Source: https://supreme.justia.com/cases/federal/us/306/539/
Timestamp: 2019-04-25 15:51:38+00:00

Document:
A state law providing that a mortgagee who has bid in the property at foreclosure sale shall have no deficiency judgment if the value of the property equals the amount of the debt and interest plus costs and expenses does not impair the obligations of preexisting mortgage contracts within the intendment of the contract clause of the Constitution. Richmond Mortgage Corp. v. Wachovia Bank, 300 U. S. 124, 300 U. S. 128. P. 306 U. S. 545.
278 N.Y. 467, 17 N.E.2d 131, affirmed.
but overruled his motion for a deficiency judgment.
property, was denied a deficiency judgment in a foreclosure suit, where the state court found that the value of the property purchased by the mortgagee at the foreclosure sale was equal to the debt secured by the mortgage.
The mortgage was executed in February, 1928 -- that is, prior to the legislation in question -- to secure a bond for $15,000, with interest, payable in February, 1931. On default in payment, appellant, the holder of the bond and mortgage, brought suit for foreclosure and judgment for foreclosure and sale was entered in April, 1938. The property was then sold to appellant for the sum of $7,500. In the referee's report of sale, the amount due on the bond and mortgage was stated to be $15,771.17, and the taxes, fees, and expenses amounted to $1,319.03, leaving a deficiency of $9,590.20.
by the Court of Appeals. Honeyman v. Clark, 278 N.Y. 467, 17 N.E.2d 131. The court followed its earlier decisions, citing Honeyman v. Hanan, 275 N.Y. 382, 9 N.E.2d 970; Klinke v. Samuels, 264 N.Y. 144, 190 N.E. 324; City Bank Farmers' Trust Co. v. Ardlea Incorporation, 267 N.Y. 224, 196 N.E. 34.
"The Legislature may modify, limit, or alter the remedy for enforcement of a contract without impairing its obligation, but, in so doing, it may not deny all remedy or so circumscribe the existing remedy with conditions and restrictions as seriously to impair the value of the right."
of the suit. Having a total debt of $15,771.17, with expenses, etc., of $1,319.03, appellant has obtained through his foreclosure suit the property of the debtor found without question to be worth over $25,000. He has that in hand. We know of no principle which entitles him to receive anything more. Assuming that the statute, before its amendment, permitted a recovery of an additional amount through a so-called deficiency judgment, we cannot say that there was any constitutional sanction for such a provision which precluded the legislature from changing it so as to confine the creditor to securing the satisfaction of his entire debt.
Section 1083-a, in substance, assured to the court the exercise of its appropriate equitable powers. By the normal exercise of these powers, a court of equity in a foreclosure suit would have full authority to fix the terms and time of the foreclosure sale and to refuse to confirm sales upon equitable grounds where they were found to be unfair or the price bid was inadequate. Home Building & Loan Association v. Blaisdell, supra, at pp. 290 U. S. 446-447, and cases cited, note 18. Richmond Mortgage Corp. v. Wachovia Bank, supra, at p. 300 U. S. 129. In this control over the foreclosure sale under its decree, the court could consider and determine the value of the property sold to the mortgagee and what the mortgagee would thus realize upon the mortgage debt if the sale were confirmed. See Monaghan v. May, 242 App.Div. 64, 67, 273 N.Y.S. 475; Guaranteed Title & Mortgage Co. v. Scheffres, 247 App.Div. 294, 285 N.Y.S. 464.
"so as to prevent his obtaining more than his due. By the old and well known remedy of foreclosure, a mortgagee was so limited because of the chancellor's control of the proceeding."
And that did "not impair the obligation of the contract."
We reach a similar result here upon the same ground -- that, under the finding of the state court, the mortgagee has obtained satisfaction of his debt, and that the denial by the statute of a further recovery does not violate the constitutional provision.
"1083-a. Limitation Upon Deficiency Judgments During Emergency Period. No judgment shall be granted for any residue of the debt remaining unsatisfied as prescribed by the preceding section where the mortgaged property shall be sold during the emergency, except as herein provided. Simultaneously with the making of a motion for an order confirming the sale or, in any event, within ninety days after the date of the sale, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action. Such notice shall be served personally or in such other manner as the court may direct. Upon such motion, the court, whether or not the respondent appears, shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date of sale or such nearest earlier date as there shall have been any market value thereof, and shall make an order directing the entry of a deficiency judgment. Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the party liable as determined by the judgment with interest, plus the amount owing on all prior liens and encumbrances with interest, plus cost and disbursements of the action including the referee's fee and disbursements, less the market value as determined by the court or the sale price of the property, whichever shall be the higher. If no motion for a deficiency judgment shall be made as herein prescribed, the proceeds of the sale, regardless of amount, shall be deemed to be in full satisfaction of the mortgage debt, and no right to recover any deficiency in any action or proceeding shall exist."

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