Mutual Life Insurance v. Cameron — 1 Abb. N. Cas. 424

Majority

p. 424

MUTUAL LIFE INS. CO. v. CAMERON.

N. Y. Supreme Court, First Department; Chambers,

October, 1876.

Headnote

Leave to Plead Discharge.—Laches.—Leave to Answer.

Where a defendant in foreclosure omitted to plead his discharge in bankruptcy, relying on the apparent impossibility of there being any considerable judgment for deficiency against him,—Held, that more than two years and a half afterward he might be allowed to plead it, when, by reason of intermediate modification of the judgment, he had been charged with a very large deficiency.

Motion to open a judgment by default.

This action was commenced in January, 1874, to foreclose certain mortgages on property in the city of New York. Donald Cameron was joined as a defendant, because he was one of the obligors upon one of the

p. 425

bonds for the sum of $50,000. He was duly served with a summons, but having no defense at that time,, did not appear in the action. He supposed that the premises covered by the mortgages were an ample security, and were worth far more than the amount of the mortgages. In April, 1874, Cameron was discharged in bankruptcy, and, supposing that this protected him from any liability for any judgment obtained by the plaintiff, paid no attention to the proceedings in the action, and took no steps for his protection. In February, 1875, a judgment of foreclosure and sale was entered, decreeing that plaintiff should have judgment for any deficiency as against Cameron, with others, some of whom were infants. Under this decree, a sale was thereafter made on April 20,1875. In June, 1875, the infant defendants obtained an order vacating said decree, and permitting all the parties who had answered to proceed to trial de novo ; and also giving leave to the infants to file a new answer. From this order the plaintiff appealed to the general term ; but nevertheless in July proceeded to a new trial of the action. This new trial resulted in a second judgment for plaintiff, with a provision for deficiency against Cameron with others. This second judgment was appealed from by the infant defendants, and the general term, in January, 1876, dismissed plaintiff’s appeal from the order for new trial, and reversed the judgment which had been rendered pending the appeal, and ordered a new trial. In March, 1876, the plaintiff obtained a modification of the order dismissing the appeal, the effect of which modification was to permit the judgment entered in February, 1875, and the sale thereunder to stand until further order of the court, and to adjudge, also, that only one-quarter of the mortgaged premises was subject to be sold to satisfy the mortgages sought to be foreclosed. This decision rendered Cameron liable to a judgment for a deficiency

p. 426

for a large sum. He did not learn this fact until October 7, 1876, when he immediately moved that the judgment of February, 1875, so far as_ it, directed a judgment for deficiency against him, be opened, and that he be permitted to answer, and set .up the defense of his discharge in bankruptcy.

Mr. Joline, for the motion.

Julien T. Davies, opposed.

The laches is only apparent. The defendant moved as soon as he learned what had taken place in the suit, and when for the first time the question of his liability for a deficiency became a practical one. He ought to be allowed to plead his discharge, upon payment of the costs which have accrued since the decision of the general term, followed by the notice of trial for the second time, and $10 costs of motion. The plaintiff, however, has the usual leave to discontinue or to disclaim any personal claim against Cameron, within twenty days, without costs.

Ordered accordingly.^[1]

There was no appeal.

* The order was as follows : Ordered: That said motion be and the same is hereby granted; and that said defendant have leave to serve his answer herein within three days after the entry of this action, on payment to plaintiff’s attorney of $25 costs accrued since the decision of the general term herein, ordering a new trial of this action, and $10 costs of this motion. And it is further ordered that upon the service of said answer, and the payment of such costs, the judgment herein entered on the day of February, 1875, so far as the same provides for the payment, of any deficiency by the said Cameron, .be vacated and set aside. And it is further ordered that the plaintiff have leave to discontinue this action as against said defendant Cameron, or to disclaim any personal claim against him therein, within twenty days after service of said answer without costs, if so advised.