Hurd v. Callahan

The Surrogate. The objection to the proof offered as to the depreciation in value of the mortgaged premises was well taken. The case of People v. Jansen has been overruled, and is no longer to be regarded as an authority (5 Amer. Dec., 275, and note, 279). In no case is a surety discharged by mere laches of the creditor, unless after a request to prosecute the principal (Looney v. Hughes, 26 N. Y., 514). The mere neglect of the holder of the bond and mortgage to proceed against the mortgagor, does not discharge the guarantor, though the value of the land become so depreciated as to be ultimately inadequate to pay the amount due (Brown v. Curtiss, 2 N. Y., 225). Callahan guaranteed the payment of the bond and mortgage. This was a guaranty of payment, not only of the principal, but also of the interest that might accrue thereon. The case of Hamilton v. Van Rensselaer (43 N. Y., 244), cited by counsel for contestants, is not in point. There the guaranty was for the punctual payment of interest on a bond to run for several years, payable yearly, and an agreement to pay it on demand, in default of its payment by the obligor. It was held that the guaranty did not extend to the payment of interest accruing after the bond became due, as was claimed by the plaintiff. Ch. J. Church remarked that the construction contended for by the plaintiff might render the contract as burden [396] some as if it had been a guaranty of the payment of the .principal itself. It has been repeatedly decided that the real estate of deceased persons can only be sold in a proceeding like this, to pay their debts, and that the costs of actions brought against the executor or administrator to recover them, are no part of such debts. This is undoubtedly the law. The only question on this subject, in this case, is whether the deficiency in the amount realized embraces the costs, etc. The holder of the bond and mortgage exhausted his remedy against the land, and the supreme court has adjudged that the proceeds of sale were insufficient to pay the same; and the amount remaining due thereon, for principal and interest, is the amount of the deficiency. The costs of the foreclosure were incidental to the endeavor to collect out of the mortgaged premises ; and although they were first paid out of the proceeds of sale, they cannot justly be considered as constituting any part of the amount still due on the bond and mortgage. I am to ascertain what remains due, and I find that $548.76 has, through legal proceedings, been paid thereon, and that there is still due $480.08, with interest thereon from May 15, 1880. Ho costs, as such, are included in this balance. The sale, if ordered, is for the purpose of paying it, and not to pay any costs. Upon a guaranty of payment only, the holder may proceed, in the first instance, against the maker ; but if he does so, and subjects himself to costs, he cannot after-wards recover those costs of the guarantor, because he had his action, in the first instance, against the guarantor, and need not have incurred costs in an action against [397] the maker (Theobald on Principal and Surety, 90 ; Tuton v. Thayer, 47 How. Pr., 180). But suppose the plaintiff in foreclosure had not made the executrix a party in that action, and had afterwards sued her on the testator’s guaranty, to recover this deficiency, he would have obtained a judgment for the whole amount, with costs. Then lie could have made a like application to this, and the amount of that judgment, exclusive of costs, would have been the debt against the decedent, he was entitled to recover in the proceeding. In the case of Mosher v. Hotchkiss (3 Keyes, 161), although it was a case of guaranty of collection, the court lays down the abstract rule, as one of the reasons why the guarantor should not be allowed to have the costs of an action against the principal deducted from an amount collected from him and applied to the principal,—that where a sum of money has been collected by action against the principal debtor, the surety can have no equity to demand that so much of the money as shall be necessary to pay the expense of the collection, shall be withheld from that object, and be applied exclusively to satisfy the principal of the debt. The creditor is entitled to the whole of his demand, and the expenses of collection were legitimately deducted from the sum realized by execution against the principal debtor. The case of Ferguson v. Broome (1 Bradf., 10), cited by counsel for the heirs, was decided before the enactment of Laws 1869, ch. 845, which protects bona fide purchasers for value, after the lapse of three years from the date of letters testamentary, or of administration, which thus robs this right of the creditor of its character as “a hidden and tremendous lien.” The case was de [398] cided upon sound principles, as the law then stood, but is no longer an authority, in so far as its reasoning is in conflict with the provisions of that act. The language of that law implied that a sale may be made, on the application of a creditor, which is not presented until after three years has elapsed since the granting of letters. This proceeding having been commenced in July last, is unaffected by the provisions, on this subject, of the new Code. While this case presents a different question from that discussed in the East River Nat. Bk. v. McCaffrey (3 Redf., 97), and I do not, therefore, propose here to consider it, yet I am inclined to think the conclusion there reached to be sound. The amount of the deficiency, with interest, must be established as the amount due to the petitioner. Ordered accordingly.