Court Opinion

ID: 3606419
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:51:43.590008+00
Date Added: 2024-06-11T09:35:45.401603
License: Public Domain

I concur in the decision that there should be a new trial upon which a full and complete hearing with ample opportunity for cross-examination must be accorded to all parties. I also agree that the "security" to be valued under the statute is the mortgage (including the bond which is secured by the mortgage).
This is a liquidation proceeding and to measure the actual loss to the claimant it is necessary to ascertain the true value of the mortgage. The value of the mortgage is what would be realized upon the enforcement of the mortgage in the usual manner and not what might be realized upon the sale of the mortgage as such. The authorities in this State hold that this is the proper basis for valuing such security. (See Wheeler v. Newbould, 16 N.Y. 392;Brightson v. Claflin, 225 N.Y. 469; Perillo v. Zunino,259 N.Y. 21.) If then the applicable rule of law is that the value of the mortgage is what would be realized upon enforcement thereof, it follows, when the obligor on the bond is hopelessly insolvent, that the value of the mortgage is the value of the realty as if foreclosed less what would be the cost of foreclosure and any loss or expense in so doing. This latter includes all legal and administrative expenses such as receivership maintenance and loss of income. Valuation as if foreclosed does not mean a purchase price which may be realized by a forced sale at the auction block. It means "the amount which one desiring but not compelled to purchase will pay under ordinary conditions to a seller who desires but is not compelled to sell" (Heiman v. Bishop, 272 N.Y. 83, 86) and with such ordinary aids towards obtaining such reasonable value as the average holder of a mortgage would employ.
Objection is made that the above method for the valuation of mortgages is not applicable because of the *Page 83 
mortgage moratorium laws. (Civ. Prac. Act, §§ 1083-a, 1083-b.) These laws, however, do not purport to change rights but only to suspend foreclosure during the period of emergency and only where interest and taxes have been paid in full. Such continued payment is the best evidence that the mortgage is worth the face amount and will eventually be paid. But in any event we are valuing the mortgage not because the claimant is required to foreclose but merely to determine the value on the liquidation date. Therefore, the fact that, if interest and taxes are duly paid, the actual foreclosure may be postponed to the end of the emergency and the repeal of the mortgage moratorium laws, does not affect the validity of the method for valuing the mortgage.
CRANE, Ch. J., LEHMAN, O'BRIEN and RIPPEY, JJ., concur with LOUGHRAN, J.; FINCH, J., concurs in separate opinion; HUBBS, J., taking no part.
Ordered accordingly. *Page 84