Court Opinion

ID: 5343976
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:09:49.35216+00
Date Added: 2024-06-11T08:29:37.522992
License: Public Domain

Hill, P. J.
Appeal from an order vacating a deficiency judgment in a foreclosure action. Respondents in September, 1932, executed the mortgage to appellant. There was default in interest payments and a foreclosure begun early in 1934. A judgment of foreclosure and sale containing the usual direction for the entry of a deficiency judgment was granted and entered in Otsego county clerk’s office and thereafter the premises were sold. The referee reported the amount of the deficiency and his report was confirmed by an order of the Special Term held in September, 1934. The county clerk docketed the deficiency judgment on June 6, 1935.
The judgment was vacated upon the ground that an amendment to section 1083-a of the Civil Practice Act (Laws of 1934, chap. 564) nullified and in effect repealed a part of section 4 of chapter 794 of the Laws of 1933. The part of section 1083-a which was added by the amendment reads: “ The provisions of section 1083-a, as amended, shall apply to all actions to foreclose mortgages on real property now pending in the courts of the State.” The part of chapter 794 (Laws of 1933) which the court has held to be repealed reads: “ This act shall not apply to mortgages dated on or after July first, nineteen hundred thirty-two, or to any bond, collateral bond, guarantee, or extension agreement or other agreement or writing concerning or delivered in connection with any indebtedness secured by a mortgage dated on or after July first', nineteen hundred thirty-two.”
Sections 1083-a and 1083-b of the Civil Practice Act were enacted by section 2 of chapter 794 of the Laws of 1933. They have to *691do with the amount and the entry of deficiency judgments in foreclosure actions and with actions upon bonds secured by mortgages upon real estate. Because of the limitation contained in section 4 of the chapter, the new sections did not apply to mortgages dated on and after July 1, 1932. Section 1 of the chapter declared the existence of a public emergency. ' Section 4 fixed the period of the emergency from the date of the act to July 1, 1934, and also enacted as above quoted concerning the mortgages to which the emergency applied. The Court of Appeals, in passing upon the constitutionality of these sections of the Civil Practice Act, has said: “ That such legislation, reasonably seeking only temporary relief, is not unconstitutional, we may refer to our recent decision in Matter of People (Title & Mortgage Guarantee Co. of Buffalo) (264 N. Y. 69), and Home Building & Loan Assn. v. Blaisdell (290 U. S. 398).” (Klinke v. Samuels, 264 N. Y. 144, 149.) The authorities cited in the above quotation sustain the constitutionality of these acts because of the power of the Legislature in an emergency to abrogate contract rights and provisions to a reasonable extent as it deems necessary for the public good. The reason for and the reasonableness of not including mortgages dated after July 1, 1932, is obvious. The depression which led to the emergency began late in 1929 and the Legislature believed that the low point was reached about July 1, 1932. Property values had decreased markedly from 1929 to that date. To permit mortgagees to force the sale of real property in an unstable market and then to enter as a deficiency the wide margin between the low selling price and. the face of the mortgage placed when values were much higher, was deemed by the Legislature to be unfair to the debtor and that it would create a danger to the economic welfare and the best interests of the community. To prevent this the moratorium was declared. As to mortgages executed on and after July 1, 1932, the same logic did not apply. Real estate values were then at their lowest ebb. Borrower and lender were dealing under economic conditions that had not changed. Mortgages then negotiated were not ordinarily for an amount in excess, of the value of the property upon which they were a hen.
The Legislature did not declare a general emergency as to all contracts under which money was payable. If the emergency required, doubtless it could have enacted that the grocer, the tailor, the merchant, should not recover judgments against delinquent debtors. A moratorium could have been declared as to money borrowed upon promissory notes. This was not done. The moratorium was limited to mortgages on real estate and the bonds secured thereby that were negotiated before July 1, 1932, the low point in the depression. Thus by the enactment in 1933, sections *6921083-a and 1083-b did not affect in any way mortgages negotiated after July 1, 1932. That the Legislature intended to limit the application of these sections is shown by subsequent legislation. Chapter 277 of the Laws of 1934 amended sections 1 and 4 of chapter 794 of the Laws of 1933 only to the extent that the emergency was declared to continue an additional year to July 1, 1935. Again, by chapter 2 of the Laws of 1935, the same sections of the 1933 chapter were amended by declaring that the emergency should be regarded as continuing until July 1, 1936. The amendment to section 1083-a relied upon in the court below was enacted by chapter 564 of the Laws of 1934. The section was amended again as to phraseology by chapter 268 of the Laws of 1935. Neither of these amendments affects or changes the limitation contained in section 4 of chapter 794 of the Laws of 1933. The moratorium did not extend to mortgages on real estate executed after July 1, 1932, any more than it did to chattel mortgages executed at any time. Deficiency judgments in foreclosure actions on mortgages made after that date do not come within the purview and are not affected by the two new sections of the Civil Practice Act. There can be no conflict between section 1083-a of the Civil Practice Act and section 4 of chapter 794 of the Laws of 1933, for the latter limits and circumscribes the application of the former.
The order vacating the judgment should be reversed on the law, with ten dollars costs, and the motion to vacate the judgment denied, with ten dollars, costs, and the judgment of June 6, 1935, reinstated.
McNamee and Heffernan, JJ., concur; Rhodes, J., dissents, with a memorandum; Bliss, J., dissents, with a memorandum.