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Chambers v. Boldt

Decided: August 9, 1939.


On petition and rule to show cause.

For the petitioners, Riggins & Davis (Frank W. Davis).

For the respondent, Carl Kisselman and Henry S. Ross.

Before Justices Case and Heher.


The opinion of the court was delivered by

CASE, J. The matter comes before us on petition and rule to show cause to vacate and set aside a judgment, entered by confession on bond and warrant, for the deficiency remaining on a bond and mortgage debt after crediting thereon the proceeds of the foreclosure sale of the real estate.

On July 16th, 1935, the petitioners, Charles Boldt and Margaret I. Boldt, his wife, and Paul B. Richter, executed and delivered to the respondent, J. Howard Chambers, a bond in the amount of $2,000, to which was appended a warrant of attorney to confess judgment, and the Boldts further executed and delivered their real estate mortgage to secure the bond. The lands were later conveyed to Richter. The mortgage became in default, and on March 4th, 1937, Chambers filed his bill in Chancery to foreclose. The Boldts and Richter were brought in as parties to the suit and had actual notice of the pendency thereof. The property was bought in at the foreclosure sale by Chambers. The sale was confirmed on October 5th, 1937. On December 2d, 1937, Chambers filed in the office of the register of deeds of Camden county, wherein the lands were situated, a notice of intention and, accordingly, on December 4th, 1937, entered a confessed judgment against the petitioners for the deficiency. No application was made by the petitioners to Chambers to refinance the mortgage indebtedness during the pendency of the foreclosure suit, although Chambers made repeated efforts to induce the owner of the property to reinstate the mortgage while it was under foreclosure and, after foreclosure, to accept the reconveyance of the foreclosed premises. The petitioners appear to have been on full notice of all the essential steps of the foreclosure proceedings, but the entry of the confessed judgment for the deficiency did not come to their attention until November 19th, 1938, when suit was brought in a Pennsylvania court upon the judgment. Thereupon petitioners went into our Court of Chancery in the effort to open

up and vacate the decree confirming sale and to obtain a reference to a master to ascertain the fair value of the mortgaged premises in order that that value might be applied in reduction of the deficiency. Chancery, following hearing, dismissed the petition. The petition herein was then filed, and the present rule was issued.

Petitioners contend that by reason of chapter 88, Pamph. L. 1935, the obligee on a mortgage bond, if he would hold the obligor to liability for a deficiency under the mortgage sale, must proceed on the bond by plenary action instituted by the issuance and personal service of summons notwithstanding the obligor has duly executed and delivered a warrant of attorney to enter judgment by confession.

Section 1 of the 1935 statute is as follows:

"In all cases where a bond and mortgage has or may hereafter be given for the same debt, all proceedings to collect said debt shall be, first, to foreclose the said mortgage, and if at the sale of the mortgaged premises under said foreclosure proceedings the said premises should not sell for a sum sufficient to satisfy said debt, interest and costs, then and in such cases it shall be lawful to proceed on the bond for the deficiency, and that all suits on said bond shall be commenced within three months from the date of the confirmation of the sale of said mortgaged premises and judgment shall be rendered and execution issued only for the balance of debt and costs of suit; provided, however, that no action shall be instituted against any party answerable on the bond unless such party is joined in the proceedings to foreclose the said mortgage; and provided, further, that the obligor or obligors in said bond may file an answer in the suit on said bond disputing the amount of such deficiency, in which event both parties may introduce in evidence at the trial, testimony of the fair market value of the mortgaged premises at the time of the sale under said foreclosure proceedings, and the court, sitting ...

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