Case Name: In re PIZA
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1896-05-08
Citations: 38 N.Y.S. 540
Docket Number: 
Parties: In re PIZA.
Judges: 
Reporter: West's New York Supplement
Volume: 38
Pages: 540–542

Head Matter:
In re PIZA.
(Supreme Court, Appellate Division, First Department.
May 8, 1896.)
'Mortgages—-Release of Mortgagor.
Where the grantee of mortgaged premises did not assume the payment of the mortgage, an extension of time for payment of the debt given the grantee by the mortgagee releases the mortgagor only to the extent of the value of the land at the time of the agreement for such extension; and therefore, in an action to foreclose the mortgage, the discontinuance, by consent, of the action, as to the mortgagor, on the claim being interposed by him that the extension of payment released him from liability, does not prevent an action against the mortgagor, in case of a deficiency on the foreclosure sale. Van Brunt, P. J., dissenting.
Appeal from special term, New York county.
Petition by Joshua S. Piza, as administrator of Rachel S. Piza, to sue David W. O’Neil upon a certain bond executed by him. From an older granting the petition, O’Neil appeals.
Affirmed.
Argued before VAN BRUNT, P. J., and BARRETT, RUMSEY, O’BRIEN, and INGRAHAM, JJ.
George E. Miner, for appellant.
Benjamin N. Cardozo, for 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 his bond. O'Neil executed his 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 ISteers] 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 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 upon 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 appropriately 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 be 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 be 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 $10 costs and disbursements of the appeal.
RUMSEY, O'BRIEN, and INGRAHAM, JJ., concur.