Court Opinion

ID: 5360534
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:22:42.201748+00
Date Added: 2024-06-11T08:29:52.047803
License: Public Domain

Martin, P. J. (dissenting).
The plaintiff in a foreclosure action is not entitled to a deficiency judgment if the fair and reasonable market value of the mortgaged premises, as of the date of the foreclosure sale equaled or exceeded the amount due and unpaid on the mortgage. The referee here has not determined the “ market ” value.
One of the plaintiff’s experts testified that, from 1930 to 1936, there was not a free market in the section where the property here involved is located. To establish the existence of a market in 1936 he testified to one sale in May, 1935 (which was part of an accumulation of plottage for a banking house), one sale in June, 1935, and another sale in May, 1936. He testified to foreclosure sales which, of course, are not an element to be considered for the purpose of establishing a market. Sales seventeen months apart are not sufficient to show existence of a market. Another expert produced by the plaintiff testified that the last time a fair and reasonable value for property of this kind existed was in 1928. The third expert offered by plaintiff testified: “ Prior to 1931 there was a very active real estate market, and it ended in July of 1931. Then there was practically no real estate market, as generally conceded by the people until the last of 1935 and 1936, when there was considerable selling. There has been selling for1 mortgages, there has been selling of properties by people who took them over, and there has been selling by people who had to sell, and people who did not have to sell, willing buyers at prices they thought were reasonable, and could be obtained. There has been a market in 1935 and 1936, quite an active market. We have sold many pieces of property in that section.”
He testified to the sale of sixteen or seventeen pieces of property in the immediate vicinity of the property which is the subject of this action, but he was unable to testify whether such sales were by owners who had acquired the same through foreclosure or were inter-family transfers.
Testimony was given on behalf of the defendant to the effect that a fair and reasonable market value for real estate ceased as of *2681931; that there was always a market at a price, but it was not always a fair and reasonable market; that the fair and reasonable market value of this property when there last existed a market was more than sufficient to meet the mortgage obligation.
On the record we are of the opinion that, at the time of the sale in foreclosure, there was no “ actual ” market in which a fair and reasonable value could be obtained for this property. In arriving at the value of the property on the date of sale in foreclosure, the referee adhered to the instructions of the Court of Appeals in Heiman v. Bishop (272 N. Y. 83). We are of the opinion that the market value of the property here involved, as of the date of sale, is the value placed on it by the referee. ■
In Heiman v. Bishop (supra) the Court of Appeals pointed out that the object of the Legislature in enacting section 1083-a of the Civil Practice Act “ was to set up a new equitable standard for dealing with the question of deficiency judgments growing out of foreclosures; on the one hand, to protect unfortunate mortgagors, and, on the other, to allow mortgagees, when equitable in the circumstances, to secure deficiency judgments.” The record here discloses that the appellant acquired this property in 1914 and paid $36,000 therefor. The respondent purchased the property in November, 1931, for $150,000, paying $50,000 in cash and giving the seller a purchase-money mortgage for $100,000 at six per cent, which was, after two years, reduced to five and one-half per cent. In November, 1930, the respondent, who was then the lessee, spent approximately $10,192 in altering the premises, changing the same over from a one-family dwelling to a business property equipped to accommodate a restaurant in the basement and first-floor levels and apartments on the other three levels. The street is in transition from residential to business property. The foreclosure sale here took place in April, 1936, and the appellant bid the property in for $50,000. The appellant now has the property plus the $50,000 paid in cash in 1931 and is asking for a deficiency judgment of $55,256.76. Under all the circumstances the appellant is not entitled to a deficiency judgment.
The order, so far as appealed from, should be affirmed.
Dore, J., concurs.
Order, so far as appealed from, reversed, with twenty dollars costs and disbursements, and motion granted, with leave to plaintiff to enter a deficiency judgment against defendant-respondent in the sum of $10,256.76, with costs.