Chase v. Harvey

Hill, P. J.

The Special Term has denied the usual application (Civ. Prac. Act, § 1083-a) for a deficiency judgment on the foreclosure of a mortgage dated after July 1, 1932, stating, “ we still insist the court has power over all deficiency judgments.” The question here presented is not an open one.

It is stated in the opinion in Monaghan v. May (242 App. Div. 64): “ The refusal to allow, without the statutory limitation, the entry of a deficiency judgment may not, therefore, be justified by the statute. It must be sustained, if at all, under the inherent power of a court of equity. The Legislature has declared that an emergency exists, fixed the period thereof, and declared that certain remedies available to mortgagees (inter alia, in respect to deficiency judgments) shall be subject to limitations during that period. These enactments ‘ provide procedure and relief which are cognate to the historic exercise of equitable jurisdiction.’ Equity is not circumscribed by these statutory dates if the emergency in fact had an earlier origin. These enactments do not deprive a court of equity of its inherent power to place limitations upon the remedies available to a mortgagee in consonance with fundamental doctrines of equity.”

The opinion in the Court of Appeals in Emigrant Industrial Savings Bank v. Van Bokkelen (269 N. Y. 110) states concerning the decision in Monaghan v. May (supra): “ We think this order was unauthorized and without effect ” (p. 114).

To quote further: “ Much of the argument before us was addressed to the question whether in an action to foreclose a mortgage the final judgment may order a sale without the award of any personal liability, when in conscience that course is compelled by extraordinary hardship that otherwise must inevitably result in times of widespread economic prostration. As to this we express no opinion, since upon the foregoing statement it is plain that no such issue was here presented for determination by the courts below. Perhaps it should be said that we do not approve the decision in Monaghan v. May (supra) ” (p. 116).

The statement made by the judge presiding at the Special Term, “ we still insist the court has power over all deficiency judgments,” makes it plain that there was no issue of extraordinary hardship presented for determination in the instant case and that the decision appealed from was made solely on the ground that the Supreme Court, under its general equity powers, has control “ over all deficiency judgments.” Equity is never automatic, but in individual actions for foreclosure, the Court of Appeals has said that it is an open question whether it may not be invoked to relieve the harshness of the enforcement of the legal remedy “ when in conscience that course is compelled by extraordinary hardship that otherwise must inevitably result in times of widespread economic prostration.” But it gives no support for the general enforcement of emergency statutes which by their terms are not applicable. (Emigrant Industrial Savings Bank v. Van Bokkelen, supra.) The Court of Appeals has again definitely spoken on the question here presented. (Guaranteed Title & Mortgage Co. v. Scheffres, 275 N. Y. 30, revg. 249 App. Div. 652.)

I favor a reversal on the law, with costs. The provisions regarding a deficiency judgment should be stricken from the judgment appealed from and the motion for a deficiency judgment, without complying with the emergency sections, granted.

McNamee, Crapser and Bliss, JJ., concur; Rhodes, J., dissents, with an opinion.