No. 90-529 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

THE FIRST FIDELITY BANK, 

a Montana Banking Corporation, 

Plaintiff and Respondent, 

-vsJAMES D. SLACK, JR., SX RANCHES, INC., 

a Corporation; JIM SLACK & ASSOCIATES, 

JAN 15 1991 

INC., a Corporation; SUNDANCE LAND 

AND CATTLE COMPANY, a Partnership, &A S%il!z 

CLERK OF SUPRClr*- -?1r C001RT 

STATE OF ibld2NYAfdA 

Defendants and Appellants. 

APPEAL FROM: District Court of the Seventh Judicial District, 

In and for the County of Dawson, 

The Honorable B. W. Thomas, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Mark D. Parker; Parker Law Firm, Billings, Montana 

For Respondent: 

R.W. Heineman, P.C., Wibaux, Montana 

Submitted on Briefs: December 6, 1990 

Filed: 
Justice Diane G. Barz delivered the Opinion of the Court. 

The defendants, James D. Slack, Jr. , SX Ranches, Inc. , and Jim 

Slack & Associates, Inc., appeal from a final partial summary 

judgment entered by the District Court of the Seventh Judicial 

District, Dawson County. 

On January 24, 1983, defendant Jim Slack & Associates executed 

a promissory note to plaintiff, The First Fidelity Bank in the 

amount of $240,000 due May 1, 1983 guaranteed by defendant James 

Slack, Jr., and SX Ranches and secured by a Security Agreement. 

On January 24, 1983, defendant SX Ranches also executed a 

promissory note for $200,000 to plaintiff Bank guaranteed by 

defendant James Slack and secured by Security Agreements. This 

note was due January 1, 1984. 

In February of 1984, after both notes were in default, the 

plaintiff Bank and defendants entered into a extension agreement 

providing plaintiff Bank with additional collateral and a new due 

date for pay-off of November 1, 1984. One of the items of 

collateral provided was a junior real estate lien to a first 

mortgage filed by Norwest Bank of Billings. Mortgages were 

executed by defendant James Slack to plaintiff Bank covering real 

estate in Richland County subject to mortgages of the Federal Land 

Bank and Norwest Bank, and also real estate in Carbon County 

subject to prior mortgages of Norwest Bank and others. 

After payments by the defendants were never made and proceeds 
from the disposition of collateral were insufficient, plaintiff 

Bank filed the instant lawsuit. 

Meanwhile, Norwest Bank pursued foreclosure on the first 

mortgage in Carbon County and obtained a Judgment of Foreclosure 

on April 27, 1988 in the amount of $2,922,768.29 plus interest, 

attorney's fees and costs. Prior to that judgment, on October 30, 

1987, a Stipulation between Norwest and Slack was furnished to 

plaintiff Bank showing Slack's indebtedness was greater than the 

value of the property and no proceeds would be available to 

plaintiff Bank from the foreclosure. The plaintiff Bank signed an 

agreement and mortgage release to Norwest Bank to allow Norwest to 

complete its foreclosure in exchange for $13,000 which was applied 

to the note. 

The sole issue in this appeal is whether the "one action rule1' 

set forth in 9 71-1-222, MCA which states "There is but one action 

for the recovery of debt or the enforcement of any right secured 

by mortgage upon real estate . . . . If precludes the Bank from 

obtaining a deficiency judgment. Defendants contend that the Bank 

was required to foreclose their real estate mortgage first. The 

District Court found that to apply the "one action rule1' under the 

circumstances of this case would be unreasonable. The District 

Court found that the defendants had a burden to show that had 

plaintiff Bank foreclosed there would be some value realized from 

the security to apply to the debt and the $13,000 which the 

plaintiff Bank received from Norwest could only be obtained from 
refraining from foreclosure. In other words the $13,000 was the 

price Norwest was willing to pay to facilitate its own foreclosure. 

We agree. There is uncontroverted evidence that the security held 

by plaintiff Bank as a second mortgage was worthless. 

In Bailey v. Hansen (1937), 105 Mont. 552, 74 P.2d 438, the 

plaintiff brought an action for collection of a note without 

foreclosing on the mortgage. It was claimed that the mortgage had 

no value. The Court stated the Itone action statutew was to compel 

the one who has taken security for his debt to exhaust his security 

before resorting to the general assets of the debtor. The Court 

further held that the one action rule does not prohibit a personal 

action when the mortgage security has become valueless. Bailey, 

at 555, 74 P.2d at 440. We hold that there is no violation of the 

"one action rule" in this case. 

Affirmed. Let remittitur issue forthwith. 

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 

1988 Internal Operating Rules, this decision shall not be cited as 

precedent and shall be published by its filing as a public document 

with the Clerk of this Court and by a report of its result to the 

West Publishing Company. / 

We concur: 
i Justices i