First Nat. Bank of Salt Lake City v. Haymond

• Decision Date: 23 May 1936
• Docket Number: 5734
• Citation: 57 P.2d 1401,89 Utah 151
• Court: Utah Supreme Court
• Parties: FIRST NAT. BANK OF SALT LAKE CITY v. HAYMOND et al

57 P.2d 1401

89 Utah 151

FIRST NAT. BANK OF SALT LAKE CITY v. HAYMOND et al

No. 5734

Supreme Court of Utah

May 23, 1936

Appeal from District Court, Third District, Salt Lake County; Roger I. McDonough, Judge.

Suit by the First National Bank of Salt Lake City against A. L Haymond, Jr., and others, and Ella La Vaun Evans and others. Judgment for plaintiff, and defendants A. L. Haymond, Jr. and others appeal.

AFFIRMED.

Gustin & Richards, of Salt Lake City, for appellants.

Bowen &amp Quinney, of Salt Lake City, for respondent.

ELIAS HANSEN, Chief Justice. EPHRAIM HANSON, MOFFAT, and WOLFE, JJ., concur. FOLLAND, J., did not participate.

OPINION

ELIAS HANSEN, Chief Justice.

This is an appeal from that part of the judgment rendered by the court below in a mortgage foreclosure proceeding which awarded plaintiff a deficiency judgment against the appealing defendants. There is no controversy as to the facts. They are as follows: On October 22, 1926, the appealing defendants and others of the defendants made, executed, and delivered to the Deseret Savings Bank, a corporation, a negotiable promissory note for the principal sum of $ 1,750. The note bore interest at 7 per cent. per annum, payable quarter yearly. On the same day the note was so executed and delivered the appealing defendants and others of the defendants also made, executed, and delivered to the plaintiff, as security for the payment of the note, a real estate mortgage on the east one-half of lot 2, block 1, plat "I", Salt Lake City survey, subject to a right of way over and across the north 10 feet thereof. Prior to the commencement of this suit, the note and mortgage were transferred to plaintiff. At the time of the trial of this cause, plaintiff was the owner and holder of the note and mortgage. The complaint filed by the plaintiff is in the usual form of a suit to foreclose a mortgage. The defendants who do not appeal were served with summons by publication. Personal service of summons was had on the appealing defendants. They answered. In their answer they, among other matters, alleged that the mortgaged property is of a value in excess of $ 8,000 and is of a value far in excess of the amount owing upon the note and mortgage; that prior to the commencement of the mortgage foreclosure suit they offered, and they now offer, to convey to plaintiff all of their right, title, and interest in and to the mortgaged property in full satisfaction of plaintiff's claim against them. Defendants pray judgment that plaintiff take nothing by its complaint, that they be awarded their costs and for general relief. At the trial plaintiff offered in evidence its note and mortgage together with testimony touching the amount owing thereon. It is made to appear that there was due and owing on the note and mortgage the principal sum of $ 1,712.10, together with interest thereon at the rate of 7 per cent. per annum from and after October 22, 1931. It was also made to appear that plaintiff had expended $ 8 for an abstract of title for the mortgaged premises and that $ 175 was a reasonable attorney's fee for the foreclosure of the mortgage. Defendants offered evidence over the objection of plaintiff tending to show that the mortgaged property was at the time the note became due of the market value of $ 8,662.50 and at the time of the trial of a market value of $ 5,775. It was further made to appear that it was problematical whether a ready market for the mortgaged property could be found, that at the time of the trial the unpaid taxes on the mortgaged property amounted to $ 1,655.44, and that the taxes for the current year, not delinquent at the time of trial, amounted to $ 213.90.

Upon the pleadings so filed and the evidence so adduced the court below made and entered its findings of fact, conclusions of law and judgment. By the judgment it was, among other matters, ordered that the mortgaged property be sold at public auction by the sheriff of Salt Lake County according to the law and the practice of the court, and that the proceeds of the sale or so much thereof as was necessary be applied to pay the sum of $ 2,893.52, the amount owing upon the note and mortgage, including costs and attorney's fees;

"that if the moneys arising from said sale shall be insufficient to pay the amount so found due plaintiff * * * then upon the coming in of the return of the sheriff showing such deficiency there shall be docketed a judgment of this court in favor of plaintiff and against the defendants, A. L. Haymond, Jr., Florence Haymond, Walter Conrad Haymond, Gladys A. Haymond, Winifred Haymond, Marian Haymond, and each of them, for the amount of such deficiency, together with interest thereon at the rate of 7% per annum from date of said return and judgment and plaintiff shall have execution therefor and for its accruing costs."

This appeal is prosecuted from only that part of the judgment which we have just quoted. Over the objection of plaintiff, the court below permitted the appellants to include as a part of their bill of exceptions the return of the sheriff of the sale of the mortgaged property and the entry of the deficiency judgment against the defendants mentioned in that part of the judgment heretofore quoted. The return shows that the mortgaged property was bought in by plaintiff at the sheriff's sale for the sum of $ 100. A deficiency judgment was entered against the defendants heretofore mentioned in that part of the judgment above quoted in the sum of $ 2,230.16. The mortgaged property was bought in subject to the lien for the unpaid taxes.

It is the contention of appellants that the court below was in error in awarding a deficiency judgment. That is the only attack made upon the judgment appealed from. It is urged by appellants that, this being a suit in equity, and the mortgaged property having an intrinsic market value in excess of plaintiff's demand, no deficiency judgment should have been entered. In support of that contention, reliance is had upon the doctrine announced in the following cases: Monaghan v. May, 242 A.D. 64, 273 N.Y.S. 475; Suring State Bank v. Giese, 210 Wis. 489, 246 N.W. 556, 85 A. L. R. 1477; Northern Pac. Ry. Co. v. Boyd, 228 U.S. 482, 33 S.Ct. 554, 57 L.Ed. 931; Innes v. Stewart, 36 Mich. 285; Federal Title & Mortg. Guaranty Co. v. Lowenstein, 113 N.J. Eq. 200, 166 A. 538; Farmers' & M. Sav. Bank v. Eagle Bldg. Co., 151 Misc. 249, 271 N.Y.S. 306; Brereton v. Miller, 7 Utah 426, 27 P. 81; Russell v. Hank, 9 Utah 309, 34 P. 245.

In the case of Monaghan v. May, supra, the trial court refused to grant a deficiency judgment. The mortgage foreclosed in that suit aggregated $ 24,077.55. Plaintiff bid in the property for $ 5,000 and thereafter moved the court to confirm the referee's report of sale and for a deficiency judgment of $ 19,791.71. The sale was confirmed, but a deficiency judgment was denied because the value of the mortgaged property equalled the mortgage debt and completely satisfied it. The appellate court held that under section 1083 of the Civil Practice Act of New York, which provided a deficiency judgment may be awarded in a mortgage foreclosure proceeding, a court of equity may refuse to authorize the entry of a deficiency judgment when the mortgaged property has been sold at foreclosure sale to the mortgagee at an inadequate price. In the case of Suring State Bank v. Giese, supra, property variously estimated of a value at from $ 1,000 to $ 3,000 was sold at mortgage foreclosure sale to the mortgagee for $ 600. The mortgagee asked for a deficiency judgment of $ 1,379.16 upon an original loan of $ 2,000. The trial court refused to grant a deficiency judgment. Upon appeal the Supreme Court of Wisconsin held that a court of equity may decline to confirm a sale under foreclosure, when, because of economic depression, there is almost a complete absence of a market for realty and the bid is substantially inadequate. In that case it was ordered that the mortgagee should be permitted to retain the property in payment of the obligation or, in the event it failed to do so, that the sale should be set aside and a resale ordered. In the case of Federal Title & Mortgage Guaranty Co. v. Lowenstein, supra, it was held that, "while ordinarily confirmation of judicial sale will not...