Court Opinion

ID: 6906813
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:01:44.102808+00
Date Added: 2024-06-11T16:06:22.856917
License: Public Domain

BENNETT, J.,
Specially Concurring. — The facts in this case have already been fully stated in the opinion of Chief Justice McBride and in the opinions of Justices Burnett and Harris.
I concur in the conclusion and in the general reasoning of former Justice Mooke, as adopted in the opinion of the Chief Justice.
It seems to me that Section 426, L. O. L., clearly intended to make the foreclosure of the purchase-money mortgage satisfy the debt, without regard to the amount for which the property was sold, and that it was intended to prohibit a judgment for any deficiency, either in the foreclosure proceeding or any other proceeding.
I also think the title to the act, by which Section 426 was originally enacted, which was
“To abolish deficiency judgments upon the foreclosure of mortgages to secure the unpaid balance on the purchase price of real property,”
*21—was sufficiently broad to come within the provisions of Section 30, Article IV, of the Oregon Constitution.
I think the entire satisfaction of the debt and the prohibition of a deficiency judgment, either in the foreclosure proceeding or in an action at law, was “properly connected” within the meaning of that constitutional provision, with the subject indicated in the title.
It is urged that there was no deficiency judgment, under the provisions of our Code, prior to the adoption of Section 426, supra, and that, therefore, the act of the legislature abolishing deficiency judgments, found nothing to abolish, and was nugatory and meaningless. I think such a construction of a solemn act of the legislature should not be accepted, unless the argument therefor is very cogent and compelling.
It is reasoned that, according to the ancient practice, a judgment for the deficiency was a separate judgment, entered after the return of the execution upon the mortgage foreclosure, and that our judgment under Section 422, L. O. L., prior to the adoption of Section 426, was a general judgment against the defendant for the whole amount of the debt, and was not therefore a ‘ ‘ deficiency judgment. ’ ’
It is argued that the phrase “deficiency judgment” should be defined as a special judgment for a fixed amount, entered after the return on the execution sale, after fixing the exact amount of the deficiency. It seems to me we should not place too much importance upon a mere arbitrary definition of the term. The practice, as to personal judgments for the deficiency on a mortgage foreclosure, has not been uniform in the different states for a great many years. In some states the old practice was preserved, and the personal judgments were not entered until after the mortgaged property had been sold and the proceeds applied *22upon the debt. In others, a personal judgment was entered for the whole sum in the first instance, but execution against the defendant’s property generally, could not be issued until it was specially ordered by the court; and this special order would only be made upon a showing, after the sale of the property covered by the mortgage. In still others, as in our own state, a personal judgment for the whole sum was entered at the time of the adoption of the foreclosure decree; but execution was suspended until the mortgaged property was sold, and then the amount received was applied upon the debt and execution issued as a matter of course for the balance remaining unpaid: 3 Jones on Mortgages (7 ed.), § 1709.
It seems to me that all of these are deficiency judgments, one as much as the other, since they all authorize a general execution against the defendants, for the deficiency after the mortgaged property had been sold and the money applied, and for that alone.
The words “deficiency judgment” have not, as far as I have been able to ascertain, ever attained the dignity of a dictionary definition. Neither do they seem to have been very often defined by the courts.
In Goldsmith v. Brown, 35 Barb. (N. Y.) 484, 492, there was a covenant to pay the deficiency after a foreclosure and sale, the court saying:
“This word ‘deficiency,’ as used in this contract, has a technical meaning, and signifies that part of the debt or sum of money which the mortgage was made to secure, and which is not realized and collected from the subject mortgaged.”
In Bailey v. Block, 104 Tex. 101, 103 (134 S. W. 323, 325), the Supreme Court of Texas, after tracing all the different changes in the practice in regard to judgments for a deficiency, proceeds:
*23“To all of these practices one prominent requirement is common, and that is that the foreclosure sale is to be made, the proceeds applied and the deficiency thus mathematically ascertained before any proceeding against the property of the debtor other than that mortgaged, is allowed.”
It seems to me that a deficiency judgment may fairly be defined as any judgment for the deficiency after the sale of the mortgaged property, and which can be enforced generally against the property of the defendant, after the receipts of the mortgage foreclosure have been applied.
And it seems to me that any such judgment would be equally a deficiency judgment, whether it was entered before or after the return of execution, and whether it was in form a general judgment for the whole sum, to be reduced by the application of the proceeds from the sale under the mortgage, or a specific judgment for the particular amount left unpaid, entered after the foreclosure sale.
It is true that under the law, as it stood prior to the adoption of Section 426, L. O. L., Section 422 of the Code provided that in addition to a decree of foreclosure the court should, in case of a promissory note, etc., “decree the recovery of the amount of such debt against such person or persons, as the case may be, as in the case of an ordinary decree for the recovery of money.” That is still the law as to ordinary foreclosures other than purchase price mortgages.
But that section must be construed together with Section 425, which provides that an execution issue in the first instance, for the sale of the property covered by the mortgage, and that when the property covered by the mortgage is not sufficient to pay the entire debt,
*24“the decree may be enforced by execution as in ordinary cases.”
This latter section is, of course, read- into all personal judgments on the foreclosure of mortgages, and when the two sections are construed together, we have a judgment in form against the defendants. for the whole sum, and also a judgment or decree for the sale of the mortgaged property; but the judgment against the defendants personally can only be enforced after the mortgaged property has been sold and then only for the amount of the deficiency.
To my mind, this is just as much a deficiency judgment as if the word “deficiency” was written into the decree, and that decree was entered after the sale of the property under the mortgage.
We think this is what has always been understood in this state as a deficiency judgment, and that it is the deficiency judgment prohibited by Section 426, L. O. L.
This view seems to be recognized by this court in Stewart v. Templeton, 55 Or. 364 (104 Pac. 978, 106 Pac. 640), in which it is said:
“It is insisted, however, that, whatever view may be taken, a deficiency judgment cannot be had against the defendant; but, since it is not disclosed that the notes were given for the purchase price of the property mortgaged, we fail to see upon what grounds this contention can be upheld.”
In Myer v. Beal, 5 Or. 130, the court says.
“The correct interpretation of this statute is, that when there is a covenant for the payment of a certain sum in the mortgage the remedy shall be against the land, and at tlje same time a personal judgment may be obtained to collect any amount which may remain unpaid after the proceeds of the sale of the mortgaged *25premises have been applied to the extinguishment of the judgment
It is true that under the doctrine announced in Page v. Ford, 65 Or. 450 (131 Pac. 1013, Ann. Cas. 1915A, 1048, 45 L. R. A. (N. S.) 247), the holder of a purchase price note may still proceed at law upon the note and disregard the mortgage; but in doing so he waives his mortgage security, and I do not think that a court of equity would or ought to permit him to evade the statute by taking a personal judgment and then after-wards proceed in a court of equity to foreclose his mortgage.
I think it is a mistake to assume that he would receive the same advantages by proceeding at law on the note as he would by a foreclosure of the mortgage. It is true that he could have a general execution on his judgment against all of the property of the defendant, which might be levied upon the mortgaged property, the same as the remainder of defendant’s property; butVe may assume that the very purpose of taking a mortgage is to obviate some near or remote danger of the insolvency of the defendant. If it was certain that the debtor was solvent and would remain solvent no one would think of taking a mortgage. If a party proceeds on the note generally he may, when he gets his judgment and execution, find the property attached by other creditors; or a prior judgment of other creditors may have become a lien thereon; or the property may have been transferred or mortgaged by the debtor, or the debtor may claim it as a homestead exemption.
In nine eases out of ten, and probably in ninety-nine cases out of a hundred, the creditor would rather proceed on the mortgage, even if it extinguished his debt to do so, than to waive his mortgage and commence an *26action at law upon the promissory note. It was no doubt the insolvent, or nearly insolvent, debtor the legislature was particularly trying to protect, and not the one who had plenty of means outside of the mprtgaged property. It might be of but little advantage to the creditor to take a personal judgment over and above his mortgage against an insolvent or nearly insolvent debtor; and yet such a judgment might be .a millstone hanging around the neck of such a debtor, discouraging thrift and industry, and leaving no room or hope for future prosperity.
It may be true, that if the mind of the legislature had been directed toward possible actions at law against a purchase price debtor upon the promissory note, that it would have prohibited such action also. The fact that it did not do so and did not complete a perfect scheme for the protection of the debtor under such circumstances, ought not to' take away such relief and protection as has been given by the act.
Under the doctrine of Page v. Ford, 65 Or. 450 (131 Pac. 1013, Ann. Cas. 1915A, 1048, 45 L. R. A. (N. S.) 247), the creditor still has his option to proceed on the mortgage to foreclose, or to proceed on the promissory note at law; but the legislature had a perfect right to say that he could not do both.
As to future contracts and in pursuance of what it considers a correct public policy the legislature has a right to prohibit any contracts which may be injurious to the general public good, or it may stop with rendering such contracts unenforceable. This has been too often held to be any longer questioned. The usury law prevents the contract of the parties for a greater than a given rate of interest. Again it is generally held that a party cannot make a contract in advance to waive his right of redemption or his privilege of ex-*27eruption. Hundreds of other illustrations could be cited but these are enough.
I think the statute should be literally construed in the interest of the purpose intended by the legislature. It is true that arguments can be adduced pro and con, as to whether or not such a law would be in the interest of a good public policy; but the very fact that there are such arguments both ways, and considerations to be weighed on each side, makes the question preeminently one for the legislature. And it having declared what it believes to be public policy, in regard to the matter, we must accept that as good public policy and liberally construe the law for the purpose of carrying out its intention
Johns, J., concurs.