In re Piza

Barrett, J.:

The order appealed from grants the petitioner, Joshua S. Piza, applying as administrator of Rachel S. Piza, deceased, leave to sue David "W. O’Neil to recover the amount due upon a bond executed by him.

O’Neil executed a bond and mortgage to the petitioner individually on January 4, 1889. They were for $25,000, and fell due January 4, 1892, prior to which time they were assigned to the decedent. In December, 1890, O’Neil sold the mortgaged premises to one Steers, who took subject to the mortgage, but did not covenant to pay it. On January 4, 1892, the decedent entered into a written agreement with Steers, without O’Neil’s knowledge or consent, extending the time of payment three years. By this instrument Steers made himself liable for the whole principal sum “ with like effect as if the party of the second part (Steers) had assumed and agreed to pay the said mortgage in and by the terms of the deed” which he received from O’Neil. The mortgage -was foreclosed in the early part of 1894, on account of a default in the payment of interest. O’Neil was at first made a party defendant, and judgment for any deficiency was claimed against him; but upon his assertion that the extension had relieved him from all liability on the bond, the action was discontinued as to him by consent.

If Steers had covenanted with O’Neil in the deed to assume the mortgage, there is no doubt that O’Neil would have become simply a surety for the performance of the covenant, and that the extension would have relieved him from all liability. (Calvo v. Davies, 73 N. Y. 216.) But Steers did not so covenant, and O’Neil’s exemption from liability on the bond was limited to the value of the land at the time of the agreement. (Murray v. Marshall, 94 N. Y. 611.) He was not liable for any deficiency which might arise upon the sale in the foreclosure suit. He was only liable for the difference between the actual value of the land at the time of the agreement and the amount of the mortgage. The risk of future depreciation fell upon the creditor. It is doubtful, therefore, whether the question of O’Neil’s liability and its extent could have been properly tried in the foreclosure action. Not being liable for any deficiency upon the sale, and his liability, if any, depending upon considerations foreign to an ordinary decree of foreclosure and sale,, his being dropped as a party defendant did not substantially prejudice him, or affect his real interests. Whether he is now liable, depends not upon what the property brought at the foreclosure sale, but entirely upon its value at the time of the agreement between the decedent and Steers. The petition states, upon information and belief, that the property was then of less value than the mortgage. O’Neil states, also, upon information and belief, that it was worth more. These conflicting claims cannot properly he tried upon affidavits, and we see nothing oppressive or inequitable in permitting the petitioner to bring his action to have that question properly determined.

The order should, therefore, be affirmed, with ten dollars costs and disbursements of the appeal.

Rumsey, O’Brien and Ingraham, JJ., concurred; Van Brunt, P. J., dissented.