28; Rev. 1875, tit. 18, c. 7, § 2; Gen. St. 1888, § 3011; Gen. St. 1902, § 4124. 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. When, in 1887, mortgages were permitted to be foreclosed by sale, at the discretion of the court, similar provision was made for fixing the actual value of the premises by an appraisal. For some reason this appraisal was made binding only on those upon whose motion the sale was ordered. Chapter 109, Public Acts of 1887. The statute has remained in the same form down to the present time. Gen! St. 1888, §§ 3023, 3028; Gen. St. 1902, §§ 4141, 4146.

In the case exhibited by this record the difference between the appraisal and the sale price was $6,900, and the amount realized was insufficient to satisfy the first mortgage, so that no part of the plaintiffs' judgment lien was paid. As the plaintiffs' lien was for less than $700, the application of section 4146 to their case would produce the result that a judgment creditor who sought to execute his judgment by foreclosure, instead of by an ordinary execution, would find that because he asked for a foreclosure by sale his judgment debt might be wiped out, without any partial...