Case Name: WRIGHT v. WIMBERLY
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1916-03-14
Citations: 79 Or. 626
Docket Number: 
Parties: WRIGHT v. WIMBERLY.
Judges: Mr. Justice Benson and Mr. Justice McBride concur in the result.
Reporter: Oregon Reports
Volume: 79
Pages: 626–638

Head Matter:
Argued February 16,
affirmed March 14,
rehearing denied March 28, 1916.
WRIGHT v. WIMBERLY.
(156 Pac. 257.)
Mortgages — Foreclosure — Deficiency Judgment — Statute — “Mortgagee.”
1. Under Section 426, L. O. L., providing that, when a judgment is given for the foreclosure of any mortgage to secure payment of the balance of the purchase price of real property, it shall provide for the sale of' the property to satisfy the judgment, but that the “mortgagee” shall not be entitled to a deficiency judgment on account of such mortgage, note or obligation secured thereby, plaintiff, the assignee of a note and mortgage, without notice that the mortgage had been executed to secure anj part of the purchase price of the mortgaged real property, neither the note nor the mortgage containing any statement to that effect suing to foreclose the mortgage, was not entitled to any deficiency judgment against the makers of the note.
[As to reasonable price when deficiency judgment is sought, see note in 103 Am. St. Rep. 54.]
From Douglas: James W. Hamilton, Judge.
Department 1.
Statement by Mr. Chief Justice Moore.
This is a suit by A. H. Wright, as plaintiff, against L. Wimberly and Cora Wimberly, husband and wife, O. C. Jones, G. H. Carter, H. Doherty, Grace Burnett, W. H. Vrooman and E. Wagner to foreclose a mortgage.
It is alleged in the complaint that on January 28, 1910, the defendants L. Wimberly and Cora Wimberly, his wife, executed to O. C. Jones their promissory note of $3,000, payable on or before ten years with 6 per cent interest payable annually, and, if not so paid, the whole sum to mature upon such default at the option of the holder of the note, and in case of suit or action thereon, the makers promised to pay such additional sum as the court might adjudge reasonable as attorney’s fees; that, in order to secure the payment of that note, the makers thereof executed to the payee named therein a mortgage of a tract of real property in Douglas County, Oregon, particularly describing the premises, which mortgage was duly recorded; that by sundry transfers the note and mortgage were duly assigned to the plaintiff, who is the owner and holder thereof; that default has been made in the payment of the matured interest, whereupon the plaintiff elected to treat the principal and such interest as due and payable and so notified the makers of the note and the several indorsers thereof; that $300 is a reasonable sum as attorney’s fees; that other named defendants have or claim some interest in or lien upon the mortgaged land, but that such assertion of right or estate is subordinate and inferior to the plaintiff’s lien on the premises. In addition to the ordinary prayer for a decree of foreclosure and sale of the mortgaged premises, the plaintiff asks that, if the proceeds of such sale be insufficient to meet the payment of his demands, he may have judgment over against the makers of the promissory note for such deficiency, and that execution may issue for the collection thereof.
The averments of the complaint are admitted by the answer, which alleges that on January 27, 1910, for the consideration of $4,000 the defendant L. Wimberly purchased the real property described in the complainl from O. C. Jones and Ella Jones, his wife, who executed to him a deed therefor which was duly recorded; that he then paid them on account thereof $1,000, and he and his wife executed to O. C. Jones a mortgage of the real property so conveyed, to secure the payment of $3,000, the remainder of the purchase price of the premises, and for no other purpose. The prayer of the answer is that no deficiency judgment may be rendered against the makers of the promissory note.
The averments of new matter in the answer are denied, upon information and belief, in the reply which alleges that the plaintiff obtained the promissory note long prior to any default in the payment of interest, giving full value for it, and that he is an innocent purchaser thereof in good faith.
The cause being thus at issue was tried, whereupon the prayer of the complaint was granted, except that no deficiency judgment was rendered against the makers of the promissory note, from which decree the plaintiff appeals.
Aeeirmed. Rehearing Denied.
For appellant there was a brief and an oral argument by Mr. Oliver P. Coshow.
For respondents there was a brief over the names of Mr. A. N. Orcutt and Mr. Carl E. Wimberly, with an oral argument by Mr. Orcutt.

Opinion:
Opinion by
Me. Chief Justice Moore.
A statute of this state, enacted in 1854, declares in effect that, when a promissory note is secured by a realty mortgage, upon a foreclosure thereof a deficiency judgment may be rendered against the mortgagors: Section 7106, L. O..L. This clause of the law was impliedly amended in part February 24, 1903, by an act which reads:
"When judgment or decree is given for the foreclosure of any mortgage, hereafter executed, to secure payment of the balance of the purchase price of real property, such judgment or decree shall provide for the sale of the real property, covered by such mortgage, for the satisfaction of the judgment or decree given therein, and the mortgagee shall not be entitled to a deficiency judgment on account of such mortgage or note or obligation secured by the same": Section 426, L. O. L.
The defendant L. Wimberly testified in support of the averments of new matter in the answer as to the mortgage having been executed to evidence a part of the purchase price of the mortgaged premises. The plaintiff's testimony substantiates the averments of the reply with respect to the payment of the face value of the note, and that he took an assignment thereof without knowledge or notice that the mortgage had been executed to secure any part of the purchase price of the mortgaged real property. Neither the note nor the mortgage contains any statement that either was exe cuted to evidence any part of the consideration of the land so purchased.
It will be remembered that the statute quoted declares the "mortgagee" shall not be entitled to a deficiency judgment. If the phrase "the owner and holder of the mortgage" had been employed, instead of the word "mortgagee," the restriction in such cases might have been freed from all doubt. A perusal of the statute referred to will show that it is remedial in character, and for that reason it should be liberally construed. So interpreting the word "mortgagee," it is believed that the term is employed to mean that each assignee of the security is to be deemed, during the term of his ownership of the lien, as the mortgagee, thereby prohibiting him from securing a deficiency judgment on the foreclosure of a mortgage given to secure any part of the purchase price of land. Any other conclusion would permit a mortgagee of real property to assign a mortgage thereof, and thus defeat a right expressly granted by statute to the mortgagor for his benefit and protection. It is the undoubted policy of the law to protect the head of a family by granting to him a homestead that is exempt from execution. So, too, upon principle, it must be true that the legislative assembly encourages the acquisition of title to land, even upon payment of a part of the consideration, and the giving of security for the remainder of the purchase price by the execution of a mortgage of. the premises, limiting a recovery, in case of foreclosure, to a forfeiture of the payment made as a part of the consideration, and restoring to the mortgagee his original estate in the premises. By such statutory restriction a timid purchaser might venture to secure a home for himself and family by giving part of the consideration, hoping to be able to meet the payment of the remainder of the purchase price when it matured according to the terms of a mortgage of the premises; but he would undoubtedly hesitate to pledge his future energy and prospects of success in life in order to liquidate a deficiency judgment when the mortgagee was allowed to retain the sum which had been paid and also permitted to secure a title to the premises pursuant to the decree of foreclosure.
The right thus granted may be defeated by the mortgagee, who, by waiving his lien and maintaining an action at law on the promissory note or other obligation so secured, can procure a judgment for the entire amount due and obtain the sum so awarded by execution, if the debtor have sufficient property by the sale of which the judgment can be discharged: Page v. Ford, 65 Or. 450 (131 Pac. 1013, Ann. Cas. 1915A, 1048, 45 L. R. A. (N. S.) 247); Walters v. Cooper, 71 Or. 139 (142 Pac. 359). The practice pursued in these cases and the method of procedure resorted to therein were rendered possible because Section 426, L. O. L. prohibiting the granting of a deficiency judgment in case of a purchase price mortgage of real property, applies only to suits instituted to foreclose such lien, and not to actions at law based upon the note or other obligation. The original mortgagee knew, when the mortgage was given, that it was executed to secure a part of the purchase price of the mortgaged premises. When the promissory note and mortgage were assigned, it was incumbent upon the assignee to ascertain whether or not the security which he obtained was a purchase money mortgage, if he desired to foreclose the lien instead of bringing an action at law on the note to recover the amount thereof.
"All proceedings," says a text-writer, "to collect any deficiency arising on the sale of mortgaged prem ises under a foreclosure, are purely statutory ": Wiltse, Mort. Foreclosure (3 ed.), § 733.
Such being the case, it was not necessary to state in the note or mortgage herein that the lien was created to evidence a part of the purchase price of the mortgaged premises.
Finding no error, we must affirm the decree, and it is so ordered. Aeeirmed. Rehearing Denied.
Mr. Justice Benson and Mr. Justice McBride concur in the result.