Court Opinion

ID: 9704037
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:19:46.483391+00
Date Added: 2024-06-11T18:21:55.220305
License: Public Domain

TEIGEN, Judge
(dissenting).
It is my opinion that not only have the majority misconstrued that portion of Section 32-19-07, N.D.C.C., which they purport to analyze for the purpose of determining legislative intent, but they have omitted from their analysis a very important portion of the statute. In my opinion a proper construction of the language contained in Section 32-19-07, N.D.C.C., and the sections to which it refers, compel an opposite conclusion than that reached by the majority. Therefore I must dissent.
Section 32-19-07, N.D.C.C., provides, in part:
“Except as otherwise provided in sections 32-19-04 and 32-19-06, neither before nor after the rendition of a judgment for the foreclosure of a real estate mortgage or for the cancellation or foreclosure of a land contract made after July 1, 1951, shall the mortgagee or vendor, or the successor in interest of either, be authorized or permitted to bring any action in any court in this state for the recovery of any part of the debt secured by the mortgage or contract so foreclosed. It is the intent of this section that no deficiency judgment shall be rendered upon any note, mortgage, or contract given after July 1, 1951, to secure the payment of money loaned upon real estate or to secure the purchase price of real estate, and in case of default the holder of a real estate mortgage or land contract shall be entitled only to a foreclosure of the mortgage or the cancellation or foreclosure of the contract except as provided by sections 32-19-04 and 32-19-06." [Emphasis added.]
The majority in their interpretation of Section 32-19-07, N.D.C.C., have completely ignored the word “before” and the clause “in case of default the holder of a real estate mortgage or land contract shall be entitled only to a foreclosure of the mortgage or the cancellation or foreclosure of the contract except as provided by sections 32-19-04 and 32-19-06.” They have chosen to interpert this section to be applicable only in the event of foreclosure. In other words, under the majority interpretation, it requires the commencement of a foreclosure action to activate the provisions of the statute, but before foreclosure the statute is dormant and any action may be brought to enforce recovery of the debt secured by a real estate mortgage or land contract. Their construction completely ignores the important provisions of the statute set forth above and violates the cardinal rule of construction of statutes which provides that, in construing a provision of a statute, effect is to be given to the whole statute and the courts, if possible, will construe it and give meaning to every part of the same rather than adopt a construction which would make part of the statute meaningless and of no effect. This rule has been supported by many cases of this court. Brenna v. Hjelle, 161 N.W.2d 356 (N.D.1968); Wallentinson v. Williams County, 101 N.W.2d 571 (N.D.1960); State v. E. W. Wylie Co., 79 N.D. 471, 58 N.W.2d 76 (1953); Ophaug v. Hildre, 77 N.D. 221, 42 N.W.2d 438 (1950).
Section 1-02-05, N.D.C.C., provides:
“When the wording of a statute is clear and free of all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit.”
*129In my opinion Section 32-19-07, N.D.C.C., in clear and unambiguous language, provides that the holder of a real estate mortgage or land contract, in case of default, shall be entitled only to a foreclosure and that neither before nor after the foreclosure shall the mortgagee or vendor be authorized or permitted to bring any action in any court of this state for the recovery of any part of the debt secured by the mortgage or the contract, except for the deficiency as limited by Sections 32-19-04 and 32-19-06, N.D.C.C.
The historical background of this law also confirms my construction of the statute. Section 8100, Compiled Laws of 1913, provided that, in foreclosure actions, the court was empowered to direct the issuance of an execution for the balance that might remain unsatisfied after applying the proceeds of a mortgage foreclosure sale. This section was amended by Chapter 1S5, Session Laws of 1933, to provide that following a foreclosure of a mortgage “the court shall have no power to render a deficiency judgment.” This enactment was construed in Burrows v. Paulson, 64 N.D. 557, 254 N.W. 471 (1934), as merely to deprive the court of power to enter a deficiency judgment as an incident to a foreclosure and to allow the mortgagee to proceed at law in a subsequent action for the collection of that portion of the debt secured by the mortgage which had not been paid by the fruits of the foreclosure sale. Following Burrows, the Legislature amended the statute by the enactment of Chapter 159, Session Laws of 1937, and provided in Section 1 that in any action for the foreclosure or satisfaction of a real estate mortgage or the cancellation or foreclosure of a land contract, entered into after July 1, 1937, “the Court shall under no circumstance have power to render a deficiency judgment for any sum whatever” and, by Section 2, prohibited all actions for the collection of the debt except by foreclosure or cancellation. Section 2 provided:
“That neither before nor after the rendition of the judgment and decree [for foreclosure or cancellation] herein provided for, shall the mortgagee or contract holder, or their .successors [in] interest, be authorized or permitted to bring any action in any Court in this State for the recovery of any part of the debt secured by said mortgage or contract so foreclosed.”
Section 3 stated that it was the legislative intent to provide by this Act that there shall be no deficiency judgments rendered upon notes, mortgages or contracts given to secure the payment of money loaned upon real estate or to secure the purchase price of real estate and that, in case of default, the holder of a real estate mortgage or land contract shall only be entitled to a foreclosure or a cancellation, and admonished the courts that “no Court shall place any other construction upon this Act.” Thus Chapter 159, Session Laws of 1937, made the holding in Burrows inapplicable to mortgages or land contracts entered into after July 1, 1937.
The present law, construed in this case, was enacted in 1951 (Ch. 270, S.L. 1951), amends the previous statutes, and allows deficiency judgments, but limits them to an amount not exceeding the difference between the mortgage debt and the fair value of the mortgaged premises, and continues in effect the prohibition against other actions for the recovery of any part of the debt either before or after foreclosure. It was made operative as to real estate mortgages and land contracts entered into after July 1, 1951.
The 1951 enactment has been construed by this court in three decisions. In Bank of Killdeer v. Fettig, 129 N.W.2d 365 (N.D.1964), we held that the holder of a note secured by both a chattel and a real estate mortgage is entitled to foreclose the chattel mortgage without first foreclosing the real estate mortgage, and without reference to it. The rationale in that decision was that the statute does not relate in any manner to the foreclosure of a chattel mortgage nor prohibit a person from using either his personal property or his real property, or both, as security for a loan.
*130The next case was Loraas v. Connolly, 131 N.W.2d 581 (N.D.1964), decided about four months after Bank of Kildeer v. Fettig, supra. In Loraas we held that these statutes bar an action against the mortgagor upon a debt secured by a real property mortgage, except one for foreclosure. In paragraph 4 of the syllabus we said:
“Under the provisions of the statutes of this State limiting deficiency judgments and suits upon debts secured by real property mortgages only, a mortgagee of real property is barred from maintaining an action against the mortgagor upon the secured debt or any part thereof except in connection with, or subsequent to, a foreclosure of the mortgage. (Sections 32-19-07, 32-19-04, 32-19-06 NDCC)”
The third case is entitled McKee v. Kinev, 160 N.W.2d 97 (N.D.1968). In that case we held that the holder of a land contract (the above statutes are equally applicable to land contracts or real estate mortgages) may not ignore the contract and bring an action for a personal money judgment for the balance due and owing on the contract. In paragraph 4 of the syllabus we said:
“A vendor or the successor in interest of a contract for sale of real estate is barred from maintaining an action for a personal money judgment under the statutes of this State limiting deficiency judgments and suits upon moneys owing secured by a land contract except in connection with, or subsequent to, the cancellation or the foreclosure of a land contract. Secs. 32-19-06 and 32-19-07, N.D.C.C.”
In referring to Sections 32-19-06 and 32-19-07, N.D.C.C., and particularly the language contained in the latter section pertaining to legislative intent, we said in McKee :
“The language employed leaves no doubt as to the mandate of the Legislature in enacting this statute. This court cannot invade the province of the Legislature when the Legislature has spoken so clearly. Sec. 1-02-05, N.D.C.C. Any relief which an aggrieved party may desire to derive by remedial legislation must of necessity be secured from the Legislature, in which such authority is vested pursuant to the Constitution of this State.” McKee v. Kinev, 160 N.W.2d 97, 101.
The effect of the majority opinion is to overrule McKee and Loraas.
The majority correctly state that the provisions of Section 32-19-07, N.D.C.C., were not considered in our decision in Skinner v. American State Bank, 189 N.W.2d 665 (N.D.1971). The reason, however, is that Section 32-19-07, N.D.C.C., was not brought to our attention in the arguments, the briefs, or from our own research. I think that we made a mistake in Skinner and should now acknowledge that mistake. In Skinner we followed Fargo Building & Loan Ass’n v. Rice, 66 N.D. 100, 262 N.W. 345 (1935), decided prior to the enactment of Chapter 159, Session Laws of 1937, which was the first enactment prohibiting the mortgagee or contract holder, or his successors in interest, from bringing any action in any court in this state for the recovery of any part of the debt secured by a real estate mortgage or land contract, except by foreclosure.
Under the circumstances of this case, it is my opinion that the assignment of rents and profits contained in the mortgage is a part of the security for the mortgage debt and may be invoked upon default of the conditions of the mortgage by the service of a notice upon the tenant of the mortgaged property, informing him that the mortgage is in default and that the mortgagee is invoking the assignment of rents provision in the mortgage. The service of such notice will impress the mortgage lien upon the future rents. ■ Under the limitations contained in Sections 32-19-06 and 32-19-07, N.D.C.C., the mortgagee, in order to enforce his lien upon the rents, must commence an action to foreclose upon his security. In this case, East Grand Forks *131Federal Savings and Loan Association, commenced an action in law for a personal money judgment to recover a part of the debt secured by the real estate mortgage under the assignment of rents provision contained in the mortgage, without asking for foreclosure. In my opinion this cannot be maintained as the court, under the statute, is prohibited from granting the relief prayed for in the absence of a prayer for foreclosure. However, it would appear to me that there would be no reason why, in a foreclosure suit, the mortgagee could not reach the rents which had accumulated subsequent to the time the mortgagee invoked the assignment of rents provision contained in the mortgage as additional security described in the mortgage. The debtor, however, would be entitled to the possession of the real estate, and the rents and the use and benefits thereof, from the date of the foreclosure sale until the expiration of the period of redemption.
For the reasons stated herein, I would affirm the district court judgment.
KNUDSON, J., agrees with the dissent of TEIGEN, J., and would affirm the judgment of the district court.