Stuhlbarg v. West Norwood Bldg & Loan Co.

20 N.E.2d 725, 60 Ohio App. 285, 28 Ohio Law. Abs. 193, 14 Ohio Op. 159, 1938 Ohio App. LEXIS 390

• Court: Ohio Court of Appeals
• Decided: April 25, 1938
• Docket: No 5326
• Status: Published

Opinions

(On rehearing on appeal on questions of law and facts.) The case here grows out of an action by appellant, The West Norwood Building Loan Company, to foreclose a real estate mortgage. The appellees were the mortgagors and assuming mortgagors, the property in question having changed hands several times.

The action was a straight foreclosure suit in which no deficiency judgment was sought. Sale of the premises took place, and the property failed to bring enough to pay the mortgage and the costs in full, leaving a deficiency of something over $4,000. In the entry of distribution, the court granted a deficiency judgment against Miriam Stuhlbarg and Harry M. Stuhlbarg, the original mortgagors, for the full amount of the deficiency. It reserved in the entry all question of liability for the deficiency against other assuming mortgagors.

Thereupon, the Stuhlbargs filed this action directly attacking the deficiency judgment against them on the ground of fraud in the procurement thereof, and asking that the judgment be set aside, and that the defendants, the building and loan company and others, be enjoined from proceeding to levy execution upon said judgment.

The trial court set aside the judgment and granted the relief prayed for. From that judgment, the building and loan company appeals.

The question is: Was there such fraud in procuring the judgment as would justify a court of equity in setting aside the judgment in the interest of justice?

The facts established by the evidence are in substance as follows:

At the time of taking the order of sale, counsel for the building and loan company told counsel for the Stuhlbargs that he had not asked for any deficiency judgment and had no intention of seeking one (at least at that time) as he thought the property ample to satisfy the mortgage. The mortgagors were lulled into a sense of security by this assurance and did not attend the sale, willing that the property should be sold to satisfy the mortgage. When the entry of confirmation of the sale at two-thirds the appraised value and distribution of the proceeds was made, the entry, as above stated, contained a deficiency judgment. This entry was not submitted to the Stuhlbargs or their counsel. The first time the Stuhlbargs knew of any deficiency judgment was many months after its rendition, when a levy upon other property of theirs and notice of marshaling of liens was served upon them.

The power of the court to render any deficiency judgment in such case may well be doubted. Most certainly, justice will not permit such a judgment, procured and entered under the circumstances of this case, to stand. The parties have not had their day in court, and the majority of the court is of opinion that the deficiency judgment should be and hereby is set aside, and the appellants enjoined from levying execution thereon. Substantial justice can only be satisfied by a proper hearing on the merits of the right to a deficiency judgment in a proper action for that purpose.

The judgment is set aside, a permanent injunction granted, as prayed for, and the cause remanded to the Court of Common Pleas for further proceedings according to law.

Injunction granted and cause remanded.

ROSS, P.J., concurs.