Court Opinion

ID: 9687829
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:51:04.502714+00
Date Added: 2024-06-11T18:18:32.224318
License: Public Domain

*858VOGEL, Judge.
This appeal is from a summary judgment of dismissal of plaintiff’s complaint seeking recovery on a promissory note.
The facts are not in dispute. On March 21, 1968, four persons, Clair R. Nelson and his wife, Marjorie A. Nelson, and Claire Ihringer and his wife, Delores Ihringer, executed a promissory note in the amount of $7,500, payable to First State Bank of Cooperstown. On the same date, Clair R. Nelson and Claire Ihringer, without the signatures of their wives, executed and delivered to the bank a real estate mortgage as security for the debt evidenced by the promissory note. Thereafter, several renewal notes were executed and delivered by all four signers of the original note. No part of the debt or interest was paid, and on March 23, 1972, the bank commenced this action on the note alone against Delores Ihringer as the sole defendant.
She interposed the provisions of the sta-utes of this State limiting deficiency judgments in suits upon debts secured by real property mortgages as an affirmative defense, and moved for a summary judgment of dismissal. The trial court granted her motion, and the bank has appealed.
The question before us is whether, and to what extent, the laws of this State regulating deficiency judgments apply to an action against a nonmortgagor debtor on a debt which is secured by a mortgage when foreclosure of the mortgage is not sought.
We agree with the trial court that the statutes in question apply to this case, but hold that they do not forbid the action here involved. Instead, they require supplementary proceedings by a jury to determine the amount of recovery. We therefore reverse and remand.
The explanation of our reasons requires a long analysis of a colorful chapter of North Dakota history. Some of that history is given in East Grand Forks Federal Savings & Loan Assn. v. Mueller, 198 N.W.2d 124 (N.D.1972), particularly in Judge Teigen’s dissent, and in Bank of Killdeer v. Fettig, 129 N.W.2d 365 (N.D.1964).
The first anti-deficiency judgment law was passed in 1933. By Chapter 155, 1933 Session Laws, the Legislature added to a re-enactment of prior law as to judgments of foreclosure this clause:
“ . . . and the court shall have no power to render a deficiency judgment.”
At the time Chapter 155 was adopted, the Nation was in the grip of the Great Depression and in addition North Dakota was devastated by drought and low erices. That year, the per capita personal income in the United States was $375, but in North Dakota it was only $145. Seventy-eight per cent of Federal Land Bank loans were delinquent. Elwyn B. Robinson, History of North Dakota, pp. 399-400 (1966). It was the fourth-driest year of record. Ibid., p. 398.
Shortly after the Legislature passed the first anti-deficiency judgment law, Governor Langer, in April 1933, issued the first of his Executive Moratoria against foreclosures and evictions. Bruce Nelson, Land of the Dacotahs, p. 311 (1946).
In Burrows v. Paulson, 64 N.D. 557, 254 N.W. 471 (1934), this court construed Chapter 155, 1933 Session Laws, to merely prohibit deficiency judgments as part of foreclosure actions, but to permit separate actions for deficiencies.
The Legislature obviously was upset by this interpretation, because in 1937 it passed a new statute, Chapter 159, 1937 Session Laws, which provided that—
“ . . . the Court shall under no circumstances have power to render a deficiency judgment for any sum whatever.”
Section 2 of Chapter 159 provides:
“That neither before nor after the rendition of the judgment and decree herein provided for, shall the mortgagee or contract holder, or their successors *859[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.”
Then', in language which surely is unique, the Legislature expressed its displeasure with the interpretation of the 1933 statute in Burrows v. Paulson, supra, and stated its intention as to future interpretation of the 1937 statute in the following-language, found in Sections 3 and 4 of Chapter 159:
“ § 3. Intent. Interpretation.] It is the intent of the legislature to provide by this Act that hereafter there shall be no deficiency judgments rendered upon notes, mortgages, or contracts given to secure the payment of money loaned upon real estate or given to secure the purchase price of real estate, and in case of default the holder of a real estate mortgage or land contract shall only be entitled to a foreclosure or a cancellation of the mortgage or contract and no Court shall place any other construction upon this Act.
“ § 4. Saving Clause.] If the Courts declare this Act unconstitutional in so far as it relates to mortgages or contracts in existence at the time of taking effect of the Act, they shall never consider its constitutionality with reference to mortgages or contracts entered into after the date when this Act becomes effective.”
The invalidity of Section 4 is plain, in view of the separation of powers of the Judiciary and the Legislature, but the Legislature certainly made abundantly clear its intention to abolish deficiency judgments, in language suggestive of a constitutional confrontation between Legislature and Judiciary.
Incidentally, both houses of the Legislature passed Chapter 159 within a few weeks after President Roosevelt had sent to the Congress his Court-packing message, on February 5, 1937, indicative of some parallel dissatisfaction with the United States Supreme Court.
It is worth noting that in 1937 the national financial depression and the even worse agricultural depression in North Dakota raged unabated. While the per capita income in the Nation was at a low ebb, the North Dakota per capita personal income was only 47 per cent of the national average. Between 1932 and 1937, the unpaid general property taxes in North Dakota amounted to more than $34,000,000. At the end of 1936, three-fourths of the taxes in the southwestern counties of the State were delinquent. Robinson, op. cit., p. 400.
When the Code revisers recodified North Dakota law in preparation for the issuance of the Revised Code of 1943, they “omitted as surplusage” the saving clause quoted above and “the provisions instructing the court how to construe the act,” i. e., Sections 3 and 4 of Chapter 159, 1937 Session Laws. They added this novel proviso to the reviser’s note:
“If this revision has been properly done, the meaning is sufficiently clear that the court will have no difficulty construing it. If it is not properly done, the court, under the constitution, must construe it and the legislative assembly cannot limit that constitutional duty.”
In 1951, the Legislature further amended the anti-deficiency judgment law, putting it in substantially its present form in Chapter 32-19, N.D.C.C. The amendments were made by Chapter 217, 1951 Session Laws. It is common knowledge that these amendments were made because the Federal Land Bank, one of the principal lenders in the State, was refusing to make loans unless deficiency judgments were permitted. The response of the Legislature was to allow deficiency judgments under very limited circumstances, and then only for such sum as was determined by a jury, in a separate action, to be the difference between the fair value (not necessarily the then *860market value or the price at which the property was sold at foreclosure sale) and the amount of debt due after the foreclosure sale. The present statutes are found at Sections 32-19-04, 32-19-06, and 32-19-07, N.D.C.C.
These statutes were interpreted in a series of five decisions of this court: Liberty National Bank of Dickinson v. Daly, 96 N.W.2d 897 (N.D.1959); Bank of Killdeer v. Fettig, supra; Loraas v. Connolly, 131 N.W.2d 581 (N.D.1964); McKee v. Kinev, 160 N.W.2d 97 (N.D.1968); and East Grand Forks Federal Savings & Loan Assn. v. Mueller, supra.
In view of the uniquely clear and very outspoken declarations of intent of prior Legislatures, and in view of the language of the title to the 1951 Act quoted infra, it is doubtful that the legislators of 1951 failed to consider the possibility of suits against nonmortgagors liable on the mortgage notes. We therefore look to the new language of the 1951 statute for a determination of the meaning of the new legislation on this point, and, if the language is ambiguous, we look to the intent of the Legislature. The pertinent language of Chapter 217, 1951 Session Laws, now found in Sections 32-19-06 and 32-19-07, reads as follows:
“In any action for the foreclosure of a real estate mortgage or the cancellation or the foreclosure of a land contract, the court shall have the power to render judgment for the amount found to be due at the time of the rendition of said judgment, and the costs-of the action, and to order and decree a sale of the premises in such mortgage or contract described, or such part thereof as may be sufficient to pay the amount adjudged to be due and the costs of the action. The court shall have power to order and compel delivery of the possession of the premises to the purchaser at such sale, but in no case shall the possession of the premises so sold be delivered until after the expiration of one year from such sale, and the court shall direct, and the judgment shall provide, that during such one year period the debtor or owner of the premises shall be entitled to the possession, rents, use, and benefit of the real property sold. The court under no circumstances shall have power to render a deficiency judgment for any sum whatever against the mortgagor or purchaser, or the successor in interest of either, except as hereinafter provided. Where a note or other obligation and a mortgage upon real property have been given to secure a debt contracted subsequent to July 1, 1951, and the sale of the mortgaged premises has failed to satisfy in full the sum adjudged to be due and the costs of the action, the plaintiff may, in a separate action, ask for a deficiency judgment, if he has so indicated in his complaint, against the party or parties personally liable for that part of the debt and costs of the action remaining unsatisfied after the sale of the mortgaged premises. Such separate action for a deficiency judgment must be brought within ninety days after the sale of the mortgaged premises. The court, in such separate action, may render a deficiency judgment against the party or parties personally liable, but such deficiency judgment shall not be in excess of the amount by which the sum adjudged to be due and the costs of the action exceed the fair value of the mortgaged premises. In case the mortgaged premises sell for less than the amount due and to become due on the mortgaged debt and costs of sale, there shall be no presumption that such premises sold for their fair value. In all actions brought for a deficiency judgment and before any judgment can be rendered therein, the determination of the fair value of the mortgaged premises shall first be submitted to a jury at a regular term or to a jury impaneled for that purpose, and no deficiency judgment can be rendered against the party or parties personally liable unless the fair value of the mortgaged premises is determined by such *861jury to be less than the sum adjudged to be due and the costs of the action. Fifteen days’ notice of the time and place when or where such fair value of the mortgaged premises shall be so determined shall, in all cases, be given, as the court may direct, to the party or parties against zvhom personal judgment is sought. At such time and place such party or parties may offer evidence to show the fair value of the mortgaged premises even though they may not have otherwise appeared in the action for a deficiency judgment. Any deficiency judgment so obtained shall be enforced by execution as provided by law, except that no execution shall be enforced after three years from the date of the rendition of such deficiency judgment. The mortgagee or vendor or the successor in interest of either shall not be permitted or authorized either before or after the rendition of a judgment for the foreclosure of a real estate mortgage or the cancellation or the foreclosure of a land contract, if such mortgage or contract was made after July 1, 1951, 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 or canceled in excess of the amount by which such debt and the costs of the action exceed the fair value -of the mortgaged premises. Such fair value shall be determined by a jury in the same manner as the fair value is determined in cases where a deficiency judgment is sought in an action to foreclose the mortgage and such judgment shall be enforced by execution as provided by law except that no such execution shall be enforced after three years after the date of the rendition of such judgment.” [Emphasis supplied.] Sec. 32-19-06, N. D.C.C.
“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 between July 1, 1937, and 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 between July 1, 1937, and 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 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 supplied.] Sec. 32-19-07, N.D.C.C.
Section 32-19-06 provides that a mortgagee or vendor may bring a separate action after foreclosure for a deficiency judgment. It provides, in substance, that (1) the court has no power to enter a deficiency judgment against a mortgagor or purchaser except as permitted by 32-19-06; *862(2) if the mortgaged property is foreclosed and sold and a deficiency exists, the plaintiff may, if he has indicated in his complaint that he will do so, bring a separate action for a> deficiency judgment against the party or parties personally liable for that part of the debt; (3) in this separate action, the court may render judgment against the party or parties personally liable, but for only such amount as exceeds the fair value of the property, determined as the statute specifies; and (4) at the hearing to determine the fair value, fifteen days’ notice must be given to the party or parties against whom a personal judgment is sought, even though such persons have not appeared in the action for the deficiency judgment.
The language of the statute indicates a clear intention by the Legislature to require, if a deficiency judgment is desired, that an action separate from the foreclosure action be brought against non-mortgagor debtors as well as mortgagors. The use of the language relating to parties “personally liable” can have no other meaning.
The statute also covers the subject matter of separate nonforeclosure actions against nonmortgagors who are personally liable on the note. This matter is covered by the last two sentences of 32-19-06, and by the provisions of 32-19-07, quoted above. The last two sentences of 32-19-06 provide that neither the mortgagee nor vendor nor successor of either may bring any action in any court in this State for recovery of any of the debt secured by the mortgage or contract in excess of the fair value of the mortgaged premises, which is to be “determined by a jury in the same manner as the fair value is determined in cases where a deficiency judgment is sought in an action to foreclose the mortgage . . . ” This must mean that such separate actions can be brought without foreclosure but that recovery is limited to the same amount as if foreclosure had been had. To re-emphasize the point, 32-19-07 reiterates it by providing that neither before nor after cancellation or foreclosure may an action be brought to recover any part of the debt secured by the mortgage or contract so foreclosed, except as provided in Sections 32-19-04 and 32-19-06.
If the last two sentences of 32-19-06 were not intended to be so applied, they might as well have been omitted, since the statute would be complete without them.
The controversy between the majority and the minority in East Grand Forks Federal Savings & Loan Assn. v. Mueller, supra, as well as any doubt over the meaning of the anti-deficiency judgment law in situations such as we have here, arises from ambiguous language in the last two sentences of 32-19-06. On the one hand, the two sentences clearly provide that the mortgagee or vendor is not permitted “either before or after the rendition of a judgment” to bring an action for recovery of “any part of the debt secured,” but the language then goes on to refer to “the mortgage or contract so foreclosed or canceled,” which creates the ambiguity in cases such as we have here, where no foreclosure or cancellation is sued for.
The words “so foreclosed or canceled” doubtless derive from Section 2 of Chapter 159, 1937 Session Laws, which provides that “neither before nor after the rendition of the judgment . . . shall the mortgagee or contract holder, ... 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.” [Emphasis supplied.] While this language is ambiguous, the uniquely emphatic language of Sections 3 and 4 of Chapter 159, supra, resolves any doubt as to the 1937 legislative intent. In 1951, when the Legislature grudgingly permitted deficiency judgments on mortgages and contracts entered into after July 1, 1951, it adopted the language just quoted to provide, as to mortgages and contracts entered into prior to July 1, 1951, *863that “the court under no circumstances shall have power to render a deficiency judgment for any sum whatever against the mortgagor or purchaser [Sec. 32-1906, N.D.R.C.1943],” and to provide that “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 between July 1, 1937, and 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 [Sec. 32-1907, N.D.R. C.1943].” [Emphasis supplied.]
The same statute then goes on to make provisions as to mortgages and contracts entered into after July 1, 1951, using the language quoted above. We believe that the inclusion of the words “so foreclosed” was merely the inadvertent act of a draftsman or copyist who was mindful of the holding in Burrows v. Paulson, supra, that later deficiency actions were permissible, but who failed to realize that using these two words would create confusion and ambiguity as to actions on the debt without foreclosure. There could not be any inadvertence, however, in the language upon which we rely, to show the intention of the Legislature that deficiency judgments should not be permitted at all, except when a jury has found the value of the land to be less than the amount due. This intention of the Legislature is found first in the last two sentences of 32-19-06, which provide that the fair value is to be determined by the jury ‘in the same manner as the fair value is determined in cases where a deficiency judgment is sought in an action to foreclose the mortgage . ” This shows a clear intention to permit separate judgments only in such cases. The legislative intent is further shown in the same section, forbidding the bringing of “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 or canceled in excess of the amount by which such debt and the costs of the action exceed the fair value of the mortgaged premises.” The legislative intent is further shown in 32-19-07, providing that “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.” And it is shown by the fact that the last two sentences of 32-19-06 would be totally unnecessary if the Legislature had not intended to allow actions without foreclosure, but only after such a determination by the jury.
Most persuasive of all is the fact that the title of the bill passed by the Legislature plainly supports this interpretation. The title to the bill which became Chapter 217, 1951 Session Laws, read:

"A Bill

“For an Act to amend and reenact sections 32-1904, 32-1906, and 32-1907 of the North Dakota Revised Code of 1943, relating to foreclosures of mortgages; providing for deficiency judgments but limiting them to an amount not exceeding the difference between the mortgage debt and the fair value of the mortgaged premises; and prohibiting other suits except for the difference between the mortgage debt and the fair value of the mortgaged premises, and declaring an emergency.” [Emphasis added.]
The bill was the subject of much consideration by the Legislature, including at least two amendments both in committee and on the floor, and a report by one committee “without recommendation.” It was passed twice by the House, first by a vote of 82 to 29, and ultimately (after amendment and passage in the Senate, the vote there being 35 to 14) by a vote of 73 to 18. Throughout this active consideration, the title never was amended.
*864It is our duty to construe statutes consistently with their titles, and to harmonize the statute with the title if possible, rather than extending the statute’s terms beyond the range stated in the title. Olson v. Erickson, 56 N.D. 468, 217 N.W. 841 (1928).
Section 32-19-03 introduces additional complexity. It reads:
“Who subje.ct to deficiency judgment. —If the mortgage debt is secured by the obligation, or other evidence of debt, of 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 debt remaining unsatisfied after a sale of the mortgaged premises as against such other person 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.”
The first sentence was inserted by the Code Revision Commission in preparing the 1943 Revised Code. The second sentence is derived from Chapter 155, 1933 Session Laws, and was re-enacted as part of Chapter 159, 1937 Session Laws. Neither sentence was amended or re-enacted by the 1951 statutes. Whatever the original intention of the Commission or the Legislature may have been, we hold that the statutes of 1951, being later in time and covering the same subject matter, must prevail.
Thus it is our holding that the legislative intent after the 1951 amendment was that the mortgagee or vendor could either (1) foreclose without asking for a deficiency judgment, or (2) foreclose, asking for a deficiency judgment in a separate action after the sale of the property, and obtain a judgment for only the difference between the mortgage debt plus costs and the fair value determined by a jury against both mortgagors and nonmortgagors personally liable on the note, or (3) sue on the note without foreclosure but with recovery limited to the difference between the amount due on the note plus costs and the fair value of the property determined by a jury. The plaintiff here is exercising the third option.
We therefore remand the case to the district court for trial of the action, to be accompanied or followed, if demanded by the defendant, by a determination by a jury of the fair value of the mortgaged property, pursuant to the last two sentences of 32-19-06, and entry of judgment in favor of the plaintiff after such determination for “any part of the debt secured by the mortgage ... in excess of the amount by which such debt and the costs of the action exceed the fair value of the mortgaged premises. Such fair value shall be determined by a jury in the same manner as the fair value is determined in cases where a deficiency judgment is sought in an action to foreclose the mortgage and such judgment shall be enforced by execution as provided by law except that no such execution shall be enforced after three years after the date of the rendition of such judgment.” Sec. 32-19-06, N.D.C.C.
Reversed and remanded for further proceedings consistent with this opinion.
ERICKSTAD, C. J., and KNUDSON and PAULSON, JJ., concur.