Darmstadt v. Manson

Woodward, J.: The defendants in this action were the obligors in a certain bond given in connection with a mortgage. The plaintiffs brought an action for the ¡foreclosure of the mortgage, asking for a deficiency judgment. Each of the defendants was served personally within this State] arid the- appealing defendants, Morris Manson and George Jacpbson, neither appeared, answered nor demurred. Newman Diube, the third defendant, appeared nominally in the action, ¡and the same proceeded to judgment. When the judgment was entered it made no provision whatever for a deficiency, and in due course of time the premises covered by the mortgage were sold for $500, or much less, it ■ appears, than their real Value, none of the defendarits feeling that they were called upon to protect themselves at the sale.. • Subsequently the plaintiffs brought the present action to recover the amount of the deficiency from the bondsmen, failing to allege, under the provisions of section 1628 of the Code of Civil Procedure, that the permission of the court had been granted" to bring such action. Defendants demurred to the amended complaint, on the -ground that the facts stated were not sufficient -to constitute a cause of action, and the demurrer was sustained; The plaintiffs paid the costs and pleaded over, the court granting an order giving permission nunc pro tunc to bring the action, upon condition that the plaintiffs enter into a stipulation to give credit upon the judgment for the amount of the costs involved in' the action up to the time of granting the order. The defendants Manson and Jacobson appeal from -this order. - ¡ . It is contended that the premises -.involved in the foreclosure action were worth enough to have met all of the charges against them. The. defendants, whether they knew of the judginent of foreclosure or not, had no real or apparent interest in the sale" of the. premises, since the plaintiffs, by failing to proceed in the usual way, through no fault of the defendants, took the risk of. selling under the judgment which they had [251] procured. As this did not require the defendants to protect themselves against deficiency by bidding upon the property or otherwise, it would seem to be unjust to permit' them now to come in and sue upon the bond. It has been universally held that section 1628 of the Code of Civil Procedure confers no absolute right upon a plaintiff to sue separately, after a foreclosure, a person liable for the mortgage debt and who might have been made a party to the foreclosure action, but that the right to do so should be granted only when satisfactory reasons are shown why the personal liability was not prosecuted in the foreclosure suit itself. It was pointed out by Judge Rapadlo . in Equitable Life Ins. Society v. Stevens (63 N. Y. 341, 345) that under the Revised Statutes (2 R. S. 191, §153), which are now contained in the Code of Civil Procedure (§ 1628), “so far * * * from its being made compulsory on the court to grant such- permission in all cases, the general rule was against it, • and special circumstances must be shown to justify a separate proceeding at law.” And in Scofield v. Doscher (72 N. Y. 491) it was said that the “aim of the statute is to dispose of the matter in one proceeding.” We find in the record no special reasons given why the defendants, two years after the premises had been sold under a judgment which might have charged them with liability for a deficiency and required them at that time to protect themselves against a sale of the property for less than the liens against it, should now be called upon to answer in an action at law for a recovery upon the bond." The plaintiffs, by their own neglect, have placed the defendants in a different position from that they would have occupied two years before; in a position which the plaintiffs cannot, in the nature of things, restore, and, having elected to stand upon their judgment and to sell the premises, it would be unjust"'to these defendants to permit this action. They have no defense; they would simply be called upon to pay the deficiency to the full extent of their obligation in the bond, even though the plaintiffs themselves may have purchased the premises at practically a nominal figure. In other words, where a plaintiff travels outside of the usual course of the law, to the prejudice of the lights of the defendant, he ought not to be permitted to avail himself of special provisions [252] resting in the discretion! of the court, and the discretion being the discretion of the Supreme Court, we have no hesitation in saying that the order appealed from should he: reversed and that the election of the plaintiffs to rely upon the premises for their debt-cannot be withdrawn to the prejudice of those who have been lured into inactivity by the conduct of the plaintiffs. . The order appealed from should be reversed, with ten dollars costs and disbursement^, and motion denied, with ten dollars costs.. j ' Jenks, F. J., Burr, CarR and Bioh, JJ., concurred. Order reversed, with j ten dollars costs and disbursements, and motion denied, with ten dollars costs.