Case ID: ny-super-ct_54/html/0400-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Freedman, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Plaintiff, v. ISAAC T. SMITH, Defendant.
    
      Bond and mortgage—Recovery of balance due on bond after foreclosure of mortgage in another state. Code Civ. Proc. 1G28.
    This bond that was the subject of this action was conditioned for the payment of $20,000, and had been originally secured by a mortgage on real estate in New Jersey. The mortgage was foreclosed by action in a New Jersey court, and the mortgaged premises sold for $3,000 dollars. This action was brought to recover the balance due and unpaid on the bond after application of the $3,000 which, with interest to the day of trial, amounted to $20,123.49. A verdict for the defendant was directed by the trial judge, on the ground that leave of the court, in which the foreclosure suit was determined, had not been obtained to bring this action, as provided by section 1628 of the Code of Civil Procedure.
    
      Held, by the court, that this section of the Code does not apply to a case where the action for tile foreclosure of the mortgage was brought in a court outside of the limits of the state of New York. It is simply a regulation in regard to the foreclosure of mortgages upon real estate in the state of New York, and does not regulate actions on bonds generally, but only actions on bonds that are secured by mortgage on real estate situate in the state of New York. Bonds, secured by mortgages on real properly in other states, are not distinguished from bonds made without collateral security.
    Before Sedgwick, Ch. J., Freedman and O’Gorman, JJ.
    
      Decided May 2, 1887.
    Exceptions of the plaintiff ordered to be heard at General Term, in the first instance.
    
      Henry G. Atwater, for plaintiff.
    
      Geo. Putnam Smith, for defendant.
   By the Court.—Freedman, J.

This action was brought to recover a balance of $15,657.21 due on a bond made by the defendant together with his wife, now deceased, to the plaintiff in 1872, conditioned to pay the plaintiff the sum of $20,000.

On the trial, it appeared that the bond in suit had been originally secured by a mortgage made by the obligors therein named on certain property situated at Elizabeth, N. J.; that such mortgage had been foreclosed in 1882, and the mortgaged premises sold thereunder for $3,000, and that a balance remained due on the bond which, with interest up to the day of the trial, amounted to $20,123.49.

At the close of the evidence on both sides, the court directed a verdict for the defendant on the ground that leave of the court, in which the foreclosure suit took place, had not been obtained for the purpose of bringing an action to recover the deficiency due on the bond, to which direction the plaintiff duly excepted.

The plaintiff’s exceptions were ordered to be heard in the first instance at General Term.

The direction of the verdict is sought to be upheld under the provisions of section 1628 of the Code of Civil Procedure which are as follows :

While an action to foreclose a mortgage upon real property is pending, or after final judgment for the plaintiff therein, no other action shall be commenced or maintained to recover any part of the mortgage debt without leave of the court in which the former action was brought.”

The question therefore is whether that section can be held to apply to foreclosures outside of the state of New York. The section referred to is a re-enactment of the provisions of the Revised Statutes to about the same effect. Before the Revised Statutes, no decree for deficiency could be rendered in a foreclosure suit. Dunkley v. VanBuren, 3 Johns. Ch. 330.

To recover the deficiency where one arose, a separate suit at law upon the bond was necessary, and the credit- or had the right to institute proceedings at law upon the bond even during the pendency of the foreclosure suit. Jones v. Conde, 6 Ib. 77.

The debtor was thus subjected to a double litigation, and the provisions of the Revised Statutes were enacted for the express purpose of abolishing this oppressive course of proceeding. Equitable Life Ins. Co. v. Stevens, 63 N. Y. 341 (345).

One of the provisions thus enacted was that, after the filing of a bill for the satisfaction of a mortgage, the court should have power to decree payment of the deficiency by the mortgagor, and issue execution thereon (§ 152). And another was that, after- the filing and during the pendency of the bill, and after decree rendered thereon, proceedings at law for the recovery of the mortgage debt should not be had unless authorized by the Court of Chancery (§ 153). It was also provided that a person other than the mortgagor, who was liable for the mortgage debt, might be made a party to the suit and payment of the deficiency decreed against him (§ 154).

These provisions were, all contained in title II. of chapter 1 of part 3 of the Revised Statutes, which was entitled “ Of the Court of Chancery,” and in Art. YI. of said title entitled “ Of the powers and proceedings of the court upon bills for the foreclosure or satisfaction of mortgages,” and they were evidently intended to regulate the foreclosure of mortgages in the state of New York only. The “bill” referred to was a bill filed in the Court of Chancery, and it was only after the filing “ of such bill,” that is, a bill filed in the Court of Chancery of the state of New York, that proceedings at law for the recovery of the mortgage debt were forbidden.

These provisions of the Revised Statutes have been re-enacted in the Code of Civil Procedure, with such changes only as were rendered necessary by the changes in the judicial system, that is, by the change in the organization of the courts of the state, and the fusion of law and equity.

Section 1628 of the said Code is contained in chapter 14 entitled “ Special provisions regulating actions relating to property,” and in title 1 entitled “ Actions relating to real property,” and in Article IV. entitled Action to foreclose a mortgage.” It is, therefore, a regulation in regard to the foreclosure of mortgages upon real property in the state of New York.. It does not attempt to regulate actions on bonds generally, but only actions on bonds which are secured by mortgage on real property in New York. Bonds secured by mortgages on real property in other states are not 'distinguished from bonds made without collateral security.

An action to foreclose a mortgage upon real property is a strictly local action as distinguished from a transitory action, and consequently must always be brought within the territorial limits of the state in which the property is situated, and which conferred upon the court jurisdiction over the subject matter of the action. The provisions of the Code of Civil Procedure relating to the foreclosure of mortgages are intended to regulate the remedy in such cases within the territorial limits of the state of New York, and the remedy is to be had through the action of certain courts within the state. By analogy of reasoning no greater extra-territorial force can be given to any such provision of the said Code than was given in Van Voorhis v. Brintnall, 86 N. Y. 18, and Thorp v. Thorp, 90 Ib. 602, to the disqualification to marry again imposed by the judgment of a court of this state upon a defendant adjudged under the statutes of this state to have been guilty of adultery. It certainly cannot be inferred from the language of section 1628 that the intention of the legislature was that application for leave to bring an action in the state of New York was to be made to a court of another state which, under the laws of that state, might have no power to grant such leave, or the action of which, even if it possessed the power, could not be reviewed by any appellate tribunal of this state.

.For the foregoing reasons, the direction of the verdict was erroneous.

The plaintiff’s exceptions should be sustained, the verdict set aside, and a new trial ordered with costs to the plaintiff to abide the event.

Sedgwick, Ch. J., and O’Gorman, J., concurred.