Case Name: In the Matter of the Petition of Joshua S. Piza, as Administrator, etc., of Rachel S. Piza, Deceased, Respondent, for Leave to Sue David W. O'Neil, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-05
Citations: 5 A.D. 181
Docket Number: 
Parties: In the Matter of the Petition of Joshua S. Piza, as Administrator, etc., of Rachel S. Piza, Deceased, Respondent, for Leave to Sue David W. O’Neil, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 5
Pages: 181–185

Head Matter:
In the Matter of the Petition of Joshua S. Piza, as Administrator, etc., of Rachel S. Piza, Deceased, Respondent, for Leave to Sue David W. O’Neil, Appellant.
Foreclosure — purchasing property subject to a mortgage — extension of time of payment of the mortgage — action on the bond after a moi'tgage forelosure has been discontinued as to the obligor — liability of the obligor.
Upon an appeal from an order granting tlie petition of Joshua S. Piza, as administrator of Rachel S. Piza, for leave to sue one David W. O’Neil upon a bond executed by him, it appeared that O’Neil executed a bond and a mortgage on certain premises on the 4th day of January, 1889, and in December, 1890, sold the mortgaged premises to Abraham Steers, who took the title subject to the mortgage, but did not covenant to pay it. The bond and mortgage fell due January 4, 1892, when the petitioner’s intestate, then being the owner thereof, made an agreement, without the knowledge or consent of O’Neil, with Steers, who-assumed the payment thereof, extending the time of payment for three years.
The mortgage was foreclosed in 1894, and O’Neil, being made a party to the foreclosure action and a judgment for any deficiency being asked against him, asserted that the extension of the time of payment of the mortgage had relieved him from all liability on the bond, and the action was discontinued as to him by consent.
In January, 1896, Rachel S. Piza having died, the petitioner instituted this proceeding, alleging that at the time of the making of the agreement between his intestate and Steers the property was of less value than the mortgage, while O’Neil, on the other hand, alleged that the property was then worth more than the amount of the mortgage.
Held, that leave to sue was properly granted;
Van Brunt, P. J., dissented.
That if Steers bad covenanted with O’Neil to assume the mortgage the extension of time would have absolutely discharged O’Neil, who would then have occupied only the position of a surety for the performance of the covenant of payment;
That as Steers did not so covenant, O’Neil’s exemption from liability on the bond was limited to the value of the land at the time of the making of the agreement;
That as the value of the land at that time was in dispute, it was proper to allow the administrator to bring an action to determine that question, as it was not a question which could be conveniently or properly litigated in the foreclosure action.
Appeal by David W. O’Neil from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 7th day of February, 1896, granting the petition of Joshua S. Piza, as administrator, etc., of Rachel S. Piza, deceased, to sue him upon a certain bond executed by him.
George E. Miner, for the appellant.
Benjamin N. Cardozo, for the respondent.

Opinion:
Barrett, J.:
The order appealed from grants the petitioner, Joshua S. Piza, applying as administrator of Rachel S. Piza, deceased, leave to sue David "W. O'Neil to recover the amount due upon a bond executed by him.
O'Neil executed a bond and mortgage to the petitioner individually on January 4, 1889. They were for $25,000, and fell due January 4, 1892, prior to which time they were assigned to the decedent. In December, 1890, O'Neil sold the mortgaged premises to one Steers, who took subject to the mortgage, but did not covenant to pay it. On January 4, 1892, the decedent entered into a written agreement with Steers, without O'Neil's knowledge or consent, extending the time of payment three years. By this instrument Steers made himself liable for the whole principal sum " with like effect as if the party of the second part (Steers) had assumed and agreed to pay the said mortgage in and by the terms of the deed" which he received from O'Neil. The mortgage -was foreclosed in the early part of 1894, on account of a default in the payment of interest. O'Neil was at first made a party defendant, and judgment for any deficiency was claimed against him; but upon his assertion that the extension had relieved him from all liability on the bond, the action was discontinued as to him by consent.
If Steers had covenanted with O'Neil in the deed to assume the mortgage, there is no doubt that O'Neil would have become simply a surety for the performance of the covenant, and that the extension would have relieved him from all liability. (Calvo v. Davies, 73 N. Y. 216.) But Steers did not so covenant, and O'Neil's exemption from liability on the bond was limited to the value of the land at the time of the agreement. (Murray v. Marshall, 94 N. Y. 611.) He was not liable for any deficiency which might arise upon the sale in the foreclosure suit. He was only liable for the difference between the actual value of the land at the time of the agreement and the amount of the mortgage. The risk of future depreciation fell upon the creditor. It is doubtful, therefore, whether the question of O'Neil's liability and its extent could have been properly tried in the foreclosure action. Not being liable for any deficiency upon the sale, and his liability, if any, depending upon considerations foreign to an ordinary decree of foreclosure and sale,, his being dropped as a party defendant did not substantially prejudice him, or affect his real interests. Whether he is now liable, depends not upon what the property brought at the foreclosure sale, but entirely upon its value at the time of the agreement between the decedent and Steers. The petition states, upon information and belief, that the property was then of less value than the mortgage. O'Neil states, also, upon information and belief, that it was worth more. These conflicting claims cannot properly he tried upon affidavits, and we see nothing oppressive or inequitable in permitting the petitioner to bring his action to have that question properly determined.
The order should, therefore, be affirmed, with ten dollars costs and disbursements of the appeal.
Rumsey, O'Brien and Ingraham, JJ., concurred; Van Brunt, P. J., dissented.