Case Name: Peter R. Egan, Respondent, v. Maria A. Buellesbach and Others, Defendants. Newman Grossman, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-12-07
Citations: 116 A.D. 306
Docket Number: 
Parties: Peter R. Egan, Respondent, v. Maria A. Buellesbach and Others, Defendants. Newman Grossman, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 116
Pages: 306–315

Head Matter:
Peter R. Egan, Respondent, v. Maria A. Buellesbach and Others, Defendants. Newman Grossman, Appellant.
First'Department,
December 7, 1906.
Foreclosure—when defaulting purchaser liable for deficiency on resale — when order directing a resale res adjúdióáta as to liability of purchaser. . " ’ ¡
When the terms of salé on mortgage foreclosure provide! for a resale without ' . application to the court if the purchaser defaults and that hé will be liable for auy deficiency, a defaulting purchaser is liable for such deficiency on a resale, although" the. second sale was made after readvertising tike property, and pursuant. to an ex- parte ■ order directing a resale, of which advertisement and motion for the resale the purchaser had actual notice. Having actual notice ' óf these facts and having attended the resale, the service pf formal notice upon him was not necessary. . " ¡ . . ■
Moreover, when after the order for the resale the first purchaser applied to the court tobe released from his purchase aud took no appeal from a denial of that relief, his liability is res adjudicata.
Houghton, J., dissented, with opinion.
Appeal by Newman Grossman from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk qf the county of New York on the 28th day of September, 1906, directing him as purchaser at a foreclosure sale to pay the sum of $550, the amount of the deficiency between the amount bid by him at said sale and the amount realized upon a resale of the property.
Julius Levy, for the appellant.
James A. Foley, for the 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:
"I, Newman Grossman, have this 22nd 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.
" Dated 'May 22nd, 1906: N. GROSSMAN."
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 ten 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 twelve o'clock m., when the referee's deeds would be ready for delivery ; that the referée was not required to send any notice to the purchaser, and if he neglected to call at the time a,nd place specified to receive his deed he would be charged with interest thereafter on the whole amount of his- purchase; that " the biddings 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. Mo 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 ten 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 twenty-third 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 twenty-eighth day of May, the purchaser had a conversation with the referee, when . the question was discussed as to whether the referee should take the 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,.ih pursuance to the consent of the purchaser, an order was entered ex par-te allowing 'a resale of the -premises. On June twenty-sixth-,, -after advertisements duly published, the resale was held1 and upon that' day both the purchaser and his attorney were pi-esent in the. real estate salesrooms 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 tire 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 ten 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 res'ale, and-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 andref using to comply with thé 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. Ho 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 ño 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 a pplication 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), in discussing the effect of a motion to compel á purchaser to complete a sale under a judgment of foreclosure, it was held that the determination of such 'a motion w;as an "adjudication binding upon the purchaser which lie 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) it was held that an order directing a resale made on notice to the purchaser was res judicata^ ás to his liability ; that • the amount of the' liability Only remained to be determined, and that the purchaser was bound by the resale, although be received no-actual "tiotice 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 af all material. 1 While the order for a resalé, being made without notice,, would not be an adjudication binding upon the pur chaser, 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) 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 tlie 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 lie had such notice, and, I think, it is clear that he is liable for the deficiency.
It follows that the order appealed from should be affirmed, with ten dollars costs and disbursements."
McLaughlin, Clarke and Scott, JJ., concurred; Houghton, j., dissented.