Kresos v. White, Civil 3712

• Decision Date: 10 February 1936
• Docket Number: Civil 3712
• Citation: 47 Ariz. 175,54 P.2d 800
• Parties: JOHN KRESOS and HELEN KRESOS, Husband and Wife, Appellants, v. Y. C. WHITE, Superintendent of Banks of the State of Arizona and Ex-officio Receiver of Old Dominion Bank, an Arizona Banking Corporation, Insolvent, Appellee
• Court: Arizona Supreme Court

54 P.2d 800

47 Ariz. 175

JOHN KRESOS and HELEN KRESOS, Husband and Wife, Appellants, v. Y. C. WHITE, Superintendent of Banks of the State of Arizona and Ex-officio Receiver of Old Dominion Bank, an Arizona Banking Corporation, Insolvent, Appellee

Civil No. 3712

Supreme Court of Arizona

February 10, 1936

APPEAL from a judgment of the Superior Court of the County of Gila. C. C. Faires, Judge. Judgment affirmed.

Mr. A R. Edwards, Mr. L. M. McKinley, Mr. Charles E. McDaniel and Mr. James E. Flynn, for Appellants.

Mr John L. Sullivan, Attorney General, and Mr. Allan K. Perry and Mr. Evo De Concini, Assistants Attorney General, for Appellee.

OPINION

ROSS, J.

The defendants, John and Helen Kresos, gave to the Old Dominion Bank, on August 27, 1931, their promissory note for $1,000 bearing interest at 10 per cent. payable one year after date, and to secure it made and delivered to the bank their mortgage on an undivided one-third interest in lot 607, block 30, of the original town site of Miami. April 15, 1932, the Old Dominion Bank went into insolvency and was taken over for liquidation by the state superintendent of banks. Thereafter, on January 30, 1935, the defendants having defaulted in the payment of said note, the said superintendent of banks brought this action to collect the note and to foreclose the mortgage and asked for a deficiency judgment in case the property sold for less than enough to satisfy the debt, costs, and expenses.

The defendants filed an answer in which they admitted the allegations of the complaint, but averred that the value of the mortgaged property had depreciated, due to conditions over which they had no control, but that sufficient value remained to pay the mortgage debt. The answer also denied the plaintiff's right to have a deficiency judgment, for the reason that when the note and nortgage were executed, the property was worth over $5,000 and any depreciation since was not caused by any act of defendants.

The court gave judgment to the plaintiff on the pleadings for the balance due on note, interest, costs and attorney's fees; ordered that the mortgage be foreclosed and the property sold under special execution, and that, if an insufficient amount be realized to pay the judgment, interest, costs, and expenses, the plaintiff have a deficiency judgment against the defendants and a general execution thereon.

The defendants have appealed, contending that it was error to give plaintiff a deficiency judgment against them. For their position they rely on chapter 88, Laws 1933, passed and approved March 18, 1933. (This chapter was referred and by popular vote approved and thereafter, on October 28, 1933, proclaimed by the Governor to be a law.) The above chapter is an amendment of section 2324, Revised Code of 1928. In effect, it takes away from a mortgagee or his assigns any right to collect from the mortgagor or defendant anything beyond what is realized out of the mortgaged property, unless the plaintiff is able to show at the trial that the value of the property when the note and mortgage were executed was not in excess of the amount remaining due on note or that depreciation, if any, in the value of the property was caused by some act of defendant or the original mortgagor. If the plaintiff is able to prove that the value of the property did not at the time of giving the mortgage exceed the debt, or that any depreciation it suffered was caused by the act of the defendant or the mortgagor, he may have a deficiency judgment for the difference between the property's value when the mortgage was given and the amount due on the note. The practical effect of this statute is to do away with deficiency judgments. Before its enactment and at the time of the making of mortgage herein, the law of the state allowed the mortgagee or his assigns, on foreclosure, to have general execution for any balance left after applying to the judgment whatever was realized upon the sale of the property under special execution.

Section 2327, Revised Code of 1928, so far as pertinent reads:

"If the mortgaged property does not sell for sufficient to satisfy the judgment, an execution may be issued for the balance against the mortgagor where there has been personal service, or the defendant has appeared in the action."

In Bank of Douglas v. Neel, 30 Ariz. 375, 247 P. 132, 134, this and related provisions of the law were construed. We there said:

"Technically speaking, there is no such thing under our law as a 'deficiency judgment' in the sense that a formal judgment of that description is rendered by the court, or entered by the clerk for the amount not made by the sale of the mortgaged property. There...