Case ID: ny-st-rep_15/html/0881-01.html
Source: Caselaw Access Project
Author: {"author": "Barnard, P. J. \n      Pratt, J. (dissenting).", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George W. Mead, App’lt, v. Edwin I. Spink and Richard M. Martin, Resp’ts.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed May 14, 1888.)
    
    Injunction—Sale, of property in a foreclosure action at a low figure—Deficiency judgment—Right to enforce—Not oppression.
    An action of foreclosure was brought, and the property subject to the lien of the mortgage sold at the foreclosure sale for a nominal sum to the plaintiffs in that action. The defendant in that action was poor and unable to protect the property by bidding at the sale. There was entered a large deficiency judgment against the plaintiff. The plaintiffs in the foreclosure action-have enjoyed the property so purchased, and now seek to enforce the deficiency judgment. This action is brought to restrain the enforcement of the said judgment. Held, that the sale being regular, the fact that the property brought less than its value constituted no cause of action .for the owner of the fee. The poverty of the plaintiff, which prevented the paying of his debt at or before the sale, was no defense in the foreclosure action, and that these facts were not grounds for equitable relief. Pratt, J., dissenting.
    
      Sewall Sergeant and Albert E. Lamb, for app’lt; Spink & Martin, attorneys in person, for resp’ts.
   Barnard, P. J.

—The plaintiff,- by his purchase of the mortgaged premises, became the principal debtor. The land was subject to a mortgage given by the Dunscombs, but the plaintiff agreed to pay it as part of the purchase money. Comstock v. Drohan, 7l N. Y., 9; Fairchild v. Lynch, 99 id., 359.

As a matter of course, when the plaintiff failed to perform his agreement and the mortgage was foreclosed, the holder of the mortgage entered up judgment for a deficiency against the mortgagor and the plaintiff who was to pay it. There was no question of the regularity of the sale, and if it did bring less than its value no cause of action results therefrom to the owner of the fee. There is no standard of value in the absence of fraud other than that reached by a public sale according to law. The poverty of the plaintiff, which prevented his paying his debt at or before the sale, was no defense to an action in foreclosure. No ground for equitable ruling is presented when an attempt is made to collect of a principal debtor instead of a surety. If the surety should pay it, the principal debtor would be responsible to repay it.

The judgment should be affirmed, with costs.

Dykman, J., concurs.

Pratt, J. (dissenting).

—Gross unreasonableness and oppression is a well established ground of equitable relief against contract. Even at law, and where no fraud is suggested, contracts are sometimes relieved against upon that ground.

The old horse shoe case, cited 2 Vesey, 155, where the purchaser agreed to pay one barley corn for the first nail, two for the second, and so on, doubling for the whole thirty-two nails, is a case in point.

But the ordinary tribunal for relief is equity and bargains shown to be unconscionable, are readily relieved against upon equitable terms, or wholly set aside, as justice may require.

It is not necessary that fraud be shown in any other way than by the attempt to enforce a contract intrinsically unconscionable, which is sometimes said to be a species of fraud.

Beyond certain limits, not always easy to define, equity will not allow one to take advantage of the necessities of others.

It needs no argument to show that if a person tied upon a railroad track signs a contract to pay a fortune to induce a by-passer to cut the thongs that hold him in the face of death, the contract could never be enforced. In daily life such pronounced occasions will not be apt to occur, but the principle is familiar and constantly applied that contracts will be relieved against when so hard and oppressive as to shock the moral sense.

Irregularity in the condition of the contracting parties is an element that is regarded, and where so great that the free exercise of the will is interfered with, will sometimes of itself be sufficient ground for relief.

Nor is it an insuperable objection to the relief that the oppression is produced by legal measures, nor is the contract always protected if it be the judgment of a court.

The ancient case of Lord Cranstown v. Johnston (3 Vesey, Jr., 170), was such a case, yet relief was given in equity. There a creditor had proceeded to judgment against his debtor in the Island of St. Christopher, and had sold his property for a grossly inadequate price. The proceedings were regular and no fraud or deceit was shown; yet, on the ground that the inadequacy was gross, and that the creditor seemed actuated by a desire not so much to collect his debt as to obtain the estate for a small sum, the court of chancery gave relief against the judgment. To use the law for the purposes of oppressions was regarded as a fraud upon the administration of justice. Such an application of the doctrine is familiar in our own courts.

The above case and its principle was cited with approval" in McDonald v. Neilson (2 Cowen, 139). There the whole court of errors were agreed that a regularly obtained judgment will be relieved against in equity, where there are circumstances of extraordinary hardship or great inadequacy of consideration.

In that case it was said by Charles J. Savage to be a long and well settled rule of equity to protect against that species of oppression which is sought to be justified under the forms of law. 2 Cow., 170.

In that case a man worth $20,000 was defendant in a judgment of $480. Execution was issued and after $1,200 of property had been sold for $300 defendant made a settlement to avoid further sacrifice, by which he agreed to be responsible for certain debts of his son owing to the judgment creditor.

Chancellor Kent held these facts to show such oppression and abuse of legal proceedings as to render the settlement invalid.

A majority of the court of errors sustained the settlement on the ground that the father was morally responsible for the son’s debts being in possession of property of the son which should have been devoted to the payment of his debts.

Were it not for that feature of the case the decision of the chancellor would have been affirmed.

The whole court were of the opinion that the pressure-was such as to render the settlement invalid had not other equities intervened. Judge Sutherland said “the system of law would be lamentable that should sanction such proceedings.” Charles J. Savage said in the language already quoted “No doubt Chancery has power to set aside judgments regularly obtained if there are circumstances of extraordinary hardship or great inadequacy of consideration.”

Comparison of the facts in the case at bar shows the plaintiff has abundant ground to claim relief. Here property worth $15,000 is mortgaged for a debt of $4,000. Upon foreclosure the owner is prevented by poverty from protecting the estate which is bidden off by the plaintiff in the execution for a trifling sum, the cost of suit, leaving the debt undischarged, a deficiency judgment being entered therefor.

The creditor thus for a pittance obtains possession of property to amount of $15,000, and now the judgment is sought to be enforced for the original debt. The oppression shown in the cases cited is trifling in comparison with the case at bar. Upon the facts here shown, to refuse relief would bring scandal upon the administration of justice.

The plaintiff’s practice is correct in seeking relief by an independent action. In some cases relief will be given by motion in the original suit, but that method is not exclusive. The jurisdiction of the court does not depend upon form, and can be more freely exercised in an independent action than in a more summary proceeding.

The judgment against which relief is sought is technically regular. But the plaintiff has had possession of property of the judgment debtor enough to pay the debt many times. To allow him to collect his debt yet once again would make the court a party to a robbery.

There is no laches until an attempt was made to enforce the deficiency judgment; the judgment debtor might well presume that the judgment creditor would regard the voice of justice and not seek to enforce an indefensible claim.

Had this action been begun when no proceedings to collect the judgment were threatened, it might have held that the relief would only be granted upon payment of costs of this action. The respondents, by contesting the just claim of plaintiff, and especially as they are acting for their own benefit, should pay the costs of the action both at special term and in this court.

The judgment should be that they be enjoined as prayed for in the complaint, with costs to appellant as above.