Court Opinion

ID: 9687830
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:51:04.508859+00
Date Added: 2024-06-11T18:18:32.227572
License: Public Domain

TEIGEN, Judge
(concurring in part and dissenting in part).
This case is one of first impression in this court. Although several cases have been decided interpreting the so-called no-deficiency judgment law, no cases have involved an action at law by a mortgagee or a seller under a contract for deed against a person other than a mortgagor or a purchaser on contract, or their successors or assigns. It is my opinion that Sections *86532-19-06 and 32-19-07, N.D.C.C., have no application in such cases.
Chapter 155, Session Laws of 1933, and Chapter 159, Session Laws of 1937, prohibited deficiency judgments in foreclosure actions. The 1933 Act related only to the foreclosure of mortgages, but the 1937 Act related also to the foreclosure and cancellation of land contracts. Both Acts specifically provided that nothing contained therein should be construed to postpone or affect any remedy the creditor may have against any party personally liable for the “mortgage debt other than the mortgagors and their grantees” (1933 Act), and for “the debt other than the contractor or purchaser and their successors in interest” (1937 Act).
The Acts relate only to foreclosure actions and proceedings for the cancellation of land contracts. This is made clear by the titles of these two Acts, as adopted by the Legislature. The title of the 1933 Act states:
“An Act to amend and re-enact Section 8100 of the Compiled Laws of North Dakota for the year 1913, relating to the foreclosure of mortgages, and what judgments may be entered therein.”
The title to the 1937 Act states :
“An Act relating to the foreclosure of real estate mortgages and land contracts, providing what the judgment and decree shall contain, and prohibit any deficiency judgments.”
These Acts clearly did not prohibit a secured creditor from pursuing any remedy available to him against any person personally liable for the debt who was not the mortgagor or purchaser under contract, or their assigns or successors in interest.
In 1943 the Legislature adopted the North Dakota Revised Code of 1943. The current law was incorporated in this Code. The Code assigned section numbers to various parts of the law, and arranged them in chronological order. The purpose of the recodification was to incorporate all amendments and statutes, to harmonize the statutory declaratory laws as far as possible, and to revise, wherever necessary, so as to make a perfect, complete and consistent Code.
The exception -to the prohibition against deficiency judgments, contained in the -1937 Act, was incorporated as a part of Section 32-1903, N.D.R.C.1943. This was suggested by the Code revisers, who added the exception to Section 8102 of the 1925 Supplement to the Compiled Laws of 1913, which had not been amended, and carried the combined sections into the 1943 revision. The language of Section 8102 was modified in this revision so as to comply with the law as it had been changed by the enactment of the no-deficiency judgment law. This was accomplished by merely deleting words referring to the mortgagor. The recommended revision was adopted by the Legislature when it adopted the N.D.R.C. of 1943, and this language was incorporated in the North Dakota Century Code when it was adopted by the Legislature in 1959.
The Code reviser’s notes clearly state the purpose as follows:
“This section has been revised in conformity with S.L.1937, c. 159, which permits deficiency judgments as against third parties but not against the mortgagor.”
In making this revision the Code revisers omitted certain words referring to the mortgagor and substituted other words for clarity. In showing the change, the parenthesized words in the following quote are new words and the bracketed words were omitted:
“If the mortgage debt is secured by the obligation, or other evidence of debt, (of) [or] any person other than the mortgagor, the plaintiff may make such other person a party to the action and the court may render judgment for the balance of (the) [such] debt remaining *866unsatisfied after a sale of the mortgaged premises[,] as [well] against such other person [as against the mortgagor,] and may enforce such judgment as in other cases by execution or other process. (Nothing elsewhere contained in this chapter shall be construed to postpone or affect any remedies the creditor may have against any person personally liable for the debt, other than the mortgagor or purchaser and the successors in interest of either.)”
Section 8102 of the 1925 Supplement to the Compiled Laws of 1913, as amended by-Chapter 159 of the Session Laws of 1937, and contained as Section 32-1903 of the N.D.R.C. of 1943, and adopted as Section 32-19-03 of the North Dakota Century Code.
Thus the Code revisers and the Legislature have expressed a clear intent to permit the creditor, in one action, to sue the mortgagor-debtor in rem for foreclosure, and any person other than the mortgagor, obligated for the debt, in personam in the same action, and that nothing contained in the chapter on foreclosure shall be construed to postpone or affect the creditor’s remedy in personam against such other person personally liable for the debt. Therefore I conclude that Sections 32 — 19— 06 and 32-19-07, N.D.C.C., are not applicable to that part of the action brought against the person personally liable for the debt, who is not the mortgagor or the purchaser, or the successors in interest of either.
A judgment for the recovery of a debt is in personam and is for the full amount of the debt. Technically, in such an action, there is no such thing as a deficiency judgment. A deficiency judgment is a judgment for a deficiency after the sale of mortgaged property, which secures the indebtedness and, according to Sections 32-19-06 and 32-19-07, N.D.C.C., is recoverable in a separate action in personam brought after the foreclosure sale. Sections 32-19-06 and 32-19-07, N.D.C.C., constitute a bar against an action in per-sonam against the mortgagor or contract purchaser except by a separate action which may be brought after the foreclosure, and then only for an amount as limited thereby.
A “deficiency judgment” has been defined as a judgment or decree for that part of a debt secured by mortgage not realized from the sale of mortgaged property. Gentry v. Hibbler-Barnes Company, 113 Ga.App. 1, 147 S.E.2d 31 (1966); Renard v. Allen, 237 Or. 406, 391 P.2d 777 (1964); Stretch v. Murphy, 166 Or. 439, 112 P.2d 1018 (1941); Phillips v. Union Central Life Ins. Co., 88 F.2d 188 (8 Cir. 1937); Bank of Douglas v. Neel, 30 Ariz. 375, 247 P. 132 (1926).
To further carry out the legislative intent not to burden a creditor with the prohibitions of the no-deficiency judgment sections of the chapter on foreclosure against other persons obligated who are not mortgagors or contract purchasers, the Legislature, in enacting Chapter 217 of the Session Laws of 1951, amended Section 32-1904, N.D.R.C.1943. In amending this section, the Legislature recognized that the creditor, before the commencement of an action in foreclosure, may have sought collection of the debt by an action at law from a person obligated other than the mortgagor or contract purchaser. It also approved this right by continuing the statute in force. Tt did so by re-enacting Section 8103 of the Compiled Laws of 1913, without change, and adding thereto the requirement that in a foreclosure the plaintiff shall state in his complaint whether he will, in a later and separate action, demand judgment for any deficiency which remains due after the sale of the mortgaged premises. This section is now contained as Section 32-19-04 in the North Dakota Century Code. I quote this section, as amended, showing within parenthesis the amendment.
“In an action for the foreclosure or satisfaction of a mortgage, the complaint *867shall state whether any proceedings have been had at law or otherwise for the recovery of the debt secured by such mortgage, or any part thereof, and if there have been, whether any and what part thereof has been collected. (The plaintiff shall also state in his complaint whether he will in a later and separate action demand judgment for any deficiency which remains due to him after sale of the mortgaged premises against every party who is personally liable for the debt secured by the mortgage.)”
This amendment is in harmony with the requirements of Section 32-19-03, N.D.C. C., which permits the court to render judgment for the balance of the debt remaining unsatisfied after the sale of the mortgaged premises against a person other than the mortgagor, but does not limit the amount of such judgment to the deficiency, as defined by Sections 32-19-06 and 32-19-07, N.D.C.C. This is so because the exception contained in Section 32-19-03, N.D.C.C., provides that the chapter shall not be construed to postpone or affect the remedies of the creditor against any person personally liable for the debt other than the mortgagor or purchaser, or their successors. As further evidence of the legislative intent that the full amount of the debt may be recovered from an obligated person not the mortgagor or purchaser, the Legislature did not amend Section 32-1905, N. D.R.C.1943. It was carried into the North Dakota Century Code without change. It provides :
“If it appears that any judgment has been obtained in an action at law for the moneys demanded by the complaint, or any part thereof, no proceedings shall be had in the foreclosure action, unless an execution against the property of the defendant in such judgment has been issued and the sheriff shall have made return that the execution is unsatisfied in whole or in part and that the defendant has no property out of which to satisfy such execution.” Section 32-19-05, N. D.C.C.
Thus there is no prohibition against a secured creditor suing a person other than the mortgagor or contract purchaser, who is obligated for the debt, for the full amount of the debt and enforcing collection thereof, and allowing such person’s property to be sold by the sheriff on execution to satisfy the judgment. In fact, this section requires that before any proceedings shall be had in the foreclosure the sheriff must determine that such other person has no property left out of which the sheriff can satisfy the execution. It requires the creditor to exhaust his remedy against such other person before he may proceed in foreclosure in all cases where the creditor has elected to sue such other person on the debt before commencing foreclosure.
For these reasons, it appears clear to me that the statutes have preserved the right of a secured creditor to proceed in an action at law to enforce payment of the debt against any person obligated thereunder, who is not the mortgagor or purchase contractor, or their successors, or, if he elects, he may institute an action in foreclosure, naming such other person as a codefend-ant and, after the sale of the mortgaged premises, he is entitled to a deficiency judgment against such other defendant for the balance of the debt, if any, without regard to the limitations contained in Sections 32-19-06 and 32-19-07, N.D.C.C.
For the reasons aforesaid I agree with the opinion of the majority, except as to that portion thereof limiting recovery to the difference between the fair value of the mortgaged property, as determined by a jury, and the debt plus the costs of the action.
I find Sections 32-19-06 and 32-19-07, N.D.C.C., are limited in their application to a foreclosure or cancellation action and, as to those, they apply only to the mortgagor or the contract purchaser, or their successors or assigns. In my mind, these sections are not applicable as limitations to the liability of other obligated persons for the debt.