Case Name: EGAN v. BUELLESBACH et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-12-07
Citations: 101 N.Y.S. 476
Docket Number: 
Parties: EGAN v. BUELLESBACH et al.
Judges: 
Reporter: West's New York Supplement
Volume: 101
Pages: 476–482

Head Matter:
EGAN v. BUELLESBACH et al.
(Supreme Court, Appellate Division, First Department.
December 7, 1906.)
Mortgages—Fobeolosube—Sale—Default of Purchaser.
Where the terms of a foreclosure sale provided that the bids were to be kept open after the. property was struck down, and in case the purchaser should fail to comply with any of the conditions the premises would again be put up for sale without application to the court, unless the plaintiff’s attorney should elect to make such application, and that the purchaser would be held liable for any deficiency on a resale, where the purchaser failed to comply with his bid, and the property was resold on order of court without formal notice to him, though he had actual notice of the application for the order, and he applied to the court to be relieved of his purchase, and, his motion having been denied, he took no appeal from the order, the order is conclusive on the question of his liability for the deficiency in the amount realized on the resale.
Houghton, J., dissenting.
Appeal from Special Term.
Action by Peter R. Egan against Maria A. Buellesbach and others. From an order directing Newman Grossman, purchaser at foreclosure sale, to pay the amount of the deficiency between the amount bid by him at the sale and the amount realized on a resale of the property, he appeals. Affirmed.
Argued before McLAUGHEIN, INGRAHAM, HOUGHTON, CLARKE, and SCOTT, JJ.
Julius Levy, for appellant.
James A. Foley, for respondent.

Opinion:
INGRAHAM, J.
In pursuance of a judgment of foreclosure and sale, the mortgaged premises were sold at public auction on May 22, 1906, by a referee appointed in said judgment. At that sale the appellant bid for the property $13,100 and the property was sold to him for that amount. He executed a memorandum of sale as follows:
"Newman Grossman have this 22d day of May, 1906, purchased the premises described in the annexed printed advertisement of sale, for the sum of thirteen thousand one hundred ($13,100) dollars and hereby promise and agree to comply with the terms and conditions of the sale of said premises, as above mentioned and set forth.
"N. Grossman.
"Dated May 22, 1906."
The terms of sale referred to in the memorandum signed by the purchaser, and which the purchaser promised and agreed to comply with, provided that 10 per cent, of the purchase money would be paid to the referee at the time and place of sale, and the residue of said money should be paid to the referee at his office, in the city of New York, on or before the 22d day of June, 1906, at 12 o'clock m., when the referee's deeds would be ready for delivery; that the referee was not required to send any notice to the purchaser, and, if he neglected to call at the time and place specified to receive his deed, he would be charged with interest thereafter on the whole amount of his purchase; "that the bid-dings will be kept open after the property is struck down, and, in case any purchaser shall fail to comply with any of the above conditions of sale, the premises so struck down to him will be again put up for sale under the direction of said referee under these same terms of sale, without application to the court, unless the plaintiff's attorney shall elect to make such application, and such purchaser will be held liable for any deficiency there may be between the sum for which said premises shall be struck down upon the sale, and that for which they may be purchased on the resale, and also for any costs or expenses occurring on such resale."
The purchaser subsequently informed the referee that the premises had been purchased by him under a misunderstanding, and refused to accept a deed of the said premises. Subsequent to such refusal an ex parte order was obtained directing the referee to resell the said premises, and the premises were subsequently duly readvertised for sale and the property sold for $12,550, leaving a deficiency of $550. No formal notice of the application for an order directing a resale was given to the purchaser. The purchaser gave to the referee a check for the 10 per cent, required to be paid; but, when that check was deposited for collection, it was returned, with a notice upon it that payment had been stopped. The purchaser and his attorney called on the referee on the 23d day of May, the day after the sale, and stated that they would refuse to accept the deeds of the property and comply with the terms of sale, and requesting that they be released from the sale, which the referee refused. Subsequently, on the 28th day of May, the purchaser had a conversation with the referee, when the question was discussed as to whether the referee should take initiative in applying to the court to determine whether the purchaser should be held to his bid, or whether a motion to be relieved from the sale should be made by the purchaser. The referee stated to the purchaser and his attorney that he would await the resale, which they had consented should take place before making any move in the matter; and on May 31, 1906, in pursuance to the consent of the purchaser, an order was entered ex parte allowing a resale of the premises. That on June 26th, after advertisements duly published, the resale was held, and upon that day both the purchaser and his attorney were present in the real estate sales rooms where the sale was conducted, but no bid was made by them for the property. Subsequently to the order for a resale, the purchaser made a motion to be relieved from the purchase noticed on the 12th of June, 1906, and the purchaser stated in his application that a resale was to take place on the 26th day of June, 1906. Subsequent to the resale the purchaser tendered to the referee $100 in settlement of the claim of the referee on account of the bid, and subsequently raised that offer to $250. This the referee refused to accept, and stated that an application had to be made to the court. None of these facts were denied by the purchaser.
It appears, therefore, that, after the purchaser refused to complete his purchase, he stopped payment of the check which he had given as 10 per cent, of the purchase, and immediately after the sale refused to comply with his bid and complete his purchase; that he was notified that an application was to be made ex parte for a resale, had notice of the resale, and was present at the time of the resale; and that the only objection that he raises upon this appeal is that he was not formally served with a written notice of the application of the order for a resale. The terms of sale with which he promised and agreed to comply provided that the bids should be kept open after the property was struck down, and, in case any purchaser should fail to comply with any of the conditions of sale, the premises so struck down to him would again be put up for sale under the direction of the referee under the same terms of sale, without application to the court, unless the plaintiff's attorney should elect to make such application; and such purchaser would be held liable for any deficiency that there might be between the sum for which the premises should be struck down upon the sale and that for which they might be purchased on the resale. These terms of sale have been in use for many years and are perfectly familiar to all purchasers at judicial sales. There could be no question but that, if the referee had immediately, upon the purchaser's stopping payment of the check and refusing to comply with the terms of sale, put the property up for resale, without application to the court, the purchaser would have been liable for any deficiency. The plaintiff's attorney, after the purchaser had refused to complete the title, and after the purchaser had been notified that such an application would be made, obtained an ex parte order directing a resale. There was then a readvertisement of the property, of which the purchaser had full notice. He attended the sale, and was in a position to protect himself. No possible advantage could accrue to him by having a formal notice of the application of the order for a resale. He had notice that such an order would be applied for, and did not request that a formal notice be given to him. There was no claim of any surprise, and he now makes no claim that he was in any way injured by reason of the failure to give him formal notice of the resale. After the order for the resale he applied to the court to be relieved of his purchase. That motion having been denied, he took no appeal from the order. The purchaser in effect made an application to relieve him from liability for a failure to comply with his purchase, and that necessarily involved a determination of the question as to whether the resale under an order, without formal notice to him, relieved him from his liability to pay the deficiency. A denial of that motion was necessarily an adjudication that he was liable for the deficiency, and from that order he took no appeal. The question, I think, is res judicata, and prevents the purchaser from relying upon this objection on a motion to compel him to pay the deficiency.
In Burton v. Linn, 21 App. Div. 609, 47 N. Y. Supp. 835, in discussing the effect of a motion to compel a purchaser to complete a sale under a judgment of foreclosure, it was held that the determination of such a motion was an adjudication binding upon the purchaser, which he was bound to obey, precisely as the purchaser in an ordinary contract would be bound to obey a judgment for its specific performance, and the effect of an order denying the application by a purchaser to be relieved from his purchase determines the question as to the liability of the purchaser under his contract made at the time of the sale to complete the purchase. In Rowley v. Feldman, 74 App. Div. 492, 77 N. Y. Supp. 453, it was held that an order directing a resale made on motion to the purchaser was res judicata as to his liability; that the amount of the liability only remained to be determined; and that the appellant was bound by the resale, although he received no actual notice of its time and place. The mere fact that formal notice of the application for a resale was not given to the purchaser was not at all material. While the order for a resale being made without notice would not be an adjudication binding upon the purchaser, there is nothing to justify the conclusion that it relieved him from his liability to complete the purchase. The case of Anthon v. Batchelor, 22 Abb. N. C. 423, 5 N. Y. Supp. 798, was a decision at chambers, and it did not appear that the purchaser had actual notice that an order was to be applied for directing a resale, or had notice of the time and place of the resale. So far as it holds that a sale under an order without notice to the purchaser was a waiver of the right to enforce the first sale, it should not be followed. Notice to the purchaser of an application for a resale is only necessary to prevent him from being taken by surprise, or to prevent a resale taking place without notice to him and without enabling him to protect his interest. In this case he had such notice, and I think it clear that he is liable for the deficiency.
It follows that the order appealed from should be affirmed, with $10 costs and disbursements.
MCLAUGHLIN, CLARKE, and SCOTT, JJ" concur.