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HONEYMAN v. JACOBS ET AL.

decided: April 17, 1939.

HONEYMAN
v.
JACOBS ET AL.



APPEAL FROM THE SUPREME COURT OF NEW YORK.

Hughes, McReynolds, Butler, Stone, Roberts, Black, Reed, Frankfurter

Author: Hughes

[ 306 U.S. Page 540]

 MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

This case, coming here on appeal from the state court, presents the question of the validity under the contract clause of the Federal Constitution of § 1083a of the Civil Practice Act of New York (Chapter 794 of the Laws of 1933)*fn1 under which the appellant, a mortgagee of real

[ 306 U.S. Page 541]

     property, was denied a deficiency judgment in a foreclosure suit, where the state court found that the value of the property purchased by the mortgagee at the foreclosure sale was equal to the debt secured by the mortgage.

The mortgage was executed in February, 1928, that is, prior to the legislation in question, to secure a bond for $15,000, with interest, payable in February, 1931. On default in payment, appellant, the holder of the bond and mortgage, brought suit for foreclosure and judgment for foreclosure and sale was entered in April, 1938. The property was then sold to appellant for the sum of $7500. In the referee's report of sale the amount due on the bond and mortgage was stated to be $15,771.17, and the taxes, fees and expenses amounted to $1319.03, leaving a deficiency of $9590.20.

Section 1083-a of the Civil Practice Act required that the right to a deficiency judgment should be determined in the foreclosure suit. Honeyman v. Hanan, 275 N. Y. 382; 9 N. E. 2d 970; 302 U.S. 375, 378. Accordingly, appellant made his motion in that suit to confirm the sale and for deficiency judgment. Proof was submitted to the court that the present value of the property was $25,318. It does not appear that the correctness of this valuation was contested. The court thereupon confirmed the sale and denied the motion for deficiency judgment upon the ground "that the value of the property is equal to the debt of the plaintiff." Appellant's contention that § 1083-a as thus applied violated the contract clause of the Constitution was overruled and this ruling was sustained

[ 306 U.S. Page 542]

     by the Court of Appeals. 278 N. Y. 467; 17 N. E. 2d 131. The court followed its earlier decisions, citing Honeyman v. Hanan, 275 N. Y. 382; 9 N. E. 2d 970; Klinke v. Samuels, 264 N. Y. 144; 190 N. E. 324; City Bank Farmers Trust Co. v. Ardlea Corporation, 267 N. Y. 224; 196 N. E. 34.

Appellant invokes the principle that the obligation of a contract is impaired by subsequent legislation which under the form of modifying the remedy impairs substantial rights. See Sturges v. Crowninshield, 4 Wheat. 122, 200; Von Hoffman v. City of Quincy, 4 Wall. 535, 553, 554; Antoni v. Greenhow, 107 U.S. 769, 775; Home Building & Loan Assn. v. Blaisdell, 290 U.S. 398, 430, 434, and cases cited, note 13; W. B. Worthen Co. v. Thomas, 292 U.S. 426, 433; W. B. Worthen Co. v. Kavanaugh, 295 U.S. 56, 60. As we said in Richmond Mortgage Corp. v. Wachovia Bank, 300 U.S. 124, 128, "The legislature may modify, limit or alter the remedy for enforcement of a contract without impairing its obligation, but in so doing, it may not deny all remedy or so circumscribe the existing remedy with conditions and restrictions as seriously to impair the value of the right."

We have heretofore decided that the requirement of § 1083-a that the right to a deficiency judgment must be determined in the foreclosure suit raises no substantial question under the contract clause. Honeyman v. Hanan, 302 U.S. at p. 378. The question is whether in the instant case the denial of a deficiency judgment substantially impaired appellant's contract right. The bond provided for the payment to him of $15,000 with the stipulated interest. The mortgage was executed to secure payment of that indebtedness. The contract contemplated that the mortgagee should make himself whole, if necessary, out of ...


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