Court Opinion

ID: 9594870
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:33:34.003821+00
Date Added: 2024-06-11T18:01:25.025453
License: Public Domain

BRYNER, Justice, Pro Tern.,
dissenting.
In the present case, FedAlaska, the holder of a second mortgage, purchased the property secured by the mortgage at a nonjudicial foreclosure sale conducted by the holder of the first mortgage; it then immediately resold the property for a sum that was entirely sufficient to satisfy the amount due on Adams’ promissory note. It is wholly unrealistic, under these circumstances, to view FedAlaska’s purchase and sale as being unrelated to the repayment of Adams’ promissory note, and it seems strikingly unfair to allow FedAlaska to sue and recover separately on the underlying obligation.
In a typical real estate mortgage and loan transaction, the fair market value of the mortgaged property serves to protect the legitimate interests of both borrower and lender. On the one hand, the lender is protected against default by the right of foreclosure and sale. On the other hand, the borrower may reasonably look to the value of the mortgaged property for protection against catastrophic financial loss in the event of default. Our property code seeks to promote the legitimate interests of both borrower and lender by striking a careful balance between the lender’s right to recover the property in the event of a default and the borrower’s right to receive the benefit of the value of the property upon its foreclosure.
The rule adopted by the court today effectively upsets this balance. It allows junior lienholders to do indirectly that which would be prohibited if done directly. Had FedAlaska nonjudicially foreclosed on and sold the secured property, it could not have sued Adams on the underlying promissory note. See AS 34.20.100. The cost of giving junior lienholders this right will inevitably be a significant reduction in the ability of borrowers to rely on the fair market value of their property as protection in the event of a default. This cost could readily be avoided, without significant impairment to the legitimate interests of junior lien-*1045holders, by following the California1 and Nevada2 cases.
The majority of the court declines to do so, yet none of the reasons it relies on is convincing. Differences between the statutory scheme in Alaska and those in California and Nevada do not militate against the approach taken in those states. To the extent that Alaska’s property laws differ in any relevant way, they appear to be more protective of borrowers’ rights than are the laws of California and Nevada. Statutory differences thus hardly justify rigid and inflexible adherence to a rule that would in effect permit double recovery by lenders. Contrary to the view expressed in the majority’s opinion, this case presents no unusually difficult problem of statutory construction. The “judicial gloss” involved in following the California and Nevada cases appears to be no more “cumbersome” than a multitude of comparable glosses routinely relied on by this court — and any appellate court, for that matter — in the usual course of performing its duty to determine the scope and meaning of statutory language. Nor is the concept of fair market value so novel or complex as to be unworkable in the absence of express statutory implementation.
In short, I believe that the majority’s inflexible adherence to an unfair rule is both unnecessary and ill-advised. Accordingly, I disagree with the court’s opinion. I would instead follow the approach taken by the courts of both California and Nevada — an approach that seems eminently sensible. While I would not altogether bar the holder of a second mortgage from recovering on the underlying obligation after electing to buy the secured property, I would permit recovery only to the extent that the fair market value of the secured property at the time of purchase is inadequate to cover the amount due on the obligation.

. See Walter E. Heller Western, Inc. v. Bloxham, 176 Cal.App.3d 266, 221 Cal.Rptr. 425 (1985).

. See Carrillo v. Valley Bank of Nevada, 734 P.2d 724, 725 (Nev.1987).