McGirl v. Brewer

• Decision Date: 25 February 1930
• Citation: 285 P. 208,132 Or. 422
• Parties: MCGIRL v. BREWER ET UX.
• Court: Oregon Supreme Court

285 P. 208

132 Or. 422

MCGIRL v. BREWER ET UX.

Supreme Court of Oregon

February 25, 1930

In Bank.

Appeal from Circuit Court, Jackson County; Orlando M. Corkins Judge.

On rehearing. Former decision adhered to.

For former opinion, see 280 P. 508.

This cause comes before the court on rehearing. It arose out of an action brought in the circuit court for Jackson county. On the trial defendants had decree, and on plaintiff's appeal the cause was reversed. For our original opinion, see 280 P. 508.

The complaint alleges that at Billings, Mont., on or about May 1 1921, defendants, for value, executed and delivered to one P G. Carlin their certain promissory note, in words and figures as follows:

"May 1, 1921.

"On the 1st day of May, A. D., 1926, for value received, we promise to pay to the order of P. G. Carlin at Billings Montana, the principal sum of Twelve Thousand and 00/100 Dollars, with exchange on New York, with interest thereon at the rate of eight per cent. per annum from date until maturity, payable semi-annually according to the tenor of ten interest notes annexed hereto and bearing even date herewith, both principal and interest to be paid in gold coin of the United States of the present standard of weight and fineness. If default be made in the payment of any interest note or any portion thereof at the time the same becomes due and payable, then said principal and accrued interest shall, at the option of the legal owners thereof become at once due and payable without further notice, with interest thereafter at the rate of eight per cent. per annum until paid.

"This note shall bear interest at eight per cent. per annum after maturity, until fully paid. This note and interest notes annexed are secured by a first mortgage deed duly recorded in Carbon County, State of Montana.

"Joe T. Brewer.

"Anna C. Brewer."

It is alleged that no part of said note has ever been paid excepting the interest thereon up to November 1, 1925, and the sum of $7,900 paid thereon January 15, 1927. Plaintiff alleges that he is the holder of said note, and asks judgment against defendants for the sum of $5,260, with interest thereon at the rate of 8 per cent. per annum from January 15, 1927.

The defendants allege that during the year 1921 defendant Joe T. Brewer entered into a deal with P. G. Carlin, whereby the said Brewer agreed to trade to Carlin land in Wyoming which brewer then owned of the value of $19,000, and machinery and other personal property located thereon, in part payment for land which said Carlin owned in Carbon county, Mont., and, as the balance of the purchase price of the land so to be transferred to him by Carlin, Brewer agreed to pay the sum of $12,000, which sum was to be evidenced by promissory note bearing interest at the rate of 8 per cent. per annum; that said deal was consummated and the property transfers made; that simultaneously therewith, and as a part of the same transaction, defendants executed and delivered to Carlin, as evidence of their indebtedness on the balance of the purchase price of said land, their notes in the amount of $500 and $12,000 respectively, secured by mortgage upon the property so purchased from Carlin by them. It is alleged that prior to and throughout the entire transaction, and ever since said time, the defendants have been actual residents of Medford, Jackson county, Or. It is further alleged that on September 10, 1926, the plaintiff instituted a suit to foreclose said purchase-money mortgage in Carbon county, Mont., where said land was located, serving the defendants in Medford by publication. The defendants having defaulted, a judgment and decree was, on December 16, 1926, entered in favor of plaintiff and against the defendants in the sum of $13,701.22 and $20 costs, foreclosing said purchase-money mortgage and ordering the real property described in the mortgage to be sold and the proceeds derived therefrom applied upon said judgment; that thereafter, on December 17, 1926, an order of sale of the said real property was made and entered, and, after due and legal notice thereof, the same was, on January 15, 1927, at the courthouse in Carbon county, Mont., sold to the plaintiff for the sum of $8,500 in accordance with the aforesaid decree and judgment. It is alleged that, after deducting from this amount the costs of said sale amounting to $17.10, the balance of $8,482.90 was paid to plaintiff, and the sheriff returned the order of sale with a deficiency due thereunder in the amount of $5,329.80; that plaintiff, in his action herein on said note, grants defendants a credit of $7,900 only, the amount realized on foreclosure of the purchase-money mortgage, and seeks to collect the deficiency on said judgment and note and mortgage after granting this credit.

The defendants allege that the said mortgage and decree in the foreclosure of the purchase-money mortgage is limited in Oregon to the amount for which said property is sold at foreclosure, not exceeding the amount of the judgment, and that this fact was at all times well known to plaintiff when he elected to bring the suit to foreclose the mortgage in Montana. It is claimed that the laws of Oregon and the procedure and public policy thereof permit but one suit or action on a purchase-money note or mortgage, and that, the plaintiff having proceeded upon one, the remedy upon the other is merged therein, and that a suit upon a purchase-money"money note for the balance unpaid after foreclosure is contrary to such public policy; that plaintiff by this action is attempting to collect a deficiency judgment on such purchase-money mortgage, and that said first judgment and decree in Montana is a bar to this action and is res adjudicata.

It is shown by the record in this case that the courts of last resort in the state of Montana have declared the common law of England, as modified by the statutes of Montana, to be the basic law of said state, and that, under the laws of Montana, upon non-payment at maturity of a purchase-money note secured by mortgage on real property situate therein, the holder thereof is required by statute first to realize upon the security by foreclosure. The law so enacted in the state of Montana reads as follows: "There is but one action for the recovery of debt, or the enforcement of any right secured by mortgage upon real estate or personal property, which action must be in accordance with the provisions of this chapter. In such action the court may, by its judgment, direct a sale of the encumbered property (or so much thereof as may be necessary), and the application of the proceeds of the sale, and the payment of the costs of the court and the expenses of the sale, and the amount due the plaintiff; and if it appear from the sheriff's return that the proceeds are insufficient, and a balance still remains due, judgment can then be docketed for such balance against the defendant or defendants personally liable for the debt, and it becomes a lien upon the real estate of such judgment debtor, as in other cases on which execution may be issued. No person holding a conveyance from or under the mortgagor of the property mortgaged, or having a lien thereon, which conveyance or lien does not appear of record in the proper office at the time of the commencement of the action, need be made a party to such action; and the judgment therein rendered, and the proceedings therein had, are as conclusive against the party holding such unrecorded conveyance or lien as if he had been made a party to the action." Revised Codes of Montana, 1921, § 9467. It is shown that this statute was in force on and long prior to May 1, 1926, and is still the law of Montana, and that it applies to all notes secured by mortgages, whether such notes represent the purchase price of the mortgaged land or not.

Porter J. Neff, of Medford, for appellant.

Charles W. Reames, of Medford, for respondents.

HAMILTON, A. A. J.

In order that we may the more clearly understand the objection which defendants are making to the maintenance of plaintiff's action, it is proper that we should call attention to section 426, Oregon Laws, which reads as follows: "When judgment or decree is given for the foreclosure of any mortgage, hereafter executed, to secure payment of the balance of the purchase price of real property, such judgment or decree shall provide for the sale of the real property, covered by such mortgage, for the satisfaction of the judgment or decree given therein, and the mortgagee shall not be entitled to a deficiency judgment on account of such mortgage or note or obligation secured by the same."

It will readily be admitted that, had plaintiff's mortgage been given as security for the payment of a note executed in Oregon, and upon real property situate in Oregon, and had foreclosure proceedings taken place in said state foreclosing the same, leaving an amount yet due, no further action could be maintained for the recovery of any deficiency remaining unpaid. Our court in construing the statute to which attention has just been called has so held: Wright v Wimberly, 94 Or. 1, 184 P. 740. In that cause it is stated that: "Although L. O. L. § 426, abolishing deficiency judgments upon foreclosure of real estate purchase price mortgages, does not so modify section 429, relating to action at law on indebtedness secured by mortgage, as to prevent the holder of purchase-money mortgage note from disregarding the mortgage and bringing action for personal judgment on the note; yet, where such holder does sue to foreclose, then, since the court is inhibited by section 426 from awarding under section 425 a conditional recovery or 'deficiency judgment' against the mortgagor, its determination of the entire sum due upon the personal...