Glover v. Marine Bank of Beaver Dam

• Decision Date: 27 March 1984
• Docket Number: No. 82-1841,82-1841
• Parties: Gerald G. GLOVER and Janice M. Glover, Plaintiffs-Appellants, v. MARINE BANK OF BEAVER DAM, a Wisconsin banking corporation, Defendant- Respondent.
• Court: Wisconsin Supreme Court

Page 449

345 N.W.2d 449

117 Wis.2d 684

Gerald G. GLOVER and Janice M. Glover, Plaintiffs-Appellants, v. MARINE BANK OF BEAVER DAM, a Wisconsin banking corporation Defendant- Respondent.

No. 82-1841.

Supreme Court of Wisconsin.

Argued Jan. 30, 1984.

Decided March 27, 1984.

Paul S. Taylor, Madison, argued, for plaintiffs-appellants; Bakken, Feifarek & Taylor, Madison, on brief.

Russell Goldstein, Milwaukee, argued, for defendant-respondent; Goldstein & Goldstein, Milwaukee, on brief.

CECI, Justice.

This appeal is before this court on certification from the court of appeals. Sections 808.05(2) and 809.61, Stats.

Initially, we observe that a total of four mortgages on five separate properties were utilized to secure two promissory notes. Therefore, we are concerned with the following issue:

"If a mortgagee holds more than one mortgage securing two promissory notes and elects to foreclose only some of the mortgages under section 816.101, Stats., which requires waiver of 'judgment for any deficiency which may remain due to [the plaintiff] after sale of the mortgaged premises against every party who is personally liable for the debt secured by the mortgage,' does the foreclosure satisfy the underlying promissory notes in full and oblige the mortgagee to discharge the remaining mortgages?"

The circuit court had determined that the foreclosure of only two of the mortgages securing the two promissory notes in this instance did not satisfy the underlying debts. The court concluded that the mortgagee still retained the right to foreclose on the remaining mortgages securing the notes. However, the court determined that should foreclosure on the remaining mortgages not fully satisfy the notes, the mortgagee would be estopped from taking any deficiency judgments. We affirm the order of the circuit court.

Under section 816.10(2), Stats. (1973), if a mortgagor is to be subjected to a deficiency judgment following a foreclosure sale, the mortgagor is entitled to a twelve-month redemption period. Under section 816.165(2), the mortgagor is also entitled to a finding by the circuit court that the sheriff has sold the mortgaged premises for "fair value."

Section 816.101, Stats. (1973), provides for an exception to this general procedure. ¹ The statute reads as follows "816.101 Foreclosure without deficiency; 3-acre parcels. (1) If the mortgagor has agreed in writing at the time of the execution of the mortgage to the provisions of this section, the plaintiff in a foreclosure action of a mortgage on real estate of 3 acres or less, which mortgage is recorded subsequent to January 22, 1960, may elect by express allegation in his complaint to waive judgment for any deficiency which may remain due to him after sale of the mortgaged premises against every party who is personally liable for the debt secured by the mortgage, and to consent that the mortgagor, unless he abandons the property, may remain in possession of the mortgaged property and be entitled to all rents, issues and profits therefrom to the date of confirmation of the sale by the court.

"(2) When plaintiff so elects, judgment shall be entered as provided in this chapter, except that no judgment for deficiency may be ordered therein nor separately rendered against any party who is personally liable for the debt secured by the mortgage and the sale of such mortgaged premises shall be made upon the expiration of 6 months from the date when such judgment is entered. Notice of the time and place of sale shall be given under ss. 272.31 and 816.16 within such 6-months period except that first printing of a copy of such notice in a newspaper shall not be made less than 4 months after the date when such judgment is entered."

Thus, if the mortgagee elects to waive any judgment for deficiencies which may exist after the sale of the mortgaged premises, the redemption period may be shortened from twelve to six months.

The facts are not in dispute. On September 30, 1975, Gerald and Janice Glover executed a note to the Marine Bank of Beaver Dam (Bank) for the amount of $70,000. In order to secure the note, the Glovers gave the Bank a mortgage on a parcel of real estate located in Green Lake county, described as "Section 13-14-11."

On April 27, 1978, the Glover Corporation executed a note to the Bank for the sum of $225,000. The loan was guaranteed by the Glover Development Corporation and Gerald and Janice Glover. In addition to obtaining personal guarantees, the Bank secured the loan by mortgages on real estate located in Waupaca county and belonging to the Glover Development Corporation, real estate located in Marquette county belonging to the Glovers and the Glover Development Corporation, and three parcels located in Green Lake county belonging to the Glovers. The Green Lake county parcels used for security are described as "Lot 5 in Block 15, Lot 8 in Block 15, and Section 13-14-11." It should be noted that Section 13-14-11 is the same parcel utilized to secure the $70,000 note of September 30, 1975.

Subsequently, a default occurred on both notes. The Bank declared both notes to be due and commenced a foreclosure action against the three Green Lake county parcels in June of 1980. The Bank also elected to foreclose under section 816.101, Stats. Although the record does not include a copy of the mortgages, in which the mortgagor may have agreed to this possible election by the mortgagee, the Glovers have not contested the propriety of this election.

On October 14, 1980, the judgment in the foreclosure action was entered in the office of the Green Lake county clerk of court. The judgment provided for the sale of the mortgaged Green Lake county property and stated the amount due for principal and interest on the first note as $56,449.32 and on the second note as $174,801.54. The judgment also waived any judgment for deficiency remaining due to the Bank after the sale of the mortgaged premises.

The Green Lake county property was sold at a sheriff's sale on November 28, 1980. The property was sold for a total of $155,000. The sale of the property was confirmed by court order on December 23, 1980.

On July 23, 1981, the Glovers filed an action in circuit court, requesting that both notes be declared "paid in full" and returned by the Bank and requesting that the remaining Waupaca and Marquette county mortgages be discharged of record. The Bank brought a motion for summary judgment pursuant to section 802.08, Stats., on the grounds that there was no genuine issue as to material fact and that the Bank was entitled to judgment as a matter of law.

The Glovers argue that because the Bank waived any deficiency judgment when it elected to foreclose under section 816.101, Stats., the confirmed sale of the Green Lake county properties functioned to satisfy the debts secured by the mortgages. See, Winter v. Knaak, 236 Wis. 367, 370, 294 N.W. 488 (1941). They further argue that a mortgage functions as security for debt and that there can be no mortgage where there is no debt to be secured. Security Nat. Bank v. Cohen, 41 Wis.2d 710, 714, 165 N.W.2d 140 (1969). Consequently, the Glovers maintain that the Waupaca and Marquette county mortgages were extinguished when the underlying debts were satisfied by the confirmed sale of the Green Lake county properties.

The Bank contends that by its election to proceed under section 816.101, Stats., in order to foreclose on the Green Lake county real estate, it waived only the right to maintain actions for deficiency on the promissory notes. The Bank has taken the position that deficiency judgments have been characterized as personal judgments, whereas foreclosure judgments have been described as actions to "realize upon the security." Duecker v. Goeres, 104 Wis. 29, 37, 80 N.W. 91 (1899). Therefore, the Bank argues that it has retained the right to foreclose on the mortgaged properties that remain, as long as no personal actions for deficiency judgments are brought.

This court must determine the application of section 816.101, Stats., to situations where more than one mortgage secures a debt and where the mortgagee elects to foreclose on only some of the mortgages under the statute's shortened redemption period. The interpretation of a statute and its application to a stipulated set of facts are questions of law which this court may decide without giving deference to the trial court's decision. Ynocencio v. Fesko, 114 Wis.2d 391, 396, 338 N.W.2d 461 (1983), citing Wassenaar v. Panos, 111 Wis.2d 518, 525, 331 N.W.2d 357 (1983).

The legislature has not provided us with a procedure to follow in such a situation. However, this court has recognized that:

"the cardinal rule in interpreting statutes is that the purpose of the whole act is to be sought and is favored over a construction which will defeat the manifest object of the act." Student Asso., U. of Wis.-Milw. v. Baum, 74 Wis.2d 283, 294-95, 246 N.W.2d 622 (1976), citing 2A Sutherland, Statutory Construction section 46.05 at 56-57 (4th ed. 1973).

Therefore, we must consider the problems which the legislature addressed in section 816.101, Stats., and the ends which it sought to achieve by enacting the statute, in light of Wisconsin's laws concerning mortgage foreclosure as set forth in ch. 816.

Wisconsin is a state which follows the lien theory of mortgages. In other words, the mortgagee does not have legal title in the mortgaged premises. Section 708.01, Stats. See also, Mutual Fed. S. & L. Asso. v. Wisconsin Wire Wks., 58 Wis.2d 99, 104, 205 N.W.2d 762 (1973). The mortgagor retains full ownership in the property, which consists of equitable and legal title, while the mortgagee's interest is that of a lien holder. Therefore, the mortgagee's status is that of a holder of a security interest. Id. at 104, 205 N.W.2d 762, citing Osborne, Mortgages, section 127 at 208. See also, Bank of Commerce v. Waukesha County, 89 Wis.2d 715, 279 N.W.2d 237 (1979).

The predominant...