Court Opinion

ID: 5483923
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:03:48.721421+00
Date Added: 2024-06-11T08:33:39.599014
License: Public Domain

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*30pal 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. *31Roslyn 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.