Court Opinion

ID: 8185308
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:07:42.264438+00
Date Added: 2024-06-11T16:40:23.633148
License: Public Domain

Newman, J.
The question presented by these appeals is the one question — whether the complaint states a cause of action against the guarantors, such as authorized a personal judgment to be rendered against them in the foreclosure action. It is no doubt settled beyond controversy that a, guarantor of the collection of a note or debt does not become liable on his contract of guaranty until the guarantee has exhausted all the remedies which the law gives him for the collection of his debt from the principal debtor without-avail. This means the prosecution of a suit against such principal debtor to judgment and execution. The legal remedies are said to be exhausted upon the proper return of an execution unsatisfied for want of goods whereon to levy. Day v. Elmore, 4 Wis. 190; Dyer v. Gibson, 16 Wis. 557; French v. Marsh, 29 Wis. 649. It is clear that an action at law could not be maintained on this guaranty before the-return of an execution unsatisfied. This rule is not questioned. But it is claimed that the rule has no application to a case where the debt is secured also by a mortgage. In that case it is claimed that the guarantor is a'proper party to the action to foreclose the mortgage, and liable in such action to a personal judgment in case of a deficiency. But this cannot be true in the absence of some statutory provision. to that effect, for in such a case the guarantee must exhaust his remedies against both the mortgaged property and the principal debtor before he can proceed against the guarantor. This was so held in Borden v. Gilbert, 13 Wis. 670. But it is claimed that all this is changed, in the case of a. debt secured both by a mortgage and a guaranty, by R. S. sec. 3156. This section provides that in all foreclosure ac*179tions the plaintiff may unite with his claim for foreclosure of the mortgage “ a demand for a judgment for any deficiency which may remain due to the plaintiff after sale of the mortgaged premises against every party who may he personally liable for the debt secured by the mortgage . . . if upon the same contract which the mortgage is given to secure,” and provides for the entry of a personal judgment for any deficiency which may remain after the sale of the mortgaged premises. It is clear that this statute authorizes a judgment for a deficiency against such persons only as áre liable for the mortgage debt. The guarantors are liable only according to the terms of their contract. The guarantor’s contract is that he will pay the debt in case it cannot by due diligence be collected from the mortgagor, nor made out of the security. Borden v. Gilbert, supra. So that until after such remedies as the law gives to the mortgagee have been duly exhausted without avail there is no breach of the contract of guaranty, nor any liability upon it. The statute makes no new rule of liability. It does not on its face purport to make any such change. In order that a statute shall change a common-law liability or create a new one, the intention to work such an effect must appear on the face of the statute itself with some reasonable degree of clearness. These guarantors were not “personally liable for the debt secured by the mortgage,” and so wmre not liable to a judgment for a deficiency in the foreclosure action, because the mortgagee’s remedies against the mortgagor had not been exhausted.
By the Court.— That part of the foreclosure judgment which orders judgment for a deficiency against the guarantors, and. the judgment for the deficiency against them, are reversed.