Court Opinion

ID: 7876635
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:13:57.210452+00
Date Added: 2024-06-11T16:31:25.174125
License: Public Domain

SABERS, Justice
(dissenting).
The majority holds that the statutory term “mortgaged premises” is the equivalent of “mortgaged property.” Based on this, the majority reasons that SDCL 21-47-15 and 21-47-16 clearly require that a mortgage holder seeking foreclosure and a deficiency judgment bid the fair and reasonable value of the entire property. The terms “premises” or “property” may have a plain meaning, as the majority contends, when read alone. However, when the terms are combined with the word “mortgaged” this clarity is blurred.* Although “mortgaged premises’’ may be construed to mean the unencumbered fee interest, i.e., the value of the entire property, as the majority holds, these words may also mean the value of the mortgagor’s interest in the premises, i.e., the value of the property with a reduction for any prior senior encumbrances. The latter interpretation is consistent with both the legislative purpose underlying the deficiency judgment statutes, and the needs and general principles of modern day foreclosure law.
We have previously held that “the legislative purpose in enacting the deficiency judgment statutes was to prevent unjust enrichment and gain by the holders of real estate mortgages.” Miners & Merchants Bank v. Braden Forestry, 374 N.W.2d 123, 125 (S.D.1985). Reading “mortgaged premises” to mean the value of the mortgagor’s interest in the property is consistent with this purpose. The mortgagee cannot be unjustly enriched when required to bid the full amount of the mortgagor’s interest in the property before obtaining a deficiency judgment. Thus, the legislative purpose is fulfilled by this interpretation of “mortgaged premises.”
Ironically, the majority’s reading of “mortgaged premises” permits the mortgagor to enjoy unjust enrichment to the detriment of the mortgagee. Denied a deficiency judgment, Sinclair is left with an unsatisfied debt of over $289,000 and property with significant encumbrances. Further, under the majority’s interpretation, a junior lienholder is required to buy out any senior lienholders and acquire full title to the property, where only an encumbered interest was mortgaged, before applying for a deficiency judgment.
Apart from being unduly burdensome and inequitable, the majority’s archaic interpretation also contravenes the general rule of foreclosure:
[T]he general rule is that persons holding prior mortgages or liens are not necessary parties, ... to a suit to foreclose a mortgage where the decree sought is only for a foreclosure of the equity of redemption from the prior lien or mortgage, and not of the entire property; ...
55 Am.Jur.2d Mortgages § 571 (1971). “Since a senior mortgagee’s interest cannot be affected by an action to foreclose a junior lien, it follows that an attempt to join him as a party to such an action can be defeated through timely objection.” Osborne et al., Real Estate Finance Law § 7.14 (1979); 3 Powell on Real Property ¶ 463[6]. “A junior mortgagee’s security is the property subject to prior encumbrances. That, therefore, is all that can be sold when he forecloses his lien, ...” Osborne at § 7.14.
If the phrase “mortgaged premises” meant unencumbered fee interest, the junior mortgagee would be required to try to force the foreclosure of superior mortgages, which he cannot do or, as Marx argues, forego a deficiency judgment against the mortgagor. Even where superior mortgagees desire foreclosure of their mortgages in the same proceeding, they must join in the foreclosure and bid in at the sale. Even then, their right to foreclose depends upon default existing in their respective mortgages.
*314In the amended judgment the trial court properly fixed the fair and reasonable values of the “mortgaged premises” as the value of Marx’s equity in each piece of property. At the second judicial sale, Sinclair bid approximately ten dollars above these amounts. The trial court found Sinclair adhered to the procedures required under the statutes and was entitled to a deficiency judgment. Under South Dakota foreclosure law, Sinclair would take Marx’s interests, subject to the redemption period and the prior mortgages. At the end of the redemption period, Sinclair would be vested with the title Marx held, subject to the prior encumbrances.
I believe this interpretation of “the fair and reasonable value of the mortgaged premises” is the only logical reading of SDCL 21-47-16. First, this interpretation ensures that the purpose of the deficiency judgment statutes, preventing unjust enrichment on the part of mortgagees, is fulfilled. Second, it is consistent with the general rule that junior mortgagees who foreclose are powerless, and in fact unable, to effect a foreclosure of a senior mortgagee’s lien.
Any other interpretation is not only “absurd” and “antique,” as conceded by the majority, but inequitable to present mortgagees, such as Sinclair, and future mortgagors, who will be unable to borrow against partially encumbered property. Finally, the majority opinion says Sinclair, “and others similarly situated, must look to the legislature, rather than to this court for relief.” Why? Why hide behind the legislature — ostrich like — when the solution is readily available by a reasonable interpretation of the legislative act.
I would affirm the trial court in all respects and hold that Sinclair was properly granted a deficiency judgment.
For all of the foregoing reasons I respectfully dissent.
I am authorized to state that WUEST, C.J., joins in this dissent.

 The majority refers to Webster’s Dictionary definition of the term “premises" in reaching their interpretation. This reference is not helpful in construing SDCL 21-47-16 as it ignores the word "mortgaged,” which gives meaning to the term "premises” within the context of the statute. A fair reading of SDCL 21-47-16 requires that "mortgaged premises” be read together. The majority’s assertion that the plain meaning of the phrase can be ascertained by reference to the isolated word "premises” is a distortion of the statute.