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Yale Law Journal
Volume 51
Article 2
Issue 3 Yale Law Journal
1942
THE ENFORCEMENT OF PERSONAL
LIABILITY ON MORTGAGE DEBTS IN NEW
YORK
MILTON R. FRIEDMAN
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MILTON R. FRIEDMAN, THE ENFORCEMENT OF PERSONAL LIABILITY ON MORTGAGE DEBTS IN NEW YORK, 51 Yale
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THE ENFORCEMENT OF PERSONAL LIABILITY
ON MORTGAGE DEBTS IN NEW YORK*
MILTON R. FRIEDMAN t
THE traditional remedy of a mortgagee is foreclosure. Under the
common law, a mortgage was a conveyance of title defeasible on pay-
ment of the debt. On default the mortgagee, as legal owner, took
possession or brought ejectment at law against the mortgagor. But
from an early period the mortgagor could go into equity and stay the
legal action so as to permit subsequent redemption. Consequently, the
mortgagee came to initiate his proceeding in equity by praying for an
order directing the mortgagor to redeem within a specified time or be
foreclosed of all interest in the premises.' Thus to relieve the mortgagor
from forfeiture,' chancery, along with the evolution of this procedure
of strict foreclosure,' developed the doctrine of equity of redemption
and carefully surrounded it with safeguards. 4
* The validity andeffect of assumptionof mortgage debtsin New York has recently
been discussedby the author in the JOURNAL in TheCreation and Effect ofPersonal Lia-
bilityon Mortgage Debts in New York (1940) 50 YALE L. J.224. This articlewill
discussthe remedies of themortgagee beforeand afterthe emergency legislation
of 1933.
t M ember of the New York and Connecticut bars.
1. There is said tobe an unreportedcase permitting redemption aftersixteenyears
-a practice hardlydesigned for free alienationof property. Brabner-Smith, Economic
Aspects of the Deficiency Judjnent (1934) 20 VA. L. REV. 719,721.
2. Sears,Roebuck & Co. v.Camp, 124 N. J. Eq. 403,407-08, 1 A. (2d) 425,427-
28 (1938).
3. Barson v. Mulligan, 191N. Y. 306, 313-15,
84 N. E. 75, 78,16 L. R. A. (N.s,)
151 (1908); Moulton v. Cornish, 138N. Y. 133,140-41, 33N. E. 842, 843-44, 20
L,R. A.
370 (1893); Holmes v. Gravenhorst, 238 App. Div. 313, 314-15,263 N. Y. Supp. 738,
740-41 (2d Dep't 1933),rev'd, 263 N. Y. 148,188 N. E. 285,91 A. L. R. 1230,1236
(1933); Young v. Vail, 29 N. M. 324,369-71,222 Pac. 912, 924, 34A. L. R. 980,1015
(1924).
4. Since 1830 the mortgagee's remedy of ejectment has been barred in New York
by statute(now Civil PracticeAct § 991) which cannot be avoided by contract. See
Prudential Ins. Co.v. Liberdar Holding Co., 74 F. (2d) 50, 53 (C. C. A. 2d,1934). A
mortgagee may no longer have possessionprior toforeclosurewithout the owner's con-
sent. Herrmann v. Cabinet Land Co., 217N. Y. 526, 112 N. E. 476 (1916). Waiver of
the equity of redemption is forbidden,and executory contracts to convey to the mort-
gagee in lieuof foreclosureare unenforceable as against publicpolicy. See Verity v.
Metropolis Land Co., 248 App. Div. 748, 288 N. Y. Supp. 625 (2d Dep't 1936), aff'd,
274 N. Y. 624, 10 N. E. (2d) 582 (1937); but cf. 2JONES, MORTGAGES (8th ed.1928)
§ 878, n.47, and § 881,n. 90. Dealings between mortgagor and mortgagee are subject
to scrutiny by equity.See Odellv. Montross, 68 N. Y. 499, 504(1877) ; 2 JONES,Op. Cit.
supra, at §§ 878-81; 1 WILTSIE, MORTGAGE FORECLOSURES (5thed. 1939) §§ 244-45.
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19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 383
Early foreclosure procedures were in rem and no money judgments
were sought or obtained.' With this common law background Chancellor
Kent, in the early New York case of Dunklcyv. Tau Buren,0 concluded
that equity had no jurisdiction to enter a deficiency judgment in fcorv-
closure. This was an exception to the general practice of equity, on
assuminfg jurisdiction, to make a complete determination of all issues.
legal and equitable. But principally because of Kent's prestige, American
courts have assumed since the Dznkley case that deficiency judgments
were creatures of statute alone. Later, strict foreclosure was supplanted
in New -York by foreclosure by sale, a method deemed fairer t-n the
ground that a public sale was the truest test of value: If the prisceced,;
of sale were less than the mortgage debt, the mortgagee recovered a
judgment for the deficiency, while any surplus was payable to the
8
mortgagor.
REMEDIES OF THE MORTGAGEE BEFORE Tr-E EMUERGENCY LEGISLATIOx
Deficiency Judgments. Prior to the emergency legislation of 19331
a mortgagee could by statute recover a deficiency judgment in fore-
closure against his mortgagor and any person liable on the debtO if
the court had jurisdiction in personam' 0 and the judgment directing
the sale adjudicated the liabilityof the party to be charged. 1 ' Judgment
5. See Monaghan v. 'May, 242 App. Div. 64,66, 273N. Y. Supp. 475, 478 (2d Dep't
1934); Young v. Vail, 29 N. 'M. 324,369-71,222 Pac. 912, 924,34 A. L. R. 9F9, 1015
(1924).
6. 3 Johns. Ch. 330(N. Y. 1818).
7. See Rutherford RealtyCo. v. Cook, 198 N. Y. 29, 33, q0 N.
E. 1112, 1113(1910);
Reichert v. Stilwell,172 N. Y. 83, 89,64 N. E. 790, 792 (1902); Jamaica Say. Banlz
v. M. S. Investing Co., 274N. Y. 215, 218,8 N. E. (2d) 493, 112 A. L. R. ,145,1492
(1937); M1onaghan v. 'May, 242 App. Div. 64,66, 273 N. Y. Supp. 475,478 (24 Dep't
1934), and seethe elaboratediscussionin Young v. Vail,29 N. M. 324, 22 Pac. 912,
34 A. L. R. 980, 1015 (1924).
8. Lansing v. Goelet,9 Cow. 346,356, 357 (N. Y. 1827); Sears, Ruebuck & Co.
v. Camp, 124 N. J. Eq. 403, 407-0,
1 A. (2d) 425, 428(1938) ; cf. Frank
v. Davis, 135N.
Y. 275, 279, 31N. E. 1100,1101 (1892) ;National City Bank v. Gelfert,
284 N. Y. 13,
20, 29 N. E. (2d) 449, 452-53(1940), 130 A. L. R. 1472, 1492 (1941),rcvd, 313 U. S.
221 (1941) ; 3 JoxEts,
MoRTGAGEs (Sth ed. 1928)§ 2010.
Foreclosure by sale is saidto be the common American remedy. P,rabner-Smith,
loc. cit. supra note1. The mortgagee's remedies in the variousstates are cataloguod
in 3 JoNrEs,MORTGAGFS (Sth ed.1928) § 1690 ot scq.
The remedies in England are di,-
cussed in Turner, The English Mortgage of Land as Security (1934) 20 VA. L. Riw.
729.
9. N. . C. P. A. §§ 1079(7), 1QW.
10. Heilbrunn v. Kellog, 253App. Div. 753, 1 N. Y. S. (21) 193 (24 Dep't 1937),
aff'd, 279 N.Y. 773,18 N. E. (2d) 861 (1939); Pacek v. Ferrar, 258 App.Div. 772, 14
N. 1. S. (2d) 814 (4th Dep't 1939).
11. Bankers Trust Co. v.1 East 88th St. Co., 283 N. Y. 3f9, 28 N. F (2,4 875
(1940); Wager v. Link, 134 N. Y. 122,128, 31 N. H. 213,215 1&2 ; ee Sprague
v. Jones, 9Paige 395 (N. Y. 1842) (amendment of judgment).
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THE YALE LAW JOURNAL [Vol, 51 :
382
of foreclosure and sale was final for some purposes and interlocutory
for others. It was a final order for purposes of appeal,12 but inter-
locutory as to the amount of the obligor's liability,which was not fixed
until the entry of a money judgment. 3 Not until then did execution
issue. 1 4If the referee's report of sale showed a deficit, the clerk of
the court docketed a deficiency judgment without application "to the
court or notice to the obligor."0 Execution issued immediately; confirma-
tion was neither necessary nor usual'( and no further order was re-
quired.' 7 The act of the clerk was purely ministerial,' in pursuance of
12. Emigrant Indust.Say. Bank v. Van Bokkelen, 269 N. Y. 110, 199 N. E. 23
(1935). The judgment of foreclosure and sale is a final
determinationof of the
the rights
partiesin the premiseson allmatters within thescope of the pleadings. Matter of Es-
tate of 139
Stilwell, N. Y. 338, 34 N. E. 777 (1893). The adjudicationof is
liability
immune from attack.
collateral Butterly v. Maribert Realty Corp., 234 App. Div. 424,
255 N. Y. Supp. 321 (1stDep't 1932), aff'd, 260
N. Y. 554,184 N. E. 89 (1932); Tni-
kelman v. 415East 12thSt. Corp.,251 App. Div. 377,296 N. Y. Supp. 870 (1st Dep't
1937). Fraud in obtaining the judgment may be raised subsequently. Slote v. Caq-
cade Holding Corp.,276 N. Y. 239, 11 N. E. (2d) 894 (1937); Byrnes v. Owen, 2,13
N. Y. 211, 153 N. E. 51 (1926); Garlasco v.Smith, 250 App. Div. 534, 294 N. Y. Supp.
772 (1st Dep't 1937), N.
aff'd, 276 Y. 666,13 N. E. (2d) 53 (1938). The rightto an
accounting may also be raised subsequently.Kohl v. First Trust Co., 255 App. Div.
123, 6 N. Y. S. (2d) 84 (4thDep't 1938) ;see Bennett v. Austin,81 N. Y. 308 (1880)
(juniormortgagee inpossession,using rents toacquire senior
title in holds
foreclosure,
titlein trustfor mortgagor). A thirdperson, not a party to the may
foreclosure, not
take advantage of the adjudication.St. John v. Fowler, 229 N. Y. 270, 128 N. E. 199
(1920). The judgment isinterlocutoryin that the right of redemption survives until
the sale and until then inferiorlienors may sellon execution. Nutt v. Cuining, 155
N. Y. 309, 313,49 N. E. 880,881 (1898); Barnard v. Onderdonk, 98 N. Y. 158,166
(1885). The auction saleterminates the right of redemption and the owner may not
prevent the purchaser'scompletion of the saleby tenderduring theinterim. Brown v.
Frost, 10 Paige 243 (N. Y. 1843).
13. McCarthy v. Graham, Paige 480 (N. Y. 1840); Emigrant Indust.Say. Bank
v. Van Bokkelen, 269 N. Y. 110, 115,199 N. E. 23, 25 (1935) ; see3 JoNns, M,otoAG, S
(8thed. 1928) §§ 2206, 2220.
14. French v. French, 107 App. Div. 107, 94 N. Y. Supp, 1026 (4th Dep't 1905),
appeal dismissed, 185 N. Y.532, 77 N.E. 1187 (1906) ; see 3 JoNEs,MORTOAGES (8th ed.
1928) §2012.
15. Bondy v. Aronson Inc.,
& List Realties, 227 App. Div. 136,237 N. Y. Supp. 444
(4th Dep't 1929); Hawley v. Whalen, 64 Hun 550, 19 N. Y. Supp. 521 (5th Dep't
1892).
16. Bondy v. Aronson & List Realties,Inc.,227 App. Div. 136, 237 N. Y. Supp.
444 (4thDep't 1929); Moore v. Shaw, 15Hun 428 (N. Y. 1st Dep't 1878),appeal dis-
missed, 77 N. Y. 512 (1879); Metropolitan Say. Bank v. Feigenblatt,N. Y. L. J., Oct.
26, 1936, p.1369, col.7 (Sup. Ct.); see Syracuse Trust Co. v.Corey, 167 Misc. 506,
509 et seq., 4 N.Y. S. (2d) 349, 352-53et seq. (Sup.Ct. 1938).
17. Taylor v. Derrick, 64 Hun 636,19 N. Y. Supp. 785 (Sup. Ct.1892).
18. Morris v. Morange, 38 N.Y. 172 (1868) ; Moore v. Shaw, 15Hun 428 (N. Y.
1stDep't 1878),appeal dismissed, 77N. Y. 512 (1879).
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1942] PERSONAL LIABILITY OV MORTGAGE DEBTS 385
the judgment of foreclosure and sale, and apparently not a final order
for purposes of appeal. 9
Since determination of the deficiency judgment was automatic, protec-
tion of the mortgagor depended on adequacy of price obtained at the fore-
closure sale. But the foreclosure sale, although subject to vacation on
various grounds of unfairness,- could not be set aside for inadequacy
of price alone"' unless it was so great as to "shock the conscience" of
the court.2 2 Nor did the mortgagee's resale of the premises at a profit
reduce the deficiency judgment. -3 While the failure of judicial sales to
previously been recognized, 4 it was the depression
attract bidders had
19. Himmelman v. 540 West 146th Street, Inc., 244
N. Y. 540, 155 N. E. 8M (1926).
20. King v. Platt, 37
N. Y. 155 (1867); Wright v. CaprareIla,205 App. Div. 559,
199 N. Y. Supp. 864 (2d Dep't 1923); Lincoln Trust Co. v. Fullaytar,193 App. Div.
530,190 N. Y. Supp. 630 (1stDep't 1921), appeal dismissed, 232 N.Y. 600,134 X. E.
588 (1922); Purdy v. Wilkins, 95Misc. 706. 160 N. Y. Supp. 17 (Sup. Ct. 191i); Col-
lier v. Whipple,
13 Wend. 224 (N. Y. 1834); Jackson v.Crafts, 1sJohns. Ch. 110 (N.
Y. 1820); Corwith v. Barry,69 Hun 113 (N. Y. 1893); seeEmigrant Indust.Say. Bank
i%Van Bokkelen, 269 N. Y. 110,115, 199N. E. 23, 25 (1935); Lansing v. Goelet,
9 Cow.
346, 402 (N. Y. 182-7);Brown v. Frost,10 Paige 243, 246 (N. Y. 1843); FederalTitle
& Mtge. Guar. Co. v. Lowenstein,113 N. J. Eq. 200, 203,166 At. 538,540 (Ch. 1933);
Stanley,Effect of Economic Depression on Foreclosure (1939) 27 Ky. L. J. 365,310.
only on assurance of a higher
An order of resale, when appropriate, is often granted price
and securityfor expenses.Farmers Loan & Trust Co. v. B. & M. T. Co.,119 N. Y. 15,
23, 23 N. E. 173,174 (1890); Wright v. Caprarella,
supra; Collins v. Dunston,59 App.
Div. 626,69 N. Y. Supp. 1132 (4thDep't 1901); German-American Bank v. Dorthy,
39 App. Div. 166, 57N. Y. Supp. 172 (4th Dep't 1899); Halliday v. Greenke-Halliday
Co., N.Y. L. J., June 2,1932,p.3094, col.6 (Sup. Ct.); Syracuse Trust Co. v. Corey,
167 Misc. 506, 513,
4 N. Y. S. (2d) 349, 355-56(Sup. Ci 1938); see (1933) 33 ",L.L.
REv. 744, 745,
n. 9;Note (1933) 85 A. L. R. 1480,1481 ct seq.
21. Graffam v. Burgess, 117 U. S. 180 (1885); see Matter of Superintendent of
Banks, 207N. Y. 11,16, 100 N. E. 42n,429 (1912) ; Tripp v. Cook, 26Wend. 143, 153
(N. Y. 1841); Durfee & Doddridge, Redemption from Foreclosure Satc (1925) 23
Micn. L. Rm. 825,833; Stanley,supra note 20, at 381
et seq.; Cohen and Simpson, The
Sale Technique in Corporate Reorganization (1939) 16 N. Y. U. L. Q. R. 341, 345
et seq.; (1934) 19 Cor-qL. Q. 316, 317et seq.; (1933) 42 YALE L. J. 960, 961;(1929)
27 Mic. L. REv. 822; Note (1920) 8 A. L. R. 1001, 1002.
22. Chapman v. Boetcher,27 Hun 606 (N. Y. 1882); Ames v. Lock,,ood, 13 How.
Pr. 555 (N. Y. 1856) ; seeHome Bldg. & Loan 290
Ass'n v. Blaisdell, U. S. 393,446,
88 A. L. R. 1481, 1519 (1933), and cases citedsttpra notes 20 and 21; but cf.cases
cited infra note
25.
23. Haines v. Twelfth Ward Bank, 162 App. Div. 164,147 N. Y. Supp. 254 (1st
Dep't 1914), aff'd, 220N. Y. 751, 116 N. E. 1049 (1917); Schultz v. Mead, 8 N. Y.
Supp. 663 (1890),aff'd, 128 N. Y. 680, 29 N. E. 149
(1891); see 3 Jo:Ns, Mo-aGAGEs (Sth
ed. 1928) § 2206;de Funiak, Right to a Deficiency Judgment (1939) 27 Ky. L. J. 410;
Note (1938) 117 A. L. R. 863.
24. Durfee & Doddridge, supra note 21,at 832-33;HArmor: or Cobutssioi.ns oN;
UxiroRmi LAWS (1922) 275; cf.CrAVATH. So.m LEGAL PHA Es or r FIxNA:-
ING, REORGANIZATION AND REGULATION (1930) 204.
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THE YALE LAW JOURNAL [Vol.51 : 382
that fully revealed the complete breakdown of the foreclosure machinery20
as a protection against unconscionable deficiency judgments, and led
the New York lower courts, with some division in their ranks, to make
sporadic but ineffectual efforts at amelioration.2" But, in general, the
established premise that a public sale brought the full value of the prop-
erty left the courts powerless to deprive the mortgagee of his statutory
27
rights.
Action on the Bond. Before the emergency legislation, a mortgagee
could disregard the mortgage and his right to foreclose and recover a
judgment for the mortgage debt against the mortgagor 2 8 (despite a
25. Twenty-eight of thirty-one parcelssold at foreclosure in New Jersey on the
same day brought $100 each. See Federal Title& Mtge. Guar. Co. v. Lowenstein, 113
N. J. Eq. 200, 202,
166 At. 538, 539(Ch. 1933), (1934) 19 CoRN. L. Q. 316. See Chein-
ical Bank & Trust Co. v. Schumann Associates,Inc.,150 Misc. 221, 268 N. Y. Supp.
674 (Sup. Ct. 1934) ;Brabner-Smith, supra note 1,at 722-24. New York courtsrefused
to vacate deficiency
judgments recovered on thebasis of such bids.Irving Trust Co. v.
Edson, N. Y. L. J., Feb. 20,1933, p.
1033, col. 4(Sup. Ct.);Railroad Cooperative Bldg,
& Loan Ass'n v. Cocks, N. Y. L. J., Feb.10, 1937, p. 720,
col.5 (Sup. Ct.).
26. Bank of Manhattan Trust Co. v. ElldaCorp.,147 Misc. 374, 265N. Y. Supp. 115
(Sup. Ct. 1933) (salepostponed until assurance of normal bidding); Central Hanover
Bank & Trust Co. v.Adler, N. Y. L. J.,July 29,1933, p.343, col.3 (Sup. Ct.) (sale
postponed until end of legislative
session) ;
N. Y. LifeIns. Co. v. H. & J. Guttag Corp.,
N. Y. L. J., Aug.1,1933, p.370, col.1 (ibid.);McCall v.Maxwell Park Corp., N. Y.
L. J., Aug. 1, 1933, p.370, col. 2 (Sup Ct.) (ibid.); Brown v. Wardsview Realties
Corp., N. Y. L. J.,Aug. 3, 1933, p.395, col.3 (Sup. Ct.) (ibid.); Bank of Manhattan
Trust Co. v.2166 Broadway Corp.,N. Y. L. J., July7, 1933,p. 67,col. 1 (Sup. Ct.)
(saleadjourned one month); Tishka v. Wisnieska, N. Y. L. J., July 10,1933, p. 103,
col.6 (County Ct.) (saleadjourned sixmonths); Equitable Life Assur. Soc. v. 2727
Broadway Co., N.Y. L. J., Jan. 27,
1934, p.441,col. 5 (Sup. Ct.) (saleadjourned nine
weeks); Farmers & Mechanics Say.Bank v. Eagle Bldg. Co.,151 Misc. 249, 271 N. Y.
Supp. 306 (Sup.Ct. 1934) (fixesupset price) ; N.Y. Life Ins.Co. v. Johar Realty Co.,
N. Y. L. J.,July 22, 1933,p. 259, col. 3(Sup. Ct.) (mortgagee delayed sale thirteen
months; value of property tobe applied on debt);Strochak v. GlassPaper Making Sup-
plies Co.,N. Y. L. J.,May 9, .1933,p. 2794, col.3 (Sup. Ct.); Id.,May 10, 1933,p.
2818, col. 6(Sup. Ct.) (stayssale),rev'd, 239App. Div. 312, 267 .N. Y.Supp. 282 (1st
Dep't 1933) ;Dime Say. Bank v. Danley Realty Co., N. Y. L. J., June27, 1933,p. 3839,
col.1 (Sup. Ct.) (refusesto stay sale); Loma Holding Co. v.Cripple Bush Realty Co.,
147 Misc. 655, 265 N. Y. Supp. 125 (Sup. Ct. 1933) (refusesto stay actionon bond);
see (1933) 42 YALE L. J. 960;(1934) 34 COL. L. Ray. 706,707, n. 13;Gilligan& Stern,
Protecting the Rights of Mortgagors, N. Y. L. J., Aug. 29,
1933,p. 688, col.
1; Id. Aug.
30, 1933, p. 702,
col. 1;Notes (1934) 90 A. L. R. 1330, (1933) 82 A. L. R. 976; Perl-
man, Mortgage Deficiency Jvdgments During An Economic Depression (1934) 20 VA.
L. Rav. 771,805 et seq. Cf. note152 infra.
27. But itshould be noted thatjudicialreluctanceto vacate foreclosuresaleshad at
least themerit of lendingstability to judicial
titles.
28. General Investment Co. v. Interborough Rapid Transit Co., 200 App. Div. 794,
193 N. Y. Supp. 903 (1stDep't 1922), aff'd, 235
N. Y. 133,139 N. E. 216 (1923); see
Kress v. Central Trust Co.,246 App. Div. 76,78, 283 N. Y. Supp. 467, 469 (4th Dep't
1935), aff'd, 272 N. Y. 629, 5 N. E.
(2d) 365 (1936) ; Schenectady Say. Bank v. Ashton,
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19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 387
conveyance) ,29 an assuming grantee, 30 a guarantor or against all of
them. 31 This right was unaffected by destruction of the mortgage lien
through paramount foreclosure,3 2 condemnation 3 3 or tax sale. 34
Before the enactment of statutes making available a deficiency judg-
ment in a foreclosure proceeding, the mortgagee could proceed at law
on the bond and foreclose his mortgage in equity concurrently.03 This
procedure, however, was changed by a series of statutes consolidating
the mortgagee's remedies into two complete"0 but separate actions: he
might either proceed on the bond or sue to foreclose. To avoid double
litigation and costs the consolidation statutes thus sought to confine all
issues to one of two actions and require where possible the joinder
of all persons liable on the mortgage.37 Foreclosure became a plenary
proceeding -in rem to enforce the lien and in personam for a resulting
deficiency, the complaint being deemed to state but a single cause of
action." All persons liable for the debt could thus be joined in fore-
120 Mlisc. 26S,
198 N. Y. Supp. 198 (Sup. Ct. 1923),re'd, 205 App. Div. 781,783, 260
N. Y. Supp. 245,247 (3d Dep't 1923).
29. See Johnson v. Zink, 51 N. Y. 333, 336 (1873) ;Marshall Y. Davies, 78 N. Y.
414, 421 (1879); Roch. Say. Bank & Tappen,
v. Stoeltzen Inc., 176Misc. 140, 26 N.Y.
S. (2d) 713 (Sup. Ct 1941).
30. Burr v. Beers, 24 N. Y. 178 (1861). For the of the
qualifications mortgagee's
rights againstan assuming granteesee Friedman, The Creation and Eftce of Personal
Liability on Mortgage Debts i New Yorl- (1940) 50 Y.-ax L. J. 224, 226
c seq.
31. See Shipman . Niles,75 App. Div. 451, 453-54,78 N. Y. Supp. 440, 441 (1st
Dep't 1902),aff'd, 177 N. Y. 527, 69
N. E. 1132 (1903); Roch. Say. Bank v. Stoeltzen&
Tappen, Inc.,176 Misc. 140,26 N. Y. S. (2d) 713 (Sup. Ct 1941).
32. Frank v. Davis, 135 N. Y. 275, 31 N. E. 1100 (1S92); Sautter v. Frick,229
App. Div. 345,242 N. Y. Supp. 369 (4th Dep't 1930),aff'd, 256 N.Y. 535, 177 X. E.
129 (1931) ; Weisel v. Hagdahl Realty Co., 241 App.Div. 314, 271N. Y. Supp. 629 (2d
Dep't 1934), 48 HAav. L. REv. 126.
33. See Hill v. Wine, 35 App. Div. 520,523, 54 N. Y. Supp. 892, 894 (1st Dep't
1898).
34. McRae v. Hummel, 250 App. Div. 873, 295N. Y. Supp. 202 (2d Dep't 1937).
35. Dunkley v. Van Buren, 3 Johns. Ch. 330(N. Y. 6 Johns.
1818) ; Jones v. Conde,
Ch. 77 (N. Y. 1822); seeJamaica Say. Bank v. I. S. Investing Co.,274 N. Y. 215,
218, 8 N. E. (2d) 493, 494,112 A. L. R. 1485, 1492 (1937); Palmer v. Harris, 100 Ill.
276, 280 (1881). This was said to be common practice.Engle v. Underhill,3 Edw. Ch.
250, 251(N. Y. 1838).
36. But see National City Bank v. Gelfert,
284 N. Y. 13, 22, 29 N. E. (2d) 449,
453 (1940).
37. Reichertv. Stilwell,172 N. Y. 83, 64 N. E. 790 (1902); Grosvenor v. Day, 1
Clarke Ch. 109 (N. Y. 1839); Robert v. Kidansky, 111 App. Div. 475, 97 N. Y. Supp.
913 (1st Dep't 1906),aff'd, 188 N.
Y. 638, 81 N.E. 1174 (1907); Darmstadt v. Manson,
144 App. Div. 249, 128 N.Y. Supp. 992 (2d Dep't 1911) ;Carlin v. Lindvert,175 App.
Div. 940, 161N. Y. Supp. 1120 (2d Dep't 1916).
38. The deficiencyjudgment isdeemed incidentalto the foreclosureratherthan as
cause.
stating a separate See Jamaica Say. Bank v. M. S. InvestingCo., 274 X. Y. 215,
219, 8 N. E. (2d) 493, 494,112 A. L. R. 1485, 1489,1498 (1937) ; Reichertv. Stilwell,
172 N. Y. 83, 88, 64 N. E. 790, 792
(1902).
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closure3" where a money judgment would be rendered for the residue
of the debt left after the sale4" and the priority of liability and rights-
over settled among the obligors.4 As an alternative to foreclosure the
mortgagee might maintain an action on the bond, joining all parties
personally liable and, after recovery of judgment, levying on the free
assets of the obligors. 42 The two remedies could not, however, be pursued
concurrently. 43 Nor, apparently, could a mortgagee voluntarily discon-
tinue one type of suit for the purpose of instituting the other." After
recovery of judgment in an action on the bond, for example, no fore-
closure was maintainable until execution was returned unsatisfied .4 Con-
versely, the institution of foreclosure, where a deficiency judgment was
available, debarred the mortgagee from an action on the bond before
or after the decree.40 Civil Practice Act Section 1078 codified this
39. N. Y. C. P. A. § 1079(7).
40. N. Y. C. P. A. §§ 1083,
1083-a.
41. See Vanderbilt v.Schreyer, 91 N. Y. 392,397 (1883); Albany Exchange Say.
Bank v. Winne, 168 Misc. 853,856, 6 N. Y. S. (2d) 699, 702-03 (Sup. Ct.1938) ; cf.
Farnham v. Mallory, 5 Abb. Pr. N. S. 380 (N. Y. 1867).
42. Compare p. 408infra.
43. Dudley v. Congregation of St.Francis, 138 N. Y. 451,34 N. E. 281 (1893)
White v. Wielandt, 259 App. Div. 676, 20 N. Y. S. (2d) 560 (2d Dep't 1940),aff'd,
30 N. E. (2d) 725 (N. Y. 1941); Matter of Whalen, 136 Misc. 296, 240 N. Y. Snpp.
587 (Sup. Ct. 1930) (barred from filing involuntary petition
inbankruptcy against oblig-
or during pendency of foreclosure); see 3 JoNEs, MORTGAGES (8th ed. 1928) § 2206;
Tice v. Annin, 2 Johns. Ch. 125 (N. Y. 1816). Contra: Rossbach v. Aurora Holding
Corp., 252 App. Div. 842, 300 N. Y. Supp. 601 (lst Dep't 1937) (no opinion); Steitz
v. Geiger, 1940, p.
N. Y. L. J., July 29, 226, col. 4
(Sup. Ct.).
44. Engle v. Underhill,3 Edw. Ch. 250 (N. Y. 1838); but cf.Suydam v. Bartle,9
Paige 294 (N. Y. 1841) (permitted on conditions).
45. N. Y. C. P. A. § 1077.Dudley v. Congregation of St.Francis, 138 N. Y. 451,
457-58, 34 N. E. 281,282 (1893); Grosvenor v. Day, 1 Clarke Ch. 109 (N. Y. 1839);
Guilford v. Crandall,69 Hun 414, 23 N. Y. Supp. 465 (3d Dep't 1893); Note (1939)
121 A. L. R. 917,926, 928-29; Scheidellv.Llewellyn Realty Co.,177 N. Y. Supp. 529
(Sup. Ct. 1918) (applied to foreclosurefor part of debt theretoforereduced to judg-
ment); cf.Williamson v. Champlin, 8 Paige 70 (N. Y. 1839). During foreclosureno
action on thebond is maintainablewithout cogentreasons. Matter of Moore, 81 Hun 389
(N. Y. 1894). The statute to
is inapplicable thesubsequent foreclosureof a supplemen-
tal mortgage. Reichert v. 172
Stilwell, N. Y. 83,64 N. E. 790 (1902); see Ferraro v.
Marillard 227 App.
Builders, Inc., Div. 448,238 N. Y. Supp. 188 (2d Dep't 1929) (pre-
debt).
vious action for waste no action on mortgage Cf.note 47 infra.
46. White v. Wielandt, 259 App. Div. 676, 20 N. Y. S. (2d) 560 (1stDep't 1940),
aff'd, 30N. E. (2d) 725 (N. Y. 1941); cf.Honeyman v. Hanan, 275 N. Y. 382,392, 9
N. E. (2d) 970, 974 (1937), U.
appeal dismissed, 302 S. 375 (1937); but cf. President
& Directors of Manhattan Co. v. CallisterBros.,175 Misc. 421,23 N. Y. S. (2d) 623,
aft'd, 260App. Div. 880, 23 N. Y. S. (2d) 826 (2d Dep't 1940) (mortgage partialse-
curity for notes); Schaaf v. O'Brien, 8 Daly 181 (N. Y. Comm. PI.1878). But see
Rossbach v. Aurora Holding Corp.,252 App. Div. 842, 300 N. Y. Supp. 601 (1stDep't
1937) (permits joinderof cause of action for foreclosurewith causes for interestand
taxes; no opinion); Stitzv. Geiger,N. Y. L. J., July29, 1940,p.226, col.4 (Sup. Ct.)
(ibid.).
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19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 389
limitation by preventing the maintenance of any action for the debt after
foreclosure without leave of court." While the granting of leave was
discretionary, the limits of discretion were fairly well marked. It was only
granted in special circumstances as, for instance, against a non-resident
who had knowledge of the foreclosure and an opportunity to protect his
interest at the sale4" or where there was another valid excuse for non-
joinder of an obligor.49 It was denied if the obligor could have been
served" ° or, if served, no deficiency judgment was sought in the fore-
closure, 5 i.e.,
where there was no inducement for the obligor to protect
his interest at the sale. Again, it was denied in case of some under-
47. N.Y. C. P. A. § 1078.See Duport, Right to Sue on the Bond Before, During and
After Foreclosure, N.Y. L. J.,May 17, 1932, p.2748, col.1, May 18, 1932, p.2772,
col.1. Applicationfor leave should be on noticewhere the respondentis availablefor
service.Cooper Co. v. Naumberg, 154 App. Div. 225, 138 N. Y. Supp. 1005 (2d Dep't
1912). But it may be given nuc pro tunc inthe law action.McKernan %.Robinson,
84 N. Y. 105 (1881); Matter of Corin, 217 App. Div. 809, 217 N. Y. Supp. 903 (3d
Dep't 1926); Earl v.David, 20 Hun 527 (N. Y. 1820). After reductionof the mortgage
debt to judgment no leave isrequired in actionsto enforce the judgment. Prisco &
Soveris,Inc. v.Service Bond & Mtge Co., 230 App. Div. 713, 242N. Y. Supp. S97 (2d
Dep't 1930) (settingaside a fraudulent transfer);cf.cases supra note 45; Matter of
Gray, N. Y. L. J.,May 8, 1937,p. 2327,col.7 (Sup. Ct) (judgment against executor
binds legatee
by privity;leave unnecessaryto enforcejudgment at leastwith respectto
executor'sundistributed assets);
but see Rowley v. Nellis,
41 Misc. 315, 84N. Y. Supp.
841 (Sup. Ct. 1903) (no privitybetween executor and heir); Burnham v. Burnham,
27 Misc. 106(Sup. Ct. 1899),
aff'd. 46 App.
Div. 513 (1900),aff'd, 165 N.Y. 659 (1901);
Plattv. Platt, 105N. Y. 483 (1887) (judgment againstexecutor not even prima fade
evidence of debt
against heiror devisee).
A claim against a mortgagor's estate was permitted
without leave after a foreclosure
against an absentee mortgagor. In;re Oster's Estate,8 N.Y. S. (2d) 249 (Surr. Ct.
1938),aff'd, 258App. Div. 930, 16 N.Y. S. (2d) 612 (4th Dep't 1939). Despite the
possibly proper basisfor an applicationhere the dispensationwith leave isout of line
with cases cited supra note46 and infra note51.
48. Matter of Corin, 217App. Div. S09, 217N. Y. Supp. 903 (3d Dep't 1926).
49. McKernan v. Robinson, 84 N. Y. 105 (1881); Guaranty Trust Co. v. Grabowit-
zky, N. Y. L. J., Sept. 23,
1936,p. 811,col. 3(Sup. Ct).
50. Robert v. Kidansky, 111 App. Div. 475, 97 N. Y. Supp. 913 (1st Dep't 1906),
aff'&d188 N. Y. 638, S1N. E. 1174 (1907); Matter of Byrne, 81 App. Div. 74, 80 N.Y.
Supp. 977 (1st Dep't 1903); Matter of Collins,
17 Hun 2S9 (N. Y. 1879) ; see Hochstein
v. Schlanger, 150 App. Div. 124,134 N.Y. Supp. 704 (1st Dep't1912), aff'd, 203N.Y.
513, 101 N. E. 1105 (1913); but see Campbell v. Smith,71 N. Y. 26 (1877).
51. Carlin v.Lindveit,175 App. Div. 940,161 N. Y. Supp. 1120 (2d Dep't 1916);
Matter of Steiner v. Day, 161
App. Div. 742, 147 N. Y. Supp. 200(2d Dep't 1914); Mor-
rison v. Slater,128 App. Div. 467, 112 N. Y. Supp. 855 (1st Dep't 1903); Matter of
Marshall, 53 App. Div. 136,65 N. Y. Supp. 760 (1stDept 1900) ; Rowley v. Nellis, 41
Misc. 315, 84 N. Y. Supp. 841 (Sup. Ct. 1903); but cf.Matter of McLaughlin v. Durr,
76 App. Div. 75,78 N. Y. Supp. 798 (1st Dep't 1902) (supervening paramount fore-
closure); Lockwood v. Fawcett,17 Hun 146 (N. Y. 1879) (foreclosurecomplaintasked
deficiencyjudgment but no adjudicationof liability;
may not enforce payment of defi-
ciency out of realtydevisedby mortgagor) ; but cf.note 47 stipra.
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THE YALE LAW JOURNAL (Vol. 51 : 382
standing not to seek a deficiency judgment,5 2 or in case of laches" a or
delay whereby the party to be charged lost a right-over against a person
primarily liable." It has never been denied solely on the ground of an
inadequate bid at foreclosure, but neither this factor nor other equities
escaped consideration in the cases denying leaveY 5
Death of the Obligor. As a result of statutes overruling the common
law, the death of the mortgagor effected substantial changes in the reme-
dies of the mortgagee. Under common law, all charges against realty for
which a decedent was liable, including mortgages, became debts of his
estate and payable by the personal representative unless the will directed
otherwise." The heir or devisee took the property, as against the repre-
sentative, free and clear of the mortgage. But popular belief that the rule
was otherwise, i.e.,that the mortgaged premises were primarily liable
for the payment of the debt, defeated the intentions of testators so
frequently that the legislature enacted a statute early in the nineteenth
century (now Real Property Law Section 250) reversing the common
52. Scofieldv. Doscher, 72 N. Y. 491 (1878); Matter of Marshall, 53 App. Div.
136, 65 N. Y. Supp. 760 (1stDep't 1900); cf.Wetherell v. Kelly, 195 App. Div. 227,
187 N. Y. Supp. 43 (2d Dep't 1921).
53. Stehlv. Uris, 210App. Div. 444,206 N. Y. Supp. 296 (1st Dep't 1924); U. S.
Life Ins. Co. 55 Hun 606,
v. Poillon, 7 N. Y. Supp. 834 (Sup. Ct. 1889).
54. Matter of Collins,17 Hun 289 (N. Y. 1879).
55. Leave was unnecessaryunder Section1078 after foreclosureby advertisement if
a money judgment was unavailable[see Bush v. Robbins, 23 Wkly. Dig. 405 (N. Y.
Sup. Ct. 1886); Cape Cod Say. Bank v. Patton, N. Y. L. J.,Apr. 11, 1939, p,1659,
col. 1 (Sup. Ct.)],or in bringing an action based upon a previous deficiencyjudg-
ment [see Schultzv. Mead, 8 N. Y. Supp 663 (Sup. Ct. 1890), aff'd,128 N. Y. 680,
29 N. E. 149 (1891); cf.note 47 supra]. It isapplicableonly to a holderof the mort-
gage and does not affectthe right of an obligorwho has paid the debt to reimburse-
ment against a primary or co-obligor. As to a primary obligor, see Comstock v.
Drohan, 71 N. Y. 9 (1877) ; cf.Hyde v.Miller, 45 App. Div. 396,60 N. Y. Supp. 974
(4thDep't 1899), aff'd, 168 N.Y. 590, 60 N. E. 1113 (1901). As to a co-obligor,
see
Weed v.Calkins, 24 Hun 582 (N. Y. 1881).
56. See Matter of Burrows, 283 N. Y. 540, 544,29 N. E. (2d) 77,79 (1940);
Matter of Noyes, 3 Dem. 369,370 (N. Y. 1885) ;Notes (1906) 3 L. R. A. (N.s.)
898-99; (1920) 5 A. L. R. 488, 497; (1931) 72 A. L. R. 709; (1939) 120 A. L. R. 577.
One reason advanced for thedoctrine isthat the personalty of thetestatorwas saved
from depletionby the givingof the mortgage [seeMatter of Fogarty,165 Misc. 78, 79,
300 N. Y. Supp. 231,234 (Surr. Ct.1937)], a reason of doubtfulvaliditywhen applied
to purchase money mortgages where the personalestateof thetestatorreceivedno addi-
tion thereby.See CLEAVELAND, HEWITT & CLARK, PROBATE LAW & PRAcrTic or CONN.
(1915) § 460; 5 A. L. R. supra, at 505. The rule isunaffected by a devise expressly
subjectto the mortgage, which is deemed to describethe premises,or of the testator's
which is deemed to
interest in the premises, referto a dower interestsurviving thedevise
3 L. R. A. (N.s.) supra, at 902.Itis not applied, however,where it would defeat spe-
bequests.
cific Rice v. Harbeson, 63 N. Y. 493 (1875) ; see3 L. R. A. (N.S.)supra, at
902.
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19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 391
law rule." This statute required the heir or devisee of property mort-
gaged by the decedent, in the absence of contrary testamentary directions,
to "satisfy and discharge such mortgage out of his own property," with-
out resorting to the representative. The statute was held to cover mort-
gages assumed as well as executed by the decedent."5 And it was not over-
ruled by a general testamentary direction to pay debts."0
Section 250 was limited in its terms to the relations between heir
or devisee and the general estate, but it was nevertheless extended by
construction to the mortgagee."0 Though not intended to deprive the
mortgagee of any part of his debt, it was held to make the mortgaged
premises primarily liable for the mortgage debt and to limit the liability
of the representative and distributees of the estate to a deficiency judg-
ment. By judicial legislation, therefore, the mortgagee was required first
to foreclose and then to claim against the general estate only for the
deficiency.6" The mortgagee could not waive his lien on the property
and claim for the full amount of his debt against the representative;c -
57. 1 N. Y. REV. STAT. (2d ed. 1836)p. 740, § 4.
See Matter of Burrows, 2,3 N. Y.
540, 544, 29 N. E.(2d)77, 79 (1940).
58. Matter of Fogarty, 165Misc. 78, 300N. Y. Supp. 231 (Surr. Ct. 1937); Wicks
v. Carmichael,172 Misc. 924, 16 N. Y. S. (2d) 395 (Sup. Ct. 1939).
59. Meyer v. Cahen, 111 N. Y. 270, 18 N. E. 852 (1882); In re Dell'sEstate, 154
Misc. 216, 276 N. Y. Supp. 960 (Surr. Ct. 1935).The deliveryof collateralsecurityto
the mortgagee by the testatorduring hislifetimeoverrulesthe statutepro tanto.Matter
of Vicinus,159 Misc. 903,290 N. Y. Supp. 20 (Surr. Ct. 1936).A comparable English
generally to similar
statute is construed effect.2 C
Preview
FILED: QUEENS COUNTY CLERK 08/20/2021 04:13 PM INDEX NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 Yale Law Journal Volume 51 Article 2 Issue 3 Yale Law Journal 1942 THE ENFORCEMENT OF PERSONAL LIABILITY ON MORTGAGE DEBTS IN NEW YORK MILTON R. FRIEDMAN Follow this and additional works at: http://digitalcommons.law.yale.edu/ylj Recommended Citation MILTON R. FRIEDMAN, THE ENFORCEMENT OF PERSONAL LIABILITY ON MORTGAGE DEBTS IN NEW YORK, 51 Yale L.J. (1942). Available at: http://digitalcommons.law.yale.edu/ylj/vol51/iss3/2 This Article is brought to you for free and open access by Yale Law School Legal Scholarship Repository. It has been accepted for inclusion in Yale Law Journal by an authorized editor of Yale Law School Legal Scholarship Repository. For more information, please contact julian.aiken@yale.edu. FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 THE ENFORCEMENT OF PERSONAL LIABILITY ON MORTGAGE DEBTS IN NEW YORK* MILTON R. FRIEDMAN t THE traditional remedy of a mortgagee is foreclosure. Under the common law, a mortgage was a conveyance of title defeasible on pay- ment of the debt. On default the mortgagee, as legal owner, took possession or brought ejectment at law against the mortgagor. But from an early period the mortgagor could go into equity and stay the legal action so as to permit subsequent redemption. Consequently, the mortgagee came to initiate his proceeding in equity by praying for an order directing the mortgagor to redeem within a specified time or be foreclosed of all interest in the premises.' Thus to relieve the mortgagor from forfeiture,' chancery, along with the evolution of this procedure of strict foreclosure,' developed the doctrine of equity of redemption and carefully surrounded it with safeguards. 4 * The validity andeffect of assumptionof mortgage debtsin New York has recently been discussedby the author in the JOURNAL in TheCreation and Effect ofPersonal Lia- bilityon Mortgage Debts in New York (1940) 50 YALE L. J.224. This articlewill discussthe remedies of themortgagee beforeand afterthe emergency legislation of 1933. t M ember of the New York and Connecticut bars. 1. There is said tobe an unreportedcase permitting redemption aftersixteenyears -a practice hardlydesigned for free alienationof property. Brabner-Smith, Economic Aspects of the Deficiency Judjnent (1934) 20 VA. L. REV. 719,721. 2. Sears,Roebuck & Co. v.Camp, 124 N. J. Eq. 403,407-08, 1 A. (2d) 425,427- 28 (1938). 3. Barson v. Mulligan, 191N. Y. 306, 313-15, 84 N. E. 75, 78,16 L. R. A. (N.s,) 151 (1908); Moulton v. Cornish, 138N. Y. 133,140-41, 33N. E. 842, 843-44, 20 L,R. A. 370 (1893); Holmes v. Gravenhorst, 238 App. Div. 313, 314-15,263 N. Y. Supp. 738, 740-41 (2d Dep't 1933),rev'd, 263 N. Y. 148,188 N. E. 285,91 A. L. R. 1230,1236 (1933); Young v. Vail, 29 N. M. 324,369-71,222 Pac. 912, 924, 34A. L. R. 980,1015 (1924). 4. Since 1830 the mortgagee's remedy of ejectment has been barred in New York by statute(now Civil PracticeAct § 991) which cannot be avoided by contract. See Prudential Ins. Co.v. Liberdar Holding Co., 74 F. (2d) 50, 53 (C. C. A. 2d,1934). A mortgagee may no longer have possessionprior toforeclosurewithout the owner's con- sent. Herrmann v. Cabinet Land Co., 217N. Y. 526, 112 N. E. 476 (1916). Waiver of the equity of redemption is forbidden,and executory contracts to convey to the mort- gagee in lieuof foreclosureare unenforceable as against publicpolicy. See Verity v. Metropolis Land Co., 248 App. Div. 748, 288 N. Y. Supp. 625 (2d Dep't 1936), aff'd, 274 N. Y. 624, 10 N. E. (2d) 582 (1937); but cf. 2JONES, MORTGAGES (8th ed.1928) § 878, n.47, and § 881,n. 90. Dealings between mortgagor and mortgagee are subject to scrutiny by equity.See Odellv. Montross, 68 N. Y. 499, 504(1877) ; 2 JONES,Op. Cit. supra, at §§ 878-81; 1 WILTSIE, MORTGAGE FORECLOSURES (5thed. 1939) §§ 244-45. FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 383 Early foreclosure procedures were in rem and no money judgments were sought or obtained.' With this common law background Chancellor Kent, in the early New York case of Dunklcyv. Tau Buren,0 concluded that equity had no jurisdiction to enter a deficiency judgment in fcorv- closure. This was an exception to the general practice of equity, on assuminfg jurisdiction, to make a complete determination of all issues. legal and equitable. But principally because of Kent's prestige, American courts have assumed since the Dznkley case that deficiency judgments were creatures of statute alone. Later, strict foreclosure was supplanted in New -York by foreclosure by sale, a method deemed fairer t-n the ground that a public sale was the truest test of value: If the prisceced,; of sale were less than the mortgage debt, the mortgagee recovered a judgment for the deficiency, while any surplus was payable to the 8 mortgagor. REMEDIES OF THE MORTGAGEE BEFORE Tr-E EMUERGENCY LEGISLATIOx Deficiency Judgments. Prior to the emergency legislation of 19331 a mortgagee could by statute recover a deficiency judgment in fore- closure against his mortgagor and any person liable on the debtO if the court had jurisdiction in personam' 0 and the judgment directing the sale adjudicated the liabilityof the party to be charged. 1 ' Judgment 5. See Monaghan v. 'May, 242 App. Div. 64,66, 273N. Y. Supp. 475, 478 (2d Dep't 1934); Young v. Vail, 29 N. 'M. 324,369-71,222 Pac. 912, 924,34 A. L. R. 9F9, 1015 (1924). 6. 3 Johns. Ch. 330(N. Y. 1818). 7. See Rutherford RealtyCo. v. Cook, 198 N. Y. 29, 33, q0 N. E. 1112, 1113(1910); Reichert v. Stilwell,172 N. Y. 83, 89,64 N. E. 790, 792 (1902); Jamaica Say. Banlz v. M. S. Investing Co., 274N. Y. 215, 218,8 N. E. (2d) 493, 112 A. L. R. ,145,1492 (1937); M1onaghan v. 'May, 242 App. Div. 64,66, 273 N. Y. Supp. 475,478 (24 Dep't 1934), and seethe elaboratediscussionin Young v. Vail,29 N. M. 324, 22 Pac. 912, 34 A. L. R. 980, 1015 (1924). 8. Lansing v. Goelet,9 Cow. 346,356, 357 (N. Y. 1827); Sears, Ruebuck & Co. v. Camp, 124 N. J. Eq. 403, 407-0, 1 A. (2d) 425, 428(1938) ; cf. Frank v. Davis, 135N. Y. 275, 279, 31N. E. 1100,1101 (1892) ;National City Bank v. Gelfert, 284 N. Y. 13, 20, 29 N. E. (2d) 449, 452-53(1940), 130 A. L. R. 1472, 1492 (1941),rcvd, 313 U. S. 221 (1941) ; 3 JoxEts, MoRTGAGEs (Sth ed. 1928)§ 2010. Foreclosure by sale is saidto be the common American remedy. P,rabner-Smith, loc. cit. supra note1. The mortgagee's remedies in the variousstates are cataloguod in 3 JoNrEs,MORTGAGFS (Sth ed.1928) § 1690 ot scq. The remedies in England are di,- cussed in Turner, The English Mortgage of Land as Security (1934) 20 VA. L. Riw. 729. 9. N. . C. P. A. §§ 1079(7), 1QW. 10. Heilbrunn v. Kellog, 253App. Div. 753, 1 N. Y. S. (21) 193 (24 Dep't 1937), aff'd, 279 N.Y. 773,18 N. E. (2d) 861 (1939); Pacek v. Ferrar, 258 App.Div. 772, 14 N. 1. S. (2d) 814 (4th Dep't 1939). 11. Bankers Trust Co. v.1 East 88th St. Co., 283 N. Y. 3f9, 28 N. F (2,4 875 (1940); Wager v. Link, 134 N. Y. 122,128, 31 N. H. 213,215 1&2 ; ee Sprague v. Jones, 9Paige 395 (N. Y. 1842) (amendment of judgment). FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 THE YALE LAW JOURNAL [Vol, 51 : 382 of foreclosure and sale was final for some purposes and interlocutory for others. It was a final order for purposes of appeal,12 but inter- locutory as to the amount of the obligor's liability,which was not fixed until the entry of a money judgment. 3 Not until then did execution issue. 1 4If the referee's report of sale showed a deficit, the clerk of the court docketed a deficiency judgment without application "to the court or notice to the obligor."0 Execution issued immediately; confirma- tion was neither necessary nor usual'( and no further order was re- quired.' 7 The act of the clerk was purely ministerial,' in pursuance of 12. Emigrant Indust.Say. Bank v. Van Bokkelen, 269 N. Y. 110, 199 N. E. 23 (1935). The judgment of foreclosure and sale is a final determinationof of the the rights partiesin the premiseson allmatters within thescope of the pleadings. Matter of Es- tate of 139 Stilwell, N. Y. 338, 34 N. E. 777 (1893). The adjudicationof is liability immune from attack. collateral Butterly v. Maribert Realty Corp., 234 App. Div. 424, 255 N. Y. Supp. 321 (1stDep't 1932), aff'd, 260 N. Y. 554,184 N. E. 89 (1932); Tni- kelman v. 415East 12thSt. Corp.,251 App. Div. 377,296 N. Y. Supp. 870 (1st Dep't 1937). Fraud in obtaining the judgment may be raised subsequently. Slote v. Caq- cade Holding Corp.,276 N. Y. 239, 11 N. E. (2d) 894 (1937); Byrnes v. Owen, 2,13 N. Y. 211, 153 N. E. 51 (1926); Garlasco v.Smith, 250 App. Div. 534, 294 N. Y. Supp. 772 (1st Dep't 1937), N. aff'd, 276 Y. 666,13 N. E. (2d) 53 (1938). The rightto an accounting may also be raised subsequently.Kohl v. First Trust Co., 255 App. Div. 123, 6 N. Y. S. (2d) 84 (4thDep't 1938) ;see Bennett v. Austin,81 N. Y. 308 (1880) (juniormortgagee inpossession,using rents toacquire senior title in holds foreclosure, titlein trustfor mortgagor). A thirdperson, not a party to the may foreclosure, not take advantage of the adjudication.St. John v. Fowler, 229 N. Y. 270, 128 N. E. 199 (1920). The judgment isinterlocutoryin that the right of redemption survives until the sale and until then inferiorlienors may sellon execution. Nutt v. Cuining, 155 N. Y. 309, 313,49 N. E. 880,881 (1898); Barnard v. Onderdonk, 98 N. Y. 158,166 (1885). The auction saleterminates the right of redemption and the owner may not prevent the purchaser'scompletion of the saleby tenderduring theinterim. Brown v. Frost, 10 Paige 243 (N. Y. 1843). 13. McCarthy v. Graham, Paige 480 (N. Y. 1840); Emigrant Indust.Say. Bank v. Van Bokkelen, 269 N. Y. 110, 115,199 N. E. 23, 25 (1935) ; see3 JoNns, M,otoAG, S (8thed. 1928) §§ 2206, 2220. 14. French v. French, 107 App. Div. 107, 94 N. Y. Supp, 1026 (4th Dep't 1905), appeal dismissed, 185 N. Y.532, 77 N.E. 1187 (1906) ; see 3 JoNEs,MORTOAGES (8th ed. 1928) §2012. 15. Bondy v. Aronson Inc., & List Realties, 227 App. Div. 136,237 N. Y. Supp. 444 (4th Dep't 1929); Hawley v. Whalen, 64 Hun 550, 19 N. Y. Supp. 521 (5th Dep't 1892). 16. Bondy v. Aronson & List Realties,Inc.,227 App. Div. 136, 237 N. Y. Supp. 444 (4thDep't 1929); Moore v. Shaw, 15Hun 428 (N. Y. 1st Dep't 1878),appeal dis- missed, 77 N. Y. 512 (1879); Metropolitan Say. Bank v. Feigenblatt,N. Y. L. J., Oct. 26, 1936, p.1369, col.7 (Sup. Ct.); see Syracuse Trust Co. v.Corey, 167 Misc. 506, 509 et seq., 4 N.Y. S. (2d) 349, 352-53et seq. (Sup.Ct. 1938). 17. Taylor v. Derrick, 64 Hun 636,19 N. Y. Supp. 785 (Sup. Ct.1892). 18. Morris v. Morange, 38 N.Y. 172 (1868) ; Moore v. Shaw, 15Hun 428 (N. Y. 1stDep't 1878),appeal dismissed, 77N. Y. 512 (1879). FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 1942] PERSONAL LIABILITY OV MORTGAGE DEBTS 385 the judgment of foreclosure and sale, and apparently not a final order for purposes of appeal. 9 Since determination of the deficiency judgment was automatic, protec- tion of the mortgagor depended on adequacy of price obtained at the fore- closure sale. But the foreclosure sale, although subject to vacation on various grounds of unfairness,- could not be set aside for inadequacy of price alone"' unless it was so great as to "shock the conscience" of the court.2 2 Nor did the mortgagee's resale of the premises at a profit reduce the deficiency judgment. -3 While the failure of judicial sales to previously been recognized, 4 it was the depression attract bidders had 19. Himmelman v. 540 West 146th Street, Inc., 244 N. Y. 540, 155 N. E. 8M (1926). 20. King v. Platt, 37 N. Y. 155 (1867); Wright v. CaprareIla,205 App. Div. 559, 199 N. Y. Supp. 864 (2d Dep't 1923); Lincoln Trust Co. v. Fullaytar,193 App. Div. 530,190 N. Y. Supp. 630 (1stDep't 1921), appeal dismissed, 232 N.Y. 600,134 X. E. 588 (1922); Purdy v. Wilkins, 95Misc. 706. 160 N. Y. Supp. 17 (Sup. Ct. 191i); Col- lier v. Whipple, 13 Wend. 224 (N. Y. 1834); Jackson v.Crafts, 1sJohns. Ch. 110 (N. Y. 1820); Corwith v. Barry,69 Hun 113 (N. Y. 1893); seeEmigrant Indust.Say. Bank i%Van Bokkelen, 269 N. Y. 110,115, 199N. E. 23, 25 (1935); Lansing v. Goelet, 9 Cow. 346, 402 (N. Y. 182-7);Brown v. Frost,10 Paige 243, 246 (N. Y. 1843); FederalTitle & Mtge. Guar. Co. v. Lowenstein,113 N. J. Eq. 200, 203,166 At. 538,540 (Ch. 1933); Stanley,Effect of Economic Depression on Foreclosure (1939) 27 Ky. L. J. 365,310. only on assurance of a higher An order of resale, when appropriate, is often granted price and securityfor expenses.Farmers Loan & Trust Co. v. B. & M. T. Co.,119 N. Y. 15, 23, 23 N. E. 173,174 (1890); Wright v. Caprarella, supra; Collins v. Dunston,59 App. Div. 626,69 N. Y. Supp. 1132 (4thDep't 1901); German-American Bank v. Dorthy, 39 App. Div. 166, 57N. Y. Supp. 172 (4th Dep't 1899); Halliday v. Greenke-Halliday Co., N.Y. L. J., June 2,1932,p.3094, col.6 (Sup. Ct.); Syracuse Trust Co. v. Corey, 167 Misc. 506, 513, 4 N. Y. S. (2d) 349, 355-56(Sup. Ci 1938); see (1933) 33 ",L.L. REv. 744, 745, n. 9;Note (1933) 85 A. L. R. 1480,1481 ct seq. 21. Graffam v. Burgess, 117 U. S. 180 (1885); see Matter of Superintendent of Banks, 207N. Y. 11,16, 100 N. E. 42n,429 (1912) ; Tripp v. Cook, 26Wend. 143, 153 (N. Y. 1841); Durfee & Doddridge, Redemption from Foreclosure Satc (1925) 23 Micn. L. Rm. 825,833; Stanley,supra note 20, at 381 et seq.; Cohen and Simpson, The Sale Technique in Corporate Reorganization (1939) 16 N. Y. U. L. Q. R. 341, 345 et seq.; (1934) 19 Cor-qL. Q. 316, 317et seq.; (1933) 42 YALE L. J. 960, 961;(1929) 27 Mic. L. REv. 822; Note (1920) 8 A. L. R. 1001, 1002. 22. Chapman v. Boetcher,27 Hun 606 (N. Y. 1882); Ames v. Lock,,ood, 13 How. Pr. 555 (N. Y. 1856) ; seeHome Bldg. & Loan 290 Ass'n v. Blaisdell, U. S. 393,446, 88 A. L. R. 1481, 1519 (1933), and cases citedsttpra notes 20 and 21; but cf.cases cited infra note 25. 23. Haines v. Twelfth Ward Bank, 162 App. Div. 164,147 N. Y. Supp. 254 (1st Dep't 1914), aff'd, 220N. Y. 751, 116 N. E. 1049 (1917); Schultz v. Mead, 8 N. Y. Supp. 663 (1890),aff'd, 128 N. Y. 680, 29 N. E. 149 (1891); see 3 Jo:Ns, Mo-aGAGEs (Sth ed. 1928) § 2206;de Funiak, Right to a Deficiency Judgment (1939) 27 Ky. L. J. 410; Note (1938) 117 A. L. R. 863. 24. Durfee & Doddridge, supra note 21,at 832-33;HArmor: or Cobutssioi.ns oN; UxiroRmi LAWS (1922) 275; cf.CrAVATH. So.m LEGAL PHA Es or r FIxNA:- ING, REORGANIZATION AND REGULATION (1930) 204. FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 THE YALE LAW JOURNAL [Vol.51 : 382 that fully revealed the complete breakdown of the foreclosure machinery20 as a protection against unconscionable deficiency judgments, and led the New York lower courts, with some division in their ranks, to make sporadic but ineffectual efforts at amelioration.2" But, in general, the established premise that a public sale brought the full value of the prop- erty left the courts powerless to deprive the mortgagee of his statutory 27 rights. Action on the Bond. Before the emergency legislation, a mortgagee could disregard the mortgage and his right to foreclose and recover a judgment for the mortgage debt against the mortgagor 2 8 (despite a 25. Twenty-eight of thirty-one parcelssold at foreclosure in New Jersey on the same day brought $100 each. See Federal Title& Mtge. Guar. Co. v. Lowenstein, 113 N. J. Eq. 200, 202, 166 At. 538, 539(Ch. 1933), (1934) 19 CoRN. L. Q. 316. See Chein- ical Bank & Trust Co. v. Schumann Associates,Inc.,150 Misc. 221, 268 N. Y. Supp. 674 (Sup. Ct. 1934) ;Brabner-Smith, supra note 1,at 722-24. New York courtsrefused to vacate deficiency judgments recovered on thebasis of such bids.Irving Trust Co. v. Edson, N. Y. L. J., Feb. 20,1933, p. 1033, col. 4(Sup. Ct.);Railroad Cooperative Bldg, & Loan Ass'n v. Cocks, N. Y. L. J., Feb.10, 1937, p. 720, col.5 (Sup. Ct.). 26. Bank of Manhattan Trust Co. v. ElldaCorp.,147 Misc. 374, 265N. Y. Supp. 115 (Sup. Ct. 1933) (salepostponed until assurance of normal bidding); Central Hanover Bank & Trust Co. v.Adler, N. Y. L. J.,July 29,1933, p.343, col.3 (Sup. Ct.) (sale postponed until end of legislative session) ; N. Y. LifeIns. Co. v. H. & J. Guttag Corp., N. Y. L. J., Aug.1,1933, p.370, col.1 (ibid.);McCall v.Maxwell Park Corp., N. Y. L. J., Aug. 1, 1933, p.370, col. 2 (Sup Ct.) (ibid.); Brown v. Wardsview Realties Corp., N. Y. L. J.,Aug. 3, 1933, p.395, col.3 (Sup. Ct.) (ibid.); Bank of Manhattan Trust Co. v.2166 Broadway Corp.,N. Y. L. J., July7, 1933,p. 67,col. 1 (Sup. Ct.) (saleadjourned one month); Tishka v. Wisnieska, N. Y. L. J., July 10,1933, p. 103, col.6 (County Ct.) (saleadjourned sixmonths); Equitable Life Assur. Soc. v. 2727 Broadway Co., N.Y. L. J., Jan. 27, 1934, p.441,col. 5 (Sup. Ct.) (saleadjourned nine weeks); Farmers & Mechanics Say.Bank v. Eagle Bldg. Co.,151 Misc. 249, 271 N. Y. Supp. 306 (Sup.Ct. 1934) (fixesupset price) ; N.Y. Life Ins.Co. v. Johar Realty Co., N. Y. L. J.,July 22, 1933,p. 259, col. 3(Sup. Ct.) (mortgagee delayed sale thirteen months; value of property tobe applied on debt);Strochak v. GlassPaper Making Sup- plies Co.,N. Y. L. J.,May 9, .1933,p. 2794, col.3 (Sup. Ct.); Id.,May 10, 1933,p. 2818, col. 6(Sup. Ct.) (stayssale),rev'd, 239App. Div. 312, 267 .N. Y.Supp. 282 (1st Dep't 1933) ;Dime Say. Bank v. Danley Realty Co., N. Y. L. J., June27, 1933,p. 3839, col.1 (Sup. Ct.) (refusesto stay sale); Loma Holding Co. v.Cripple Bush Realty Co., 147 Misc. 655, 265 N. Y. Supp. 125 (Sup. Ct. 1933) (refusesto stay actionon bond); see (1933) 42 YALE L. J. 960;(1934) 34 COL. L. Ray. 706,707, n. 13;Gilligan& Stern, Protecting the Rights of Mortgagors, N. Y. L. J., Aug. 29, 1933,p. 688, col. 1; Id. Aug. 30, 1933, p. 702, col. 1;Notes (1934) 90 A. L. R. 1330, (1933) 82 A. L. R. 976; Perl- man, Mortgage Deficiency Jvdgments During An Economic Depression (1934) 20 VA. L. Rav. 771,805 et seq. Cf. note152 infra. 27. But itshould be noted thatjudicialreluctanceto vacate foreclosuresaleshad at least themerit of lendingstability to judicial titles. 28. General Investment Co. v. Interborough Rapid Transit Co., 200 App. Div. 794, 193 N. Y. Supp. 903 (1stDep't 1922), aff'd, 235 N. Y. 133,139 N. E. 216 (1923); see Kress v. Central Trust Co.,246 App. Div. 76,78, 283 N. Y. Supp. 467, 469 (4th Dep't 1935), aff'd, 272 N. Y. 629, 5 N. E. (2d) 365 (1936) ; Schenectady Say. Bank v. Ashton, FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 387 conveyance) ,29 an assuming grantee, 30 a guarantor or against all of them. 31 This right was unaffected by destruction of the mortgage lien through paramount foreclosure,3 2 condemnation 3 3 or tax sale. 34 Before the enactment of statutes making available a deficiency judg- ment in a foreclosure proceeding, the mortgagee could proceed at law on the bond and foreclose his mortgage in equity concurrently.03 This procedure, however, was changed by a series of statutes consolidating the mortgagee's remedies into two complete"0 but separate actions: he might either proceed on the bond or sue to foreclose. To avoid double litigation and costs the consolidation statutes thus sought to confine all issues to one of two actions and require where possible the joinder of all persons liable on the mortgage.37 Foreclosure became a plenary proceeding -in rem to enforce the lien and in personam for a resulting deficiency, the complaint being deemed to state but a single cause of action." All persons liable for the debt could thus be joined in fore- 120 Mlisc. 26S, 198 N. Y. Supp. 198 (Sup. Ct. 1923),re'd, 205 App. Div. 781,783, 260 N. Y. Supp. 245,247 (3d Dep't 1923). 29. See Johnson v. Zink, 51 N. Y. 333, 336 (1873) ;Marshall Y. Davies, 78 N. Y. 414, 421 (1879); Roch. Say. Bank & Tappen, v. Stoeltzen Inc., 176Misc. 140, 26 N.Y. S. (2d) 713 (Sup. Ct 1941). 30. Burr v. Beers, 24 N. Y. 178 (1861). For the of the qualifications mortgagee's rights againstan assuming granteesee Friedman, The Creation and Eftce of Personal Liability on Mortgage Debts i New Yorl- (1940) 50 Y.-ax L. J. 224, 226 c seq. 31. See Shipman . Niles,75 App. Div. 451, 453-54,78 N. Y. Supp. 440, 441 (1st Dep't 1902),aff'd, 177 N. Y. 527, 69 N. E. 1132 (1903); Roch. Say. Bank v. Stoeltzen& Tappen, Inc.,176 Misc. 140,26 N. Y. S. (2d) 713 (Sup. Ct 1941). 32. Frank v. Davis, 135 N. Y. 275, 31 N. E. 1100 (1S92); Sautter v. Frick,229 App. Div. 345,242 N. Y. Supp. 369 (4th Dep't 1930),aff'd, 256 N.Y. 535, 177 X. E. 129 (1931) ; Weisel v. Hagdahl Realty Co., 241 App.Div. 314, 271N. Y. Supp. 629 (2d Dep't 1934), 48 HAav. L. REv. 126. 33. See Hill v. Wine, 35 App. Div. 520,523, 54 N. Y. Supp. 892, 894 (1st Dep't 1898). 34. McRae v. Hummel, 250 App. Div. 873, 295N. Y. Supp. 202 (2d Dep't 1937). 35. Dunkley v. Van Buren, 3 Johns. Ch. 330(N. Y. 6 Johns. 1818) ; Jones v. Conde, Ch. 77 (N. Y. 1822); seeJamaica Say. Bank v. I. S. Investing Co.,274 N. Y. 215, 218, 8 N. E. (2d) 493, 494,112 A. L. R. 1485, 1492 (1937); Palmer v. Harris, 100 Ill. 276, 280 (1881). This was said to be common practice.Engle v. Underhill,3 Edw. Ch. 250, 251(N. Y. 1838). 36. But see National City Bank v. Gelfert, 284 N. Y. 13, 22, 29 N. E. (2d) 449, 453 (1940). 37. Reichertv. Stilwell,172 N. Y. 83, 64 N. E. 790 (1902); Grosvenor v. Day, 1 Clarke Ch. 109 (N. Y. 1839); Robert v. Kidansky, 111 App. Div. 475, 97 N. Y. Supp. 913 (1st Dep't 1906),aff'd, 188 N. Y. 638, 81 N.E. 1174 (1907); Darmstadt v. Manson, 144 App. Div. 249, 128 N.Y. Supp. 992 (2d Dep't 1911) ;Carlin v. Lindvert,175 App. Div. 940, 161N. Y. Supp. 1120 (2d Dep't 1916). 38. The deficiencyjudgment isdeemed incidentalto the foreclosureratherthan as cause. stating a separate See Jamaica Say. Bank v. M. S. InvestingCo., 274 X. Y. 215, 219, 8 N. E. (2d) 493, 494,112 A. L. R. 1485, 1489,1498 (1937) ; Reichertv. Stilwell, 172 N. Y. 83, 88, 64 N. E. 790, 792 (1902). FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 THE YALE LAW JOURNAL [Vol.51: 382 closure3" where a money judgment would be rendered for the residue of the debt left after the sale4" and the priority of liability and rights- over settled among the obligors.4 As an alternative to foreclosure the mortgagee might maintain an action on the bond, joining all parties personally liable and, after recovery of judgment, levying on the free assets of the obligors. 42 The two remedies could not, however, be pursued concurrently. 43 Nor, apparently, could a mortgagee voluntarily discon- tinue one type of suit for the purpose of instituting the other." After recovery of judgment in an action on the bond, for example, no fore- closure was maintainable until execution was returned unsatisfied .4 Con- versely, the institution of foreclosure, where a deficiency judgment was available, debarred the mortgagee from an action on the bond before or after the decree.40 Civil Practice Act Section 1078 codified this 39. N. Y. C. P. A. § 1079(7). 40. N. Y. C. P. A. §§ 1083, 1083-a. 41. See Vanderbilt v.Schreyer, 91 N. Y. 392,397 (1883); Albany Exchange Say. Bank v. Winne, 168 Misc. 853,856, 6 N. Y. S. (2d) 699, 702-03 (Sup. Ct.1938) ; cf. Farnham v. Mallory, 5 Abb. Pr. N. S. 380 (N. Y. 1867). 42. Compare p. 408infra. 43. Dudley v. Congregation of St.Francis, 138 N. Y. 451,34 N. E. 281 (1893) White v. Wielandt, 259 App. Div. 676, 20 N. Y. S. (2d) 560 (2d Dep't 1940),aff'd, 30 N. E. (2d) 725 (N. Y. 1941); Matter of Whalen, 136 Misc. 296, 240 N. Y. Snpp. 587 (Sup. Ct. 1930) (barred from filing involuntary petition inbankruptcy against oblig- or during pendency of foreclosure); see 3 JoNEs, MORTGAGES (8th ed. 1928) § 2206; Tice v. Annin, 2 Johns. Ch. 125 (N. Y. 1816). Contra: Rossbach v. Aurora Holding Corp., 252 App. Div. 842, 300 N. Y. Supp. 601 (lst Dep't 1937) (no opinion); Steitz v. Geiger, 1940, p. N. Y. L. J., July 29, 226, col. 4 (Sup. Ct.). 44. Engle v. Underhill,3 Edw. Ch. 250 (N. Y. 1838); but cf.Suydam v. Bartle,9 Paige 294 (N. Y. 1841) (permitted on conditions). 45. N. Y. C. P. A. § 1077.Dudley v. Congregation of St.Francis, 138 N. Y. 451, 457-58, 34 N. E. 281,282 (1893); Grosvenor v. Day, 1 Clarke Ch. 109 (N. Y. 1839); Guilford v. Crandall,69 Hun 414, 23 N. Y. Supp. 465 (3d Dep't 1893); Note (1939) 121 A. L. R. 917,926, 928-29; Scheidellv.Llewellyn Realty Co.,177 N. Y. Supp. 529 (Sup. Ct. 1918) (applied to foreclosurefor part of debt theretoforereduced to judg- ment); cf.Williamson v. Champlin, 8 Paige 70 (N. Y. 1839). During foreclosureno action on thebond is maintainablewithout cogentreasons. Matter of Moore, 81 Hun 389 (N. Y. 1894). The statute to is inapplicable thesubsequent foreclosureof a supplemen- tal mortgage. Reichert v. 172 Stilwell, N. Y. 83,64 N. E. 790 (1902); see Ferraro v. Marillard 227 App. Builders, Inc., Div. 448,238 N. Y. Supp. 188 (2d Dep't 1929) (pre- debt). vious action for waste no action on mortgage Cf.note 47 infra. 46. White v. Wielandt, 259 App. Div. 676, 20 N. Y. S. (2d) 560 (1stDep't 1940), aff'd, 30N. E. (2d) 725 (N. Y. 1941); cf.Honeyman v. Hanan, 275 N. Y. 382,392, 9 N. E. (2d) 970, 974 (1937), U. appeal dismissed, 302 S. 375 (1937); but cf. President & Directors of Manhattan Co. v. CallisterBros.,175 Misc. 421,23 N. Y. S. (2d) 623, aft'd, 260App. Div. 880, 23 N. Y. S. (2d) 826 (2d Dep't 1940) (mortgage partialse- curity for notes); Schaaf v. O'Brien, 8 Daly 181 (N. Y. Comm. PI.1878). But see Rossbach v. Aurora Holding Corp.,252 App. Div. 842, 300 N. Y. Supp. 601 (1stDep't 1937) (permits joinderof cause of action for foreclosurewith causes for interestand taxes; no opinion); Stitzv. Geiger,N. Y. L. J., July29, 1940,p.226, col.4 (Sup. Ct.) (ibid.). FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 389 limitation by preventing the maintenance of any action for the debt after foreclosure without leave of court." While the granting of leave was discretionary, the limits of discretion were fairly well marked. It was only granted in special circumstances as, for instance, against a non-resident who had knowledge of the foreclosure and an opportunity to protect his interest at the sale4" or where there was another valid excuse for non- joinder of an obligor.49 It was denied if the obligor could have been served" ° or, if served, no deficiency judgment was sought in the fore- closure, 5 i.e., where there was no inducement for the obligor to protect his interest at the sale. Again, it was denied in case of some under- 47. N.Y. C. P. A. § 1078.See Duport, Right to Sue on the Bond Before, During and After Foreclosure, N.Y. L. J.,May 17, 1932, p.2748, col.1, May 18, 1932, p.2772, col.1. Applicationfor leave should be on noticewhere the respondentis availablefor service.Cooper Co. v. Naumberg, 154 App. Div. 225, 138 N. Y. Supp. 1005 (2d Dep't 1912). But it may be given nuc pro tunc inthe law action.McKernan %.Robinson, 84 N. Y. 105 (1881); Matter of Corin, 217 App. Div. 809, 217 N. Y. Supp. 903 (3d Dep't 1926); Earl v.David, 20 Hun 527 (N. Y. 1820). After reductionof the mortgage debt to judgment no leave isrequired in actionsto enforce the judgment. Prisco & Soveris,Inc. v.Service Bond & Mtge Co., 230 App. Div. 713, 242N. Y. Supp. S97 (2d Dep't 1930) (settingaside a fraudulent transfer);cf.cases supra note 45; Matter of Gray, N. Y. L. J.,May 8, 1937,p. 2327,col.7 (Sup. Ct) (judgment against executor binds legatee by privity;leave unnecessaryto enforcejudgment at leastwith respectto executor'sundistributed assets); but see Rowley v. Nellis, 41 Misc. 315, 84N. Y. Supp. 841 (Sup. Ct. 1903) (no privitybetween executor and heir); Burnham v. Burnham, 27 Misc. 106(Sup. Ct. 1899), aff'd. 46 App. Div. 513 (1900),aff'd, 165 N.Y. 659 (1901); Plattv. Platt, 105N. Y. 483 (1887) (judgment againstexecutor not even prima fade evidence of debt against heiror devisee). A claim against a mortgagor's estate was permitted without leave after a foreclosure against an absentee mortgagor. In;re Oster's Estate,8 N.Y. S. (2d) 249 (Surr. Ct. 1938),aff'd, 258App. Div. 930, 16 N.Y. S. (2d) 612 (4th Dep't 1939). Despite the possibly proper basisfor an applicationhere the dispensationwith leave isout of line with cases cited supra note46 and infra note51. 48. Matter of Corin, 217App. Div. S09, 217N. Y. Supp. 903 (3d Dep't 1926). 49. McKernan v. Robinson, 84 N. Y. 105 (1881); Guaranty Trust Co. v. Grabowit- zky, N. Y. L. J., Sept. 23, 1936,p. 811,col. 3(Sup. Ct). 50. Robert v. Kidansky, 111 App. Div. 475, 97 N. Y. Supp. 913 (1st Dep't 1906), aff'&d188 N. Y. 638, S1N. E. 1174 (1907); Matter of Byrne, 81 App. Div. 74, 80 N.Y. Supp. 977 (1st Dep't 1903); Matter of Collins, 17 Hun 2S9 (N. Y. 1879) ; see Hochstein v. Schlanger, 150 App. Div. 124,134 N.Y. Supp. 704 (1st Dep't1912), aff'd, 203N.Y. 513, 101 N. E. 1105 (1913); but see Campbell v. Smith,71 N. Y. 26 (1877). 51. Carlin v.Lindveit,175 App. Div. 940,161 N. Y. Supp. 1120 (2d Dep't 1916); Matter of Steiner v. Day, 161 App. Div. 742, 147 N. Y. Supp. 200(2d Dep't 1914); Mor- rison v. Slater,128 App. Div. 467, 112 N. Y. Supp. 855 (1st Dep't 1903); Matter of Marshall, 53 App. Div. 136,65 N. Y. Supp. 760 (1stDept 1900) ; Rowley v. Nellis, 41 Misc. 315, 84 N. Y. Supp. 841 (Sup. Ct. 1903); but cf.Matter of McLaughlin v. Durr, 76 App. Div. 75,78 N. Y. Supp. 798 (1st Dep't 1902) (supervening paramount fore- closure); Lockwood v. Fawcett,17 Hun 146 (N. Y. 1879) (foreclosurecomplaintasked deficiencyjudgment but no adjudicationof liability; may not enforce payment of defi- ciency out of realtydevisedby mortgagor) ; but cf.note 47 stipra. FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 THE YALE LAW JOURNAL (Vol. 51 : 382 standing not to seek a deficiency judgment,5 2 or in case of laches" a or delay whereby the party to be charged lost a right-over against a person primarily liable." It has never been denied solely on the ground of an inadequate bid at foreclosure, but neither this factor nor other equities escaped consideration in the cases denying leaveY 5 Death of the Obligor. As a result of statutes overruling the common law, the death of the mortgagor effected substantial changes in the reme- dies of the mortgagee. Under common law, all charges against realty for which a decedent was liable, including mortgages, became debts of his estate and payable by the personal representative unless the will directed otherwise." The heir or devisee took the property, as against the repre- sentative, free and clear of the mortgage. But popular belief that the rule was otherwise, i.e.,that the mortgaged premises were primarily liable for the payment of the debt, defeated the intentions of testators so frequently that the legislature enacted a statute early in the nineteenth century (now Real Property Law Section 250) reversing the common 52. Scofieldv. Doscher, 72 N. Y. 491 (1878); Matter of Marshall, 53 App. Div. 136, 65 N. Y. Supp. 760 (1stDep't 1900); cf.Wetherell v. Kelly, 195 App. Div. 227, 187 N. Y. Supp. 43 (2d Dep't 1921). 53. Stehlv. Uris, 210App. Div. 444,206 N. Y. Supp. 296 (1st Dep't 1924); U. S. Life Ins. Co. 55 Hun 606, v. Poillon, 7 N. Y. Supp. 834 (Sup. Ct. 1889). 54. Matter of Collins,17 Hun 289 (N. Y. 1879). 55. Leave was unnecessaryunder Section1078 after foreclosureby advertisement if a money judgment was unavailable[see Bush v. Robbins, 23 Wkly. Dig. 405 (N. Y. Sup. Ct. 1886); Cape Cod Say. Bank v. Patton, N. Y. L. J.,Apr. 11, 1939, p,1659, col. 1 (Sup. Ct.)],or in bringing an action based upon a previous deficiencyjudg- ment [see Schultzv. Mead, 8 N. Y. Supp 663 (Sup. Ct. 1890), aff'd,128 N. Y. 680, 29 N. E. 149 (1891); cf.note 47 supra]. It isapplicableonly to a holderof the mort- gage and does not affectthe right of an obligorwho has paid the debt to reimburse- ment against a primary or co-obligor. As to a primary obligor, see Comstock v. Drohan, 71 N. Y. 9 (1877) ; cf.Hyde v.Miller, 45 App. Div. 396,60 N. Y. Supp. 974 (4thDep't 1899), aff'd, 168 N.Y. 590, 60 N. E. 1113 (1901). As to a co-obligor, see Weed v.Calkins, 24 Hun 582 (N. Y. 1881). 56. See Matter of Burrows, 283 N. Y. 540, 544,29 N. E. (2d) 77,79 (1940); Matter of Noyes, 3 Dem. 369,370 (N. Y. 1885) ;Notes (1906) 3 L. R. A. (N.s.) 898-99; (1920) 5 A. L. R. 488, 497; (1931) 72 A. L. R. 709; (1939) 120 A. L. R. 577. One reason advanced for thedoctrine isthat the personalty of thetestatorwas saved from depletionby the givingof the mortgage [seeMatter of Fogarty,165 Misc. 78, 79, 300 N. Y. Supp. 231,234 (Surr. Ct.1937)], a reason of doubtfulvaliditywhen applied to purchase money mortgages where the personalestateof thetestatorreceivedno addi- tion thereby.See CLEAVELAND, HEWITT & CLARK, PROBATE LAW & PRAcrTic or CONN. (1915) § 460; 5 A. L. R. supra, at 505. The rule isunaffected by a devise expressly subjectto the mortgage, which is deemed to describethe premises,or of the testator's which is deemed to interest in the premises, referto a dower interestsurviving thedevise 3 L. R. A. (N.s.) supra, at 902.Itis not applied, however,where it would defeat spe- bequests. cific Rice v. Harbeson, 63 N. Y. 493 (1875) ; see3 L. R. A. (N.S.)supra, at 902. FILED: QUEENS COUNTY CLERK 08/20/2021 04:13INDEX PM NO. 712889/2021 NYSCEF DOC. NO. 47 RECEIVED NYSCEF: 08/20/2021 19421 PERSONAL LIABILITY ON MORTGAGE DEBTS 391 law rule." This statute required the heir or devisee of property mort- gaged by the decedent, in the absence of contrary testamentary directions, to "satisfy and discharge such mortgage out of his own property," with- out resorting to the representative. The statute was held to cover mort- gages assumed as well as executed by the decedent."5 And it was not over- ruled by a general testamentary direction to pay debts."0 Section 250 was limited in its terms to the relations between heir or devisee and the general estate, but it was nevertheless extended by construction to the mortgagee."0 Though not intended to deprive the mortgagee of any part of his debt, it was held to make the mortgaged premises primarily liable for the mortgage debt and to limit the liability of the representative and distributees of the estate to a deficiency judg- ment. By judicial legislation, therefore, the mortgagee was required first to foreclose and then to claim against the general estate only for the deficiency.6" The mortgagee could not waive his lien on the property and claim for the full amount of his debt against the representative;c - 57. 1 N. Y. REV. STAT. (2d ed. 1836)p. 740, § 4. See Matter of Burrows, 2,3 N. Y. 540, 544, 29 N. E.(2d)77, 79 (1940). 58. Matter of Fogarty, 165Misc. 78, 300N. Y. Supp. 231 (Surr. Ct. 1937); Wicks v. Carmichael,172 Misc. 924, 16 N. Y. S. (2d) 395 (Sup. Ct. 1939). 59. Meyer v. Cahen, 111 N. Y. 270, 18 N. E. 852 (1882); In re Dell'sEstate, 154 Misc. 216, 276 N. Y. Supp. 960 (Surr. Ct. 1935).The deliveryof collateralsecurityto the mortgagee by the testatorduring hislifetimeoverrulesthe statutepro tanto.Matter of Vicinus,159 Misc. 903,290 N. Y. Supp. 20 (Surr. Ct. 1936).A comparable English generally to similar statute is construed effect.2 C