Real  Estate   Record





AND BUILDERS^ GUIDE.





YoL. XX,





NEW TOR]?, SATURDAY, OCTOBER 6, 1877.





No. 499.





Published Weekly by

C^^ %ml Estate '^nox^ ^ssonatxon,

TERMS.
O^'E, YBAR, in advance....$10.00.
Communicafcions should be addressed to

C. W,  SAVEET,

Nos. 345 AND 347 Broadway.





FORECLOSURES.
The decUne of real estate values from a high to
a low plane, involves the widespread mipair-
ment of mortgage securifcy. Depreciation is no
respecfcor of tifcles. Ifc assails alike the legitimate
and well selected morfcgage and the usurious and
speculative one. After the decline has reached a
cerfcain stage, the values fail to represent the fuU
amount of the mortgage sum, and in this ease,
were other security lacking, the transfer or sur¬
render of the property to the mortgage creditor
would, in many cases, be an advantageous dispos¬
al of it. Not a few dealers in unimproved and
unproductive property have found themselves in
this predicament, where they would gladly sur¬
render the real estate for the cancelment of their
obligation and release from their indebtedness.
Bufc the pecuUar features of real estate indebted¬
ness efiEectuaUy precludes such an easy escape. As
is weU known to the majorifcy of our readers, and
as has been fully explained in these columns, the
bond which accompanies a mortgage involves a
personal security or obUgation, which entangles
in the transaction all ofcher properfcy belonging to
the debtor, so that mortgagees in theu- extremity
are permitted to appropriate not only the residuum
of value left in the real estate, but to attack the
personal fortunes of the bondsman and of every
subsequent o^^^ler, who may have assumed the
payment of the original bond. This feature of fche
bond and mortgage has developed no little com-
pUcationat the present time, and has given rise
to many nice questions of law as to the UabiUty of
the original bondsman and his co-obUgors. The
idea of being beld responsible for a debt long for¬
gotten and dismissed from memory on account of
the remote alienation of the property to which it
was attached, is to say the least a hard one to
i-econcUe to ordinary convictions of propriety and
equity The disinclination to respond to such de¬
mands is frequently shown in the courts, where
surprised and reluctant debtors seek to avaU
themselves of every loop-hole and technicaUty
that the law affords for escaping responsibiUty.
The nature and Umit of this peculiar obUgation
would furnish the subject matter for an interest¬
ing legal thesis. The multitude of iUustrations
which has arisen of late would furnish a varied
and luminous exposition of the entire subject. The
penalty thus involved becomes one of pecuUar
hardship in the case of bmlders and lot speculators
—those whose ownership of propei-ty at the best
is only transient and for a specific purpose ; that
is, the'gaining of a limited possible profit. But
in their case, the ownership too often necessitates
the incurring of large obUgations in the way of
mortgages.   Tbeyjaxe obliged under the prevalent





practice and custom to attach then- personal obli¬
gations to every mortgage thus given. A business
of average extent, either in house bmlding or lot
speculating, though pursued upon the most con¬
servative methods, wUl generally involve the
principals in entanglements of this kind aggregat¬
ing many fold the total capitalor wealth they may
be possessed of. If, in after years, auy considera¬
ble number of these mortgages have to go by de¬
fault and be brought to foreclosure in times of
depreciation or dullness Uke the present, the prin¬
cipals connected with them are Ukely to become
hopelessly embarrassed, even though they may
have long since parted with their interest in the
mortgaged property.

This feature of personal liabiUty in mortgage
loans has saved many a debt that would other¬
wise have been hopeless where the original bonds¬
man or .some co-obUgor has been compeUed to
discharge the indebtedness and seek to reimburse
himself as best he can out of the mortgaged
premises. This is apt to happen where the atten¬
dant loss is moderate or trifling as compared with
the total wealth of the one who responds. The
altitude which values reached during the late
speculation and the extent to which the business
of speculative ventures was can-ied led to the
issue of great nimibers of mortgages, speciflcaUy
large in amount and aggi-egating an enormous
total. No wonder then that such hordes of
dealers have succumbed entirely before the aval¬
anche of foreclosure suits that have culminated
since the panic. Some unlocked for and surpris¬
ing instances have been developed during the
past few years of the deUberate evasion of this
special UabiUty by parties who were esteemed to
be solvent and in easy circumstances. Not a few
cases have occurred where reputable and wealthy
men have transferred valuable estates, free of
mortgage or Ughtly encumbered, into the hands
of third parties apparently for no other purpose
than to escape judgments for deficiency in the
foreclosures of mortgages with which they were
inextricably entangled. It must be a bitter and
humiUating ordeal for a man of spirit and integ¬
rity to pass through, and the willingness to take
this step reveals the light estimation and slack
recognition which this hai-sh and unnatural
claim meets with among reputable men. The
lessons which are now being so bitterly leai-ned
to be of any value, should deter future operators
from issuing mortgages on a large scale, or may
result in a general movement to divorce if possi¬
ble the bond from the mortgage.

Two and only two alternatives present them¬
selves to the embarrassed mortgage debtor, either
bankruptcy, or, if otherwise solvent, a transfer of
his estate, In Ueu of these, at the discretion of
the mortgage creditor, a compromise might be
arranged whereby the mortgagee on receiving a
legal transfer of the hypothecated property
would release the debtor from further UabiUty.
Such magnanimity is doubtless contrary to the
promptings of average hiunan nature, and yet
more than one case has come to our knowledge of
the exercise of such forbearance. One notable
and praiseworthy instance deserves recording
•vvliereiii a leading land proprietor was. the sym-
pathiadng creditor,.and forgave arrears of inter¬





esfc and taxes in a single transaction amounting
to fuUy one hundi-ed thousand dollars, although
one of the debtors concerned was more than able
to respond to the deficiency.

We forbear, however, to parade the personaU-
ties of this transaction, as they are known to but
few, and it is sought to envelop them in a veil of
privacy. We would commend, however, to
wealthy corporations, and individuals now so ex¬
tensively engaged in the work of foreclosures, to
discriminate and exercise the utmost forbearance
in deaUng with delinquent debtors, and seek,
where ifc is possible, in justice to their substantial
rights, to arrange compromises with innocent and
unconscious mortgage debtors, who have become
liable through the accident of an imcanceUed or
forgotten bond. We are aware that no legal
remedy for such cases exists, and that no char¬
itable considerations could be successfuUy urged.
But a proper magnanimity on the part of mort¬
gage holdei-s might save many a valuable com¬
mercial reputation without incurriag any irre¬
mediable personal loss.

The extremity of debtors is also shown in the
many legal devices resorted to in the way of
dUatory defences to mortgages, resulting in a
long postponement of the foreclosure sale. The
commonest method is to institute a series of bogus
conveyances of the properfcy, compeUing the
mortgagee to commence new suifcs after each
conveyance. When the matter fairly gets
before the courts the judges are apt to
indulge a sentimental and tedious leniency
towards defendants that prompts them to
entertain aU sorts of dUatory motions and ex¬
cuses, so that a stubborn and well-contested
battle is often fought before the final decree of
foreclosure can be obtained. After this step is
reached a fresh battery of motions and counter-
motions, injunctions and postponements is opened
upon the luckless plaintiff to the acfcion, whose
stock of patience is pretty siu-e to be exliausted
long before the referee invests him with the title
to the mortgaged premises. Such cases, though
usuaUy rare, have become sufficiently numerous
of late to develop into a separate branch of prac¬
tice—a branch, it is needless to add, that requires
in its practitioners pecuUar skUl at the law. Such
tactics usually apply to productive property, and
the benefit accruing to the debtor is the coUection
of rents long affcer payments of interest and
taxes have ceased, so that the creditor is involved
in extra and unnecessary Uens, without being
able to derive any income from the property.

The field of foreclosures in this city during the
pasfc three years presents an interesting study.
WhUe the stream has been continuous and ua-
abating, ifc may be truly said that the heart of
the best property in New York has scarcely been
touched—the foreclosures applying chiefly to
the extreme periphery of the city, nibbling, as it
were, the outer edges. We could count on our
two hands the pieces of property of real merit
and productiveness that have been brought to
foreclosure, and these have found quick purchas¬
ers, genei-ally at prices exceeding the mortgage
debt. The one feature pf surprise and regret is
the extent to which our fiduciary institutions
have involved themselves in unwise and injudi-