Case Name: Henry B. Wesselman et al., as Executors of Blanche Wesselman, Deceased, Respondents, v. The Engel Company, Inc., et al., Appellants, et al., Defendants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1955-06-10
Citations: 309 N.Y. 27
Docket Number: 
Parties: Henry B. Wesselman et al., as Executors of Blanche Wesselman, Deceased, Respondents, v. The Engel Company, Inc., et al., Appellants, et al., Defendants.
Judges: 
Reporter: New York Reports
Volume: 309
Pages: 27–35

Head Matter:
Henry B. Wesselman et al., as Executors of Blanche Wesselman, Deceased, Respondents, v. The Engel Company, Inc., et al., Appellants, et al., Defendants.
Argued February 23, 1955;
decided June 10, 1955.
Zenaida Drabkin and Mortimer H. Koenig for appellants.
I. Plaintiffs’ flagrant loches, both in the institution and in the prosecution of this action, should have barred their recovery. (Mutual Life Ins. Co. v. United States Hotel Co., 82 Misc. 632; Becker v. Faber, 280 N. Y. 146; Brooklyn Sav. Bank v. Joseph Wechsler Estate, 259 N. Y. 9; Peoples Trust Co. v. O’Neil, 273 N. Y. 312; M. & C. Creditors Corp. v. Pratt, 172 Misc. 695; Feldman v. Metropolitan Life Ins. Co., 259 App. Div. 123; Chatham Nat. Bank v. Pratt, 135 N. Y. 423; Delaware Trust v. Calm, 195 N. Y. 231; Bloomquist v. Farson, 222 N. Y. 375; Lightfoot v. Davis, 198 N. Y. 261.) II. The neglect of plaintiffs diligently to foreclose the mortgage and collect the debt released the estate of George C. Engel and The Engel Company, Inc., of any liability for a deficiency judgment since the whole debt could have been collected from the land if plaintiffs had proceeded expeditiously. (National Sav. Bank of City of Albany v. Fermac Corp., 241 App. Div. 204, 266 N. Y. 443; Remsen v. Beekman, 25 N. Y. 552; Home Owners’ Loan Corp. v. Wood, 164 Misc. 215; White v. Wielandt, 259 App. Div. 676.) III. The order on the motion for a continuance and the affirmance of the order by the Appellate Division were not res judicata and did not establish the law of the case on the question of loches. (Matter of Lord, 78 N. Y. 109.) IV. On behalf of administrator appellant only: The Referee erroneously construed the guarantee sued on as a guarantee of payment instead of a guarantee of collection. (Bank of United States v. Andron, 155 Misc. 21; White v. Wielandt, 259 App. Div. 676; McMurray v. Noyes, 72 N. Y. 523; Craig v. Parkis, 40 N. Y. 181; Chatham Nat. Bank v. Pratt, 135 N. Y. 423; Northern Ins. Co. v. Wright, 76 N. Y. 445.) V. On behalf of administrator appellant only: The agreement of guarantee covers only principal and interest. (Equitable Life Assur. Soc. v. Toplits, 69 Misc. 457; Moyer v. Wilson, 248 App. Div. 5; Coudert v. Huerstel, 60 App. Div. 83; Riverhead Sav. Bank v. Carr, 119 Misc. 347; McConihe Realty Co. v. Henry Scharnberger, Inc., 240 App. Div. 861; White v. Wielandt, 259 App. Div. 676, 286 N. Y. 609; Central Hanover Bank & Trust Co. v. Roslyn Estates, 266 App. Div. 244, 293 N. Y. 680.)
Francis 8. Bensel and Douglas A. Witschieben for respondents.
I. The claim of loches in the prosecution of the action is not subject to review on this appeal, since appellants have not specified in their notice of appeal that they seek a review of the intermediate order granting a continuance. (O’Connor Long Is. Properties Corp. v. Bruckman, 288 N. Y. 23; Landmesser v. Hayward, 157 App. Div. 74; Matter of Flanagan, 271 App. Div. 1014; Coit v. Campbell, 82 N. Y. 509; Lyon v. Park, 111 N. Y. 350.) II. Plaintiffs were not guilty of loches in instituting or in prosecuting the action. Until administration was taken out on the estate of the guarantor, there was no one against whom the action could he continued. (Lyon v. Park, 111 N. Y. 350; Coit v. Campbell, 82 N. Y. 509; National Sav. Bank of City of Albany v. Fermac Corp., 241 App. Div. 204, 266 N. Y. 443; Remsen v. Beekman, 25 N. Y. 552; Newton v. Evers, 77 Misc. 619, 161 App. Div. 811, 215 N. Y. 198; Newcomb v. Hale, 90 N. Y. 326; Chatham Nat. Bank v. Pratt, 135 N. Y. 423; M. & C. Creditors Corp. v. Pratt, 172 Misc. 695.) III. The guarantee is one of payment, and not of collection. (Loos v. McCormack, 107 App. Div. 8; McMurray v. Noyes, 72 N. Y. 523.) IV. The guarantee covers taxes, assessments and water rates. (White v. Wielandt, 259 App. Div. 676, 286 N. Y. 609.)

Opinion:
Froessel, J.
Defendants-appellants challenge only the deficiency provisions of the judgment entered against them in this foreclosure action. The facts are sufficiently outlined in the opinion of Judge Dye, with which we agree excepting as to the liability of the appellant estate for taxes and assessments (and interest thereon) totaling $24,442.40, under George C. Engel's guarantee.
The brief, unacknowledged guarantee on which respondents rely was typewritten on the hack of the extension agreement dated October 14, 1922. By its provisions, George 0. Engel, who died in 1936, guaranteed '1 payment of [1] principal and [2] interest of said mortgage, [3] together with any and all expenses of foreclosure of said mortgage ". The entire princi pal sum of the mortgage was $19,000. The Special Beferee found the total mortgage indebtedness, with interest, to be $67,251.69.
It is said that the afore-mentioned taxes and assessments are " expenses of foreclosure of said mortgage " within the terms of said guarantee, and reliance for this holding is placed on section 1087 of the Civil Practice Act. But that statute says nothing about " expenses of foreclosure ". It merely provides that taxes and assessments " which are liens upon the property sold are deemed expenses of the sale within the meaning of that expression as used in any provision of this article." (Emphasis supplied.) The purpose of this section is to protect, not the mortgagee, but the purchaser on a foreclosure sale, who is entitled to a clear title (Moyer v. Wilson, 248 App. Div. 5, mod. 276 N. Y. 161; Equitable Life Assur. Soc. v. Toplitz, 69 Misc. 457, affd. 143 App. Div. 929; Coudert v. Huerstel, 60 App. Div. 83). In short, it directs the referee to pay out of the proceeds of the sale unpaid taxes and assessments so that he can give title free of such then existing liens.
To put it otherwise, taxes and assessments which are no longer liens cannot be deemed " expenses of the sale ", and, in any event, the definition " of that expression " is limited to that statute. It cannot control the meaning of a different expression as used in a private guarantee. George C. Engel did not guarantee taxes or assessments, or a total mortgage indebtedness, which between the mortgagor and mortgagee may include any number of items they may agree on. All that Engel guaranteed was (1) " principal ", (2) " interest " and (3) " expenses of foreclosure " — not the " expenses of sale " as defined by and limited in section 1087 of the Civil Practice Act. " Expenses of foreclosure ", in plain, everyday language, simply means, to lawyer and layman alike, the customary foreclosure expenses, namely, costs and lawful disbursements, extra allowances, referee's fees and publication charges, and that is all the parties here could have intended. The guarantor should not be bound beyond the express terms of his guarantee (see Flyer v. Elms Realty Co., 241 App. Div. 828, affd. 267 N. Y. 618). It would be wrong in any case; it would be shocking to do so on this thirty-two-year-old guarantee.
White v. Wielandt (259 App. Div. 676, 260 App. Div. 871, affd. 286 N. Y. 609) and Central Hanover Bank & Trust Co. v. Roslyn Estates (266 App. Div. 244, affd. 293 N. Y. 680) are not controlling here. These cases merely hold that in a standard form mortgage such items as taxes and assessments — and we might add insurance premiums and repairs — are frequently made a part of the entire " mortgage debt ", for which the obligor expressly agreed to be responsible, but these items do not therefore become the principal of the mortgage. In this case, the guarantor's liability is limited by the scope of Ms agreement only, not the obligor's. The Special Referee recognized this by including insurance premiums and repairs as part of the judgment against the obligor only. He should have done likewise with respect to the taxes and assessments. In that respect he fell into error by incorrectly construing section 1087 of the Civil Practice Act. Accordingly, there should be deducted from the amount of $63,276.98 in the last ordered paragraph of the Special Term judgment the sum of $24,442.40, representing the aforesaid taxes, assessments and interest.
The judgment of the Appellate Division should be modified, and the matter remitted to Special Term for further proceedings in accordance with this opinion, with costs in all courts to the appellant estate against plaintiffs-respondents.