Frederick Reichert, Respondent, v. Charles A. Stilwell, Appellant, Impleaded with Charlotte M. Stilwell

Frederick Reichert, Respondent, v. Charles A. Stilwell, Appellant, Impleaded with Charlotte M. Stilwell. Assignment of a bond and mortgage — it carries with it the right to a deficiency judgment under a collateral obligation — leave to sue — issue of execution and its return unsatisfied. An owner of land executed mortgages thereon for $1,000 and $2,000 respectively, to secure the payment of bonds accompanying the same.' ■ Subsequently he executed a third mortgage upon other premises owned by him for $3,720, $720 of which represented a new and independent consideration, and the balance . represented the principal of the two prior mortgages. The third mortgage was thereafter foreclosed, and the premises described therein were sold, $720 ol the proceeds being applied on the independent consideration represented by the third mortgage and the balance being applied in partial payment of the two prior mortgages. The sheriff reported a deficiency, but no judgment therefor was ever docketed nor any execution issued to collect the same. ■ Subsequently the mortgagee assigned and transferred the first and second mortgages and the accompanying bonds without making any formal transfer of any rights she possessed by reason of the judgment of foreclosure recovered by her on the third mortgage. The transferee thereupon began an action to foreclose the first and second mortgages without seeking or obtaining leave of the court. Held, that, the assignments of the first and second mortgages and theaccompanying bonds carried with them Whatever right to a deficiency judgment the mortgagee acquired in the foreclosure action which she had prosecuted to judgment; That it was not necessary for the plaintiff, before'commencing the action, to obtain leave of the court, pursuant to section 1628 of the Code of Civil Procedure, or that an execution should have been issued on the deficiency judgment and have been returned unsatisfied, as required by section 1630 of the Code of Civil Procedure. .' . McLennan, J., dissented from the two latter propositions. Appeal by the defendant, Charles A. Stilwell, from a judgment of the Supreme Court in favor-of the plaintiff, entered in the office of the clerk of the county of Onondaga on the 30th day of July, 1900, upon the decision of the court, rendered after a trial at the Onondaga Special Term, decreeing the foreclosure of two mortgages, with the usual provision for deficiency against the obligors on the bonds accompanying the said mortgages. On the 1st day of April, 1881, the defendant Charles A. Stilwell executed and delivered to Elizabeth B. Stevens his bond in the penal sum of $4,000, in which he bound himself to pay to said obligee the sum of $2,000, and as collateral security thereto executed and delivered a mortgage upon certain land owned by him in the town of Dewitt in said county. On October 1, 1886, said Stilwell obtained an additional loan of $1,000 from said Elizabeth B. Stevens, which was also secured by the bond of said Stilwell, and a second mortgage upon the said premises. The wife of the mortgagor executed said mortgages, each of which was recorded soon -after it was given. On the 10th day of December, 1890, said bonds and mortgages were duly assigned to Helen B. Sanford, and which said assignments were duly recorded on the same day. On the 20th day of November, 1897, said Stilwell executed a bond to Helen B. Sanford in which he covenanted to pay $3,720; $720 represented a new independent consideration and the balance was intended as further security for the obligations above set forth, the whole principal of each of which remained unpaid. A mortgage was given as collateral security to said bond upon premises not included in said prior mortgages. On February 10, 1899, said Helen B. Sanford commenced an action to foreclose said last-mentioned mortgage, asking for a deficiency judgment in the complaint thereof against said obligor. Judgment was ordered in said action, and the amount reported as due and unpaid on the three separate claims was $4,105.38. A sale of said premises was had by virtue of said judgment of foreclosure, and out of the avails the said indebtedness of $720 was first paid, and the balance thereof was applied on said two obligations originally held by Mrs. Stevens. The sheriff reported a deficiency of $2,774.47, but no judgment therefor was ever docketed or execution issued to collect the same. Thereafter, and on the 24th day of December, 1899, said Helen B. Sanford' assigned and transferred said two bonds and mortgages given to Elizabeth B. Stevens to. the plaintiff in this action, but made no forma,! transfer of any rights she may have possessed by reason o,f the judgment recovered by her. . ' This action was commenced December 14,1899, to foreclose said two mortgages assigned to the plaintiff, and no leave of the court • was sought or obtained to bring the same. ■Louis L. Waters, for the appellant. Augustus C. Stevens, for the respondent. [MAJORITY — Spbíng-,"J. :] Spbíng-,"J. : The' assignments of the two bonds and - mortgages carried also, whatever rights to a deficiency judgment Mrs. Sanford"acquired in the foreclosure .action which she had prosecuted to judgment. So far as the bond and mortgage then foreclosed bore any relation to the two mortgages in suit they were collateral to them and the judgment consequently passed with, the transfer of the principal debts. (Freeman v. Auld, 44 N. Y. 50, 57; Bolen v. Crosby, 49 id. 183, 187; Cobbey Chat. Mort. §§ 650, 651.) If it did not pass with the assignments then it was extinguished-thereby, for Mrs. Sanford could not retain the collateral judgment as a subsisting demand after she had parted with the considerations themselves. (Langdon v. Buel, 9 Wend. 80, 84.) The deficiency judgment was a mere incident to the mortgage, and though based upon the bond it could not be obtained in the foreclosure action except for the mortgage. As was said by Judge O’Brien in Dudley v. Congregation, etc., of St. Francis (138 N. Y. 451, 458): “ In an action to foreclose a mortgage a judgment for deficiency is authorized and may be rendered as incidental to the principal relief demanded, but it cannot be rendered in an action where the plaintiff fails to establish the mortgage.” Mrs. Sanford possesses no rights in this deficiency judgment and ■ cannot issue an execution thereon. If any one has any such right it is the plaintiff in this action- who is her successor in title and we will act on that assumption in. the consideration .of the questions involved. It is urged by the appellant that it is necessary for the plaintiff before commencing this action to obtain leave of the court so to do pursuant to section 1628 of the Code of Civil Procedure, and also that an execution should have been issued on the deficiency judgment and returned unsatisfied as required by section 1630 of said Code. The philosophy of the requirements of these sections is obviously to prevent an action on the bond and a foreclosure suit to collect the same debt pending at the same time. (Dudley v. Congregation, etc., of St. Francis, 138 N. Y. 451, 457.) This is made clear by section 1630, which is to be construed in connection with the two preceding sections, which reads: “ Where final judgment for the plaintiff has been rendered, in an action to recover any part of the mortgage debt, an action shall not be commenced or maintained to foreclose the mortgage unless an execution ” has been issued and returned unsatisfied. That is, if an action has been brought on the bond and judgment rendered, execution must issue before the foreclosure suit can be commenced on the mortgage which is collateral to the bond. Section 1628 is of like import, except, that if the foreclosure action is pending or final judgment has been rendered therein, an action at law to recover the mortgage debt cannot be commenced without leave of the court. These sections are, therefore, designed to meet a specific purpose. When a bond and mortgage have been given evidencing the -same indebtedness, one of which is enforcible in an action at law and the other by a suit in equity, that one remedy must be exhausted before resort can be had to the correlative relief. That is the extent of their application. Section 1629, which like the other sections has been long in vogue, and which is a part of the plan intended by them, requires the complaint in the foreclosure action to state whether any other action has been brought to recover any other part of the mortgage debt, and if so what has been collected. That requirement has been complied with in this case, for the complaint sets forth fully the facts pertaining to the preceding suit brought primarily to foreclose the mortgage of $720. And it further alleges that the surplus remaining after paying this mortgage was applied on the debts represented by the two mortgages in suit. The truth of these allegations is not assailed and the defendant has received the benefit of every cent to which he is entitled. These sections are not jurisdictional, but relate to the practice, and the court can even grant the ordernuno pro tuno.for leave to sue while the action for which leave is. necessary is pending. (Earle v. David, 86 N. Y. 634.) It is ■ obvious that these defenses are entirely technical and that the omissions referred to cannot jirejudice the defendant. His testimony tends, to show whatever property is in his possession is heavily incumbered^ and that his title, if any, is shadowy and uncertain and tl|e issuing of an execution against his pi’operty would have been a-' fruitless ceremony. iphe judgment should be affirmed, with costs to the respondent. ■ 4-11 concurred, except McLennan, J., who dissents upon the ground that it was necessary for the plaintiff to comply with the requirements of sections 1628 and 1630 of the Code of Civil Procedure. ’ ' Judgment affirmed, with costs.