Gelfert v. National City Bank - 313 U.S. 221 (1941)
U.S. Supreme Court
Gelfert v. National City Bank, 313 U.S. 221 (1941)
Gelfert v. National City Bank of New York
Argued April 3, 4, 1941
Decided April 28, 1941
313 U.S. 221
1. A state statute (N.Y.Laws, 1938, c. 510, amending § 1083 Civil Prac. Act), directing that the amount of a deficiency judgment after foreclosure sale of mortgaged property shall be ascertained by deducting from the amount of the debt the fair and reasonable market value of the property (to be determined by the court upon affidavits or otherwise) or the sale price of the property, whichever is higher, is not invalid under the Contract Clause of the Federal Constitution as applied to the case of a mortgagee who bought in the property at the foreclosure sale for much less than the debt, and who, under the law as it existed when the mortgage was made, would have been entitled to a deficiency judgment for
the difference between the amount of the debt and the amount of the sale price. P. 313 U. S. 231.
The fact that the later statute was not based on any declared public emergency, and that it confined the determination of the right to a deficiency judgment to the foreclosure proceeding, leaving the mortgagee an alternative remedy substantially coextensive with that afforded by the older statute, did not affect the validity of the later statute as applied to the mortgage.
2. It is quite uniformly the rule in this country, as in England, that, while equity will not set aside a foreclosure sale for mere inadequacy of price, it will do so if the inadequacy is so great as to shock the conscience or if there are additional circumstances against its fairness, such as chilled bidding. P. 313 U. S. 232.
3. There is no constitutional reason why, ill lieu of the more restricted control by a court of equity, the legislature cannot substitute a uniform rule designed to prevent mortgagees, bidding at foreclosure sales, from obtaining more than their just due. P. 313 U. S. 233.
257 App.Div. 1076; 14 N.Y.S.2d 995, reversed.
Certiorari, 312 U.S. 674, to review a judgment entered on remittitur from the Court of Appeals of New York, 284 N.Y. 13, 29 N.E.2d 449, which, reversing a judgment of the Supreme Court, Appellate Division, affirmed and reinstated (1) an order at Special Term confirming a referee's report of a mortgage foreclosure sale, and (2) a deficiency judgment entered pursuant to that order.