Jamaica Savings Bank v. M.S. Investing Co., 274 N.Y. 215 (1937)
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A guarantor of a mortgage debt is not constitutionally entitled to a jury trial on issues of liability in a mortgage foreclosure action where a deficiency judgment is sought.
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Summary
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In a mortgage foreclosure action, the defendant guarantors sought a jury trial on the issue of their liability for a deficiency judgment, arguing that changes to the mortgage terms without their consent discharged their obligation. The New York Court of Appeals held that the guarantors were not entitled to a jury trial as a matter of right. The court reasoned that the action was fundamentally equitable in nature, and the deficiency judgment was merely incidental to the foreclosure. The constitutional right to a jury trial does not extend to issues arising within an equity action, even if those issues would traditionally be triable at law.
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Facts
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Jamaica Savings Bank initiated a foreclosure action on a mortgage. M.S. Investing Co. was the mortgagor, and certain individuals guaranteed the mortgage debt. The guarantors claimed that the terms of the mortgage were extended or varied without their consent. The guarantors argued they were therefore no longer liable for any deficiency resulting from the foreclosure sale.
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Procedural History
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The Supreme Court, Special Term, denied the guarantors’ motion for a jury trial. The Appellate Division affirmed. The Court of Appeals granted leave to appeal and certified questions regarding the guarantors’ right to a jury trial. The Court of Appeals reversed the lower courts, holding that the guarantors were not entitled to a jury trial.
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Issue(s)
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Whether the guarantors of a mortgage debt are entitled to a jury trial on issues of fact related to their liability for a deficiency judgment in a mortgage foreclosure action.
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Holding
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No, because a mortgage foreclosure action is equitable in nature, and a claim for a deficiency judgment is merely incidental to the equitable relief sought. The right to a jury trial does not extend to issues arising in equity actions, even if those issues would traditionally be triable at law. The court stated, “The foreclosure action is equitable, and it has been repeatedly held that a defendant is not entitled to a jury trial as a matter of right.”