Ballin v. Apperson Realty Corp.

Cohn, J.

The action was brought to foreclose a purchase-money mortgage of. $100,000. The mortgage indebtedness amounted to $105,256.76. Upon the foreclosure sale, held on April 10, 1936, the property was bid in by plaintiff for $50,000-, resulting in a deficiency of $55,256.76. A motion was thereafter made for leave to enter a deficiency judgment, and the matter was referred to an official referee, who, upon proof taken, reported that “ the fair and reasonable value of this property on the date of the sale in foreclosure was $110,000 and that the plaintiff therefore is not entitled to any deficiency judgment.” The order appealed from adopted the recommendation of the learned referee.

We think the referee properly held that there was a market for the property as of the date of the sale in foreclosure. We are unable to agree with his finding that the value of this property on that date was $110,000 for the reason that such a conclusion is without support in the evidence.

There was no serious dispute as to the value of the property upon the date of sale and for the period just previous thereto. Two experts who testified for plaintiff valued the land and building at $65,000; one fixing the value of the building at $5,000, the other stating it was worth $10,000. A third expert for plaintiff appraised the property at $75,000, of which $70,000 covered the land value. The defendant’s expert witness did not attempt to give a market value for the property as of the date of sale. They all insisted that in their opinion no market had existed for that property since the year 1931.

In the light of evidence in the record as to sales in the vicinity during the years 1935 and 1936 and giving weight to the other particulars concerning which evidence had been given, the referee was justified in disregarding defendant’s testimony to the effect that there was no market for the property as of the date of sale.

It is only when the mortgaged premises are shown to have no fair and reasonable market value at the time of the sale, taking into consideration all elements which may fairly affect value, that resort may be had to the nearest earlier date when there was a market value. (Heiman v. Bishop, 272 N. Y. 83, 88; Hoard v. Luther, 251 App. Div. 692; Civ. Prac. Act, § 1083-a.) We are admonished by the Court of Appeals that in enacting section 1083-a of the Civil Practice Act it was not the intent of the Legislature to deprive mortgagees of deficiency judgments in practically all cases. (Heiman v. Bishop, supra, at p. 87.) The value of property for the purpose of fixing the amount of a deficiency judgment is not to be determined by' sales alone. The pertinent rule for fixing market value of real property in a proceeding such as this is concisely stated in the Heiman case (at p. 88), where Judge Hubbs, speaking for the court, said: “In a proceeding under section 1083-a, the court should receive evidence of the age and construction of the buildings on the premises, the rent received therefor, assessed value, location, condition of repair, the sale price of property of a similar nature in the neighborhood, conditions in the neighborhood which affect the value of property therein, accessibility and of all other elements which may be fairly considered as affecting the market value of real property in a given neighborhood. With such evidence before it, the trial court, in the exercise of its best judgment, should determine the market value of the premises in the existing circumstances.” Evidence adduced before the referee embraced practically all the items thus enumerated and it included others.

The undisputed proof is that the property consists of a four-story and basement brownstone private house on the south side of Sixtieth street about forty feet east of Park avenue in the city of New York, erected in 1870, and that the dimensions of the land are twenty feet in width by one hundred feet in depth. Plaintiff purchased the property in the year 1914 for $36,000, renovated it at an expense of about $15,000 and thereafter maintained it for many years as his medical office. In November, 1931, respondent acquired title to surrounding properties and exercised an option which it had theretofore obtained to purchase the premises from plaintiff for $150,000, of which $50,000 was paid in cash. Over $10,000 had been recently spent by respondent in renovating the building so that it might be utilized for business and dwelling purposes. Its present annual rentals are about $5,000. The assessed valuation of the property for the year 1936 was $81,000, of which $70,000 was the value of the land and $11,000 for the improvement. The building is insured for loss against fire by plaintiff for $25,000. Concededly, it is located in an excellent neighborhood and in accessibility leaves little to be desired. A building expert called by respondent testified that the replacement cost of the building as of the date of the foreclosure sale was $35,000. It is to be noted too that in its written application made for a reduction of real estate assessment for the year 1936 the defendant corporation, by its president, stated that the fair value of the land and building was $50,000.

According full weight to these items and other factors, including the testimony of the experts as to the worth of the property, we are of the opinion that the sum of $95,000 is a fair and reasonable market value on the date of the sale, $70,000 of which is land value and $25,000 the value of the building. This leaves a deficiency judgment in favor of plaintiff and against defendant-respondent in the sum of $10,256.76.

The order so far as appealed from should be reversed, with twenty dollars costs and disbursements, and the motion granted, with leave to plaintiff to enter a deficiency judgment against defendant-respondent in the sum of $10,256.76, with costs.

Glennon and Callahan, JJ., concur; Martin, P. J., and Dore, J., dissent.