In re Rothschild

Bernheimer appeals from an order of the Special Term, under section 1628 of the Code of Civil Procedure, that permits Rothschild to sue him to recover the amount of a deficiency in a sale under a judgment of foreclosure of a mortgage. The foreclosure suit was instituted by Rothschild in the name of Adams for convenience, but Rothschild now appears as the actual and formal owner of all Adams’ right and title in the premises. Bernheimer was an assignee of the original mortgagor, and in turn assigned to Wiechsler, who assigned to Rothschild. Bernheimer guaranteed to Rothschild the prompt payment of the accompanying bond.

[1, 2] .The appellant contends that there was a waiver and an election, in that Bernheimer was made a party defendant in the foreclosure suit, but that a judgment for any deficiency was prayed for therein against the other defendants only. The foreclosure action was not for recovery of the debt personally, but to collect the debt out of «the land under lien of the mortgage. Reichert v. Stilwell, 172 N. Y. 83 , 89, 64 N. E. 790 . The cause of action petitioned for is the contract or obligation of the guarantor for the payment of the debt (McKernan v. Robinson, 84 N. Y. 105 ), inasmuch as the foreclosure of the lien has not discharged the debt in full. Such relief is not prohibited save by this statute (section 1628 of the Code of Civil Procedure), that was enacted for the purpose of barring vexatious, oppressive, and expensive litigation, and to this end confined the creditor to one tribunal. But the statute may be relaxed. McKernan v. Robinson, supra; Equitable Life Ins. Society v. Stevens, 63 N. Y. 341 . And the question of relaxation is regulated by consideration of equitable principles. Equitable Life Ins. Society v. Stevens, supra.

In the case at bar, the learned Special Term recited in its order:

“It appearing to my satisfaction that a deficiency judgment in the said foreclosure action was not demanded against the said Bernheimer in the first instance because of a special and peculiar set of circumstances, which appeared to me to be sufficient.”

Rothschild shows in his petition that this omission was pursuant to agreement that no recovery would be sought against him on his guaranty, until a judgment for deficiency was' entered against the mortgagor. And Rothschild states that he was moved to such agreement in consideration of his personal relations with Bernheimer, which prompted the desire to save Bernheimer if possible, and also in consideration of attempts to adjustment and of the fact that there was certain collateral security. Rothschild also showed that during the foreclosure suit he or his representative plaintiff was in continuous consultation with Bernheimer and his attorney, Wechsler, in the scheme to relieve Bernheimer without jeopardy to Rothschild; that as far as possible all of Bernheimer’s suggestions in furtherance of the scheme were adopted; that at the foreclosure sale Wechsler, as attorney for Bernheimer, bid upon the premises without success; and that subsequent thereto Rothschild had continued to countenance and to aid Bernheimer’s schemes for his own relief without loss to Rothschild; but that Bernheimer now refuses to pay the deficiency; and that Roth

It is somewhat significant that there is no opposing affidavit from Bernheimer, and that the said affidavit of Wechsler does not meet many of the allegations of Rothschild. Thus there is no denial of the agreement with Bernheimer that Rothschild would refrain from seeking recovery from him until after deficiency judgment against the mortgagor, or that during the foreclosure action Rothschild was in constant communication with Bernheimer, or that negotiations were then pending to relieve the latter from responsibility, or that subsequent to the judgment various schemes and propositions to the same end had been advanced and suggested which had been countenanced by Rothschild. It is true that the opposing affidavit denies that any bid was made at the foreclosure sale in the interest of Bernheimer by Wechsler, but this denial only presented a disputed question of fact to the Special Term. And in any event there is no dispute but that the guarantor appeared in the foreclosure action.

[3] The showing of Rothschild could indicate to the Special Term that the omission to ask for a deficiency judgment against Bernheimer in the foreclosure suit was not to lull him to sleep so that he could not protect himself in that action, but was in furtherance of an agreement made out of consideration for him, whereby it was understood, not that his liability would be lifted, but would be contingent upon the full satisfaction of the debt from other sources.

[4] The suggestion that Rothschild should proceed further against the mortgagor, despite Rothschild’s assertion that he knows of no property of the mortgagor which would satisfy the debt, may be answered by pointing out that the agreement was but to postpone any call upon Bernheimer until after the entry of the deficiency judgment against the mortgagor, which has been done, and that the guaranty was not for the collection, but for the prompt payment, of the debt.

The order is affirmed, with $10 costs and disbursements. All concur.