Angel v. Bullington

• Decision Date: 19 July 1945
• Docket Number: No. 5310.,5310.
• Citation: 150 F.2d 679
• Parties: ANGEL v. BULLINGTON.
• Court: U.S. Court of Appeals — Fourth Circuit

150 F.2d 679 (1945)

ANGEL v. BULLINGTON.

No. 5310.

Circuit Court of Appeals, Fourth Circuit.

July 19, 1945.

R. S. Jones, of Franklin, N. C. (Jones & Jones, of Franklin, N. C., and Jones, Ward & Jones, of Asheville, N. C., on the brief), for appellant.

R. Roy Rush, of Roanoke, Va. (W. Roy Francis, of Waynesville, N. C., on the brief), for appellee.

Before PARKER, SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

W. H. Bullington, as vendor, and Furman Angel, as vendee, entered (in Virginia) into a contract (to be performed in Virginia) for the sale of land in Virginia. A deed was duly executed, part of the purchase price was paid, and notes (secured by deed of trust on the land) for the balance of the purchase price were made by the vendee. Upon default in the payment of one of these notes, the vendor, under an accelerating clause in the deed of trust, declared the other notes due and called on the trustees to sell the land. The proceeds of the sale were applied to the payment of the notes, but there was still a deficiency due on these notes.

The vendor sued the vendee for the deficiency in a court of the State of North Carolina. That court overruled a demurrer of the defendant, but this ruling was reversed by the Supreme Court of North Carolina, which held that such a deficiency judgment could not be granted by a state court of North Carolina by virtue of a statute of that state, N.C.Code of 1939, Michie, § 2593(f). Bullington v. Angel, 220 N.C. 18, 16 S.E.2d 411, 136 A.L.R. 1054.

The vendor thereupon instituted against the vendee a civil action for the deficiency in the United States District Court for the Western District of North Carolina. Judge Webb, sitting in that court without a jury, entered judgment in favor of the vendor for the deficiency.

This appeal of the vendee presents a single question. Does the North Carolina statute prevent, as to the contract in question (which is conceded to be valid under the law of Virginia) the recovery of a deficiency judgment in a District Court of the United States, sitting in North Carolina? Judge Webb answered (Correctly, we think) this question in the negative.

The statute of North Carolina reads, in part: "In all sales of real property by mortgagees and/or trustees under powers of sale contained in any mortgage or deed of trust hereafter executed, or where judgment or decree is given for the foreclosure of any mortgage executed after the ratification of this act to secure payment of the balance of the purchase price of real property, the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust or obligation secured by the same * * *."

This statute did not render void the obligation, secured by the mortgage or deed of trust, insofar as it furnishes a basis for a deficiency judgment in a foreclosure proceeding. The Supreme Court of North Carolina has construed the statute to be merely a limitation on the jurisdiction of the State courts which closes them to one who seeks such a judgment. When the instant case was before the Supreme Court of North Carolina in Bullington v. Angel, 220 N.C. 18, 16 S.E.2d 411, 412, 136 A.L.R. 1054, Associate Justice Schenck meticulously stated: "It will be noted that the limitation created by the statute is upon the jurisdiction of the court in that it is declared that the holder of notes given to secure the purchase price of real property `shall not be entitled to a deficiency judgment on account' thereof. This closes the courts of this state to one who seeks a deficiency judgment on a note given for the purchase price of real property. The statute operates upon the adjective law of the state, which pertains to the practice and procedure, or legal machinery by which the substantive law is made effective, and not upon the substantive law itself. It is a limitation of the jurisdiction of the courts of this state."

This interpretation of the statute, which is binding on us, makes it crystal clear that the statute is a limitation on the jurisdiction of the courts; that it operates in the field of adjective or procedural law, not in the realm of the substantive law of rights. It is well settled that when a claim or cause of action exists, and the jurisdictional requisites prescribed by the Constitution and laws of the United States obtain, a federal District Court has jurisdiction; and this jurisdiction cannot be limited or taken away by state statutes. This has been consistently held by the Supreme Court of the United States in a long line of cases. See, Suydam v. Broadnax, 1840, 14 Pet. 67, 10 L.Ed. 357; Union Bank of Tennessee v. Vaiden, 1855, 18 How. 503, 506, 15 L.Ed. 472; Chicago & N. W. Ry. Co. v. Whitton, 1871, 13 Wall. 270, 20 L.Ed. 571; David Lupton's Sons v. Automobile Club of America, 1912, 225 U.S. 489, 32 S.Ct. 711, 56 L.Ed. 1177, Ann.Cas.1914A, 699. See, also, Moore, Federal Practice, V. I. § 207, p. 208; Dobie on Federal Procedure, § 86, p. 336; Article 3, § 2 of the Federal Constitution; 28 U.S.C.A. § 41(1).

The question before us is not unlike that considered in David Lupton's Sons v. Automobile Club of America, 225 U.S. 489, 32 S.Ct. 711, 56 L.Ed. 1177, Ann.Cas.1914A, 699, where it was held that the Federal court in New York was not deprived of jurisdiction to entertain a...