NO. 88-294 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

FIRST INTERSTATE BANK OF KALISPELL, 

N.A., a National Ranking Association, 

Plaintiff and Respondent, 

-vsDWAYNE B. F7ANN and KATHY A. WANN, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Eleventh Judicial District, 

In and for the County of Flathead, 

The Honorable Michael Keedy, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Warden, Christiansen, Johnson & Rerq; Gary R. 

Christiansen, Kalispell, Montana 

For Respondent: 

p--. Filed: s.1; 

* 

Murphy, Robinson, Heckathorn & Phillips; Steve F. 

5, Cumminqs , Ka! ispell, Montana 

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! i 

.' J 

Submitted on Briefs: Oct. 27, 1988 

Decided: December 8, 1988 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Defendants appeal from the grant of plaintiff's motion 

for summary judgment and the subsequent judgment against the 

defendant in the amount of $10,262.45 entered by the District 

Court of the Eleventh Judicial District, Flathead County, 

Montana. We affirm the judgment. 

The sole issue upon appeal is whether the plaintiff, as 

holder of a promissory note secured by a junior trust 

indenture, is barred from recovery upon the note after the 

holder of the senior trust indenture foreclosed upon and sold 

the indentured property? 

The parties in this case do not dispute the facts, 

which are summarized as follows. On September 14, 1984, the 

defendants, Dwayne and Kathy Wann, purchased a house and 

assumed the existing first trust deed executed in favor of 

Alliance Mortgage Company. The Wanns also signed a 

promissory note in favor of First Interstate Rank of 

Kalispell (Bank). This note was secured by a second trust 

deed on the house purchased by the Wanns. 

The Wanns failed to make the semi-annual payments due 

on the Bank note, so the Bank renewed the note on October 22, 

1985, with a monthly payment schedule. The Wanns also failed 

to make payments on this renewed note and on the note held by 

Alliance Mortgage. Alliance Mortgage consequently began 

foreclosure proceedings on the first trust deed. On February 

20, 1987, Alliance Mortgage purchased the indentured house at 

the foreclosure sale with the high bid. The Bank did not bid 

at this auction. 

The Bank thereafter filed suit against the Wanns for 

nonpayment of the amount owing on their promissory note --an 

unsecured note hv reason of the sale of the indentured 
property by the owner of the first trust deed. On December 

10, 1987, the Bank filed a motion for summary judgment. The 

Wanns subsequently filed a similar motion. 

On February 18, 1988, the court granted the Bank's 

motion for summary judgment. Judgment was entered on April 

5, 1988 against the defendants in the amount of $10,262.45. 

This amount reflected $7,338.93 in principal owing on the 

note, $1,123.52 in interest accrued since June 10, 1986, and 

$1,800 in costs and attorneys' fees. The Wanns appeal from 

this judgment. 

A court may grant a motion for summary judgment if no 

genuine issue of any material fact exists and if the moving 

party is entitled to a judgment as a matter 05 law. Rule 

56 (c) , M.R.Civ.P. ; Vogele v. Estate of Schock (Mont. 1987) , 

745 P.2d 1138, 1141, 44 St.Rep. 1950, 1953. In the present 

case, both parties admit that no material issue of fact 

exists. We therefore need only determine whether the 

District Court was correct in holding that the plaintiff was 

entitled to a judgment as a matter of law. We will not 

overturn this holding unless the District Court abused its 

discretion. 

Appellants contend that the District Court erred in 

entering a judgment against them for the amount still owing 

upon the promissory note because the Bank is prohibited from 

seeking a deficiency judgment for the remaining balance due 

upon the Bank's note once the holder of the first trust deed 

has foreclosed upon the indentured property. Appellants cite 

to the case of First State Bank of Forsyth v. Chunkapura 

(Mont. 1987), 734 P.2d 1203, 44 St.Rep. 451, as support for 

this contention. 

We note at the outset that the holding in the 

Chunkapura case is inapposite to the case at hand. The Court 

in - Chunkapura stated that the creditor institutinq a judicial 
foreclosure upon an occupied, single family residential home 

under a trust deed may not seek a deficiency judgment. 

Chunkapura, 734 P.2d at 1208, 1210. This holding applies 

onlj~ to the foreclosing creditor. It does not apply to a 

creditor, such as the Bank, holding a note which is no longer 

secured because of a foreclosure action taken by another 

creditor possessing a first trust deed. 

The statutory prohibitions against deficiency judgments 

after foreclosure by advertisement and sale upon a note 

secured by a trust indenture similarly apply only to the 

foreclosing creditor. As stated in § 71-1-317, MCA: 

When a trust indenture executed in 

conformity with this part is foreclosed 

by advertisement and sale, no other or 

further action, suit, or proceedings 

shall be taken or judgment entered for 

any deficiency against the grantor or his 

surety, guarantor, or successor in 

interest, if any, on - the note, bond, or 

other obligation secured by - the trust 

indenture or against any other person 

obligated on such note, bond, or other 

obligation. (Emphasis added.) 

Use of the definite article, "the," plainly indicates that 

only the creditor possessing the foreclosed note and trust 

indenture is prohibited from seeking a deficiency judgment or 

maintaining any other action for amounts still owing on the 

secured note. This statutory interpretation is in keeping 

with existing case law which has generally held that a second 

lienholder whose lien is extinguished by the foreclosure of a 

first lien may maintain a direct action on the note. See, 

e.g., Avco Financial Services v. Christiaens (1982) , 201 

Mont. 217, 652 P.2d 220; Bailey v. Hansen (1937), 105 Mont. 

552, 74 P.2d 438; Rrophy v. Downey (1902), 26 Mont. 252, 67 

P. 31.2. 
The foreclosure by Alliance Mortgage through no fault 

of the Rank, extinguished the Rank's security interest in the 

Wanns' house. The Rank, with an extinguished lien on the 

house, was thus entitled to sue directly on the note. The 

Rank did just that. We therefore hold. that the District 

Court, as a matter of law, did not err in granting the 

plaintiff's motion for summary judqment under the facts of 

this case. 

The judqment is affirmed. 

We concur: ,-F