McLaughlin v. Durr

interest, to be paid semiannually, and the bond contained the provision that the whole principal sum should become due, at the option of the obligors, after 20 days’ default in the payment of interest. As collateral security for the payment of the indebtedness mentioned in the bond, Segunda and Bertha Lopez executed and delivered to Durr .a mortgage for $8,000 covering premises at the southwesterly corner of Sixty-First street and First avenue, in the city of New York, and the mortgage contained the same condition as to the option of the mortgagee to elect to have the whole amount become due upon the failure to pay interest. On the 15th day of August, 1896, Durr assigned the bond and mortgage to McLaughlin, and guarantied the payment of the principal amount of the bond and mortgage and interest thereon. This was a second mortgage, there being on the premises a prior mortgage for $12,000, held by one Fries. After the second mortgage was assigned to McLaughlin, Segunda and Bertha Lopez conveyed the premises to one Hilson, and subsequently, through a series of conveyances, the title to the premises became vested in Aimee Riley, subject to the two mortgages; but the payment of those mortgages was not assumed by any of the grantees in those conveyances. On May 22, 1900, McLaughlin commenced an action against Aimee Riley and others to foreclose the second mortgage, and on the 16th of April, 1900, Fries commenced an action to foreclose the first mortgage, and recovered judgment in that action on the 15th of August, 1900. The premises were sold on the nth of September, 1900, for $14,900. A small surplus of $188.51 remained after satisfying the Fries judgment. Meantime a receiver of the rents had been appointed in McLaughlin’s suit on the second mortgage, and $300 of rent was collected by that receiver, and the rents thus collected and a portion of the surplus money were paid over to McLaughlin on account of the principal of his debt. His action was never pressed to judgment. In consequence of the sale of the mortgaged premises under Fries’ judgment of foreclosure, McLaughlin’s mortgage was cut off, and he has nothing to look to now but the bond of Segunda and Bertha Lopez and the guaranty of Durr.

In the affidavits presented by Durr in resistance of McLaughlin’s application, various circumstances are stated, which, if duly proven upon a trial, might constitute obstacles to McLaughlin’s recovery upon the guaranty. They are, in effect, that that guaranty was procured by false representations of McLaughlin; that, although he was made a party defendant in the McLaughlin suit, no demand for a personal judgment for deficiency was made against him; that when the summons and complaint were served upon him he was told by the process server that no personal judgment would be sought against him (but who that person was, or by what authority he spoke, does not appear); that Durr was not a party to the foreclosure action brought upon the first mortgage, knew nothing of its institution, and was never notified by McLaughlin, or any one else, of the pendency of that suit; and, in general, that the acts and conduct of McLaughlin were such as to release Durr from his obligation as a surety. All those matters may properly be the subject of inquiry upon issues duly framed, but we cannot dispose of them upon affidavits. In re

Marshall, 53 App. Div. 136 , 65 N. Y. Supp. 760 , we do not consider as controlling here. In that case there was an express waiver of a right to a deficiency judgment. We do not regard the omission of McLaughlin to demand in his complaint a deficiency judgment as constituting in itself a binding election. Had that action proceeded to judgment, and the relations of the parties become definitely fixed thereby, a different view might be entertained. Under the circumstances as disclosed, satisfactory reasons are shown for allowing McLaughlin to sue.

The order appealed from should be reversed, with $10 costs and disbursements, and the motion granted, with $10 costs. All concur.