Perpetual Bldg. and Loan Ass'n of Anderson v. Braun, 20630

Citation242 S.E.2d 407,270 S.C. 338
Decision Date07 March 1978
Docket NumberNo. 20630,20630
CourtSouth Carolina Supreme Court
PartiesThe PERPETUAL BUILDING AND LOAN ASSOCIATION OF ANDERSON, Respondent, v. Kenneth R. BRAUN, Walter M. Burckhalter, Harold C. Morris, W. W. O'Shields, James E. Simons, F. A. Townsend, Jr., John W. Tucker, E. W. Tucker, Jr., G. Emile Tucker, Aiken-Anderson, Inc., and American Lease Plans, Inc., and Miracle Mile Co., a General Partnership under South Carolina Law of whom Kenneth R. Braun, Walter M. Burckhalter, Harold C. Morris, W. W. O'Shields, James E. Simons, F. A. Townsend, Jr., John W. Tucker, E. W. Tucker, Jr. and G. Emile Tucker are, Appellants.

John T. Bodenheimer, Harte & Harte, Aiken, and Thomas W. Weeks, of Blatt, Fales, Bedingfield, Loadholt, Poole, Motley & Richardson, Barnwell, for appellants.

Jones, McIntosh, Threlkeld, Newman & Cox, Anderson, for respondent.

NESS, Justice:

The sole matter for review is the propriety of granting a deficiency judgment when it was not specifically demanded in the foreclosure complaint. We hold a deficiency judgment to be such an incident of mortgage foreclosure that it may be supported by a general prayer for relief. 1 Accordingly, the order granting a deficiency judgment to respondent is affirmed.

Appellants owed respondent $950,000.00 and executed a mortgage as security for the debt. Upon appellants' default, respondent commenced suit seeking foreclosure of the mortgage, sale of the premises, appointment of a receiver and such other relief as might be just and proper. There was no specific prayer for the debt or for a deficiency judgment.

The circuit judge complied with the special referee's recommendation and ordered foreclosure and sale of the mortgaged premises. The bidding remained open for thirty days. Following sale the indebtedness remained unsatisfied to the extent of $171,835.32. Upon respondent's motion, the circuit judge ordered a deficiency judgment against appellants for the remaining balance.

Appellants assert the foreclosure action commenced by respondent was solely in rem and therefore could not support the granting of a deficiency judgment. We disagree. While the issue raised in this appeal is one of first impression in this State, we believe our resolution of it is consistent with general mortgage law and with the nature of a foreclosure action in South Carolina.

A mortgage represents security for an obligation, not full payment thereof. It is not implicit in the taking of a mortgage that the creditor is to look only to the property for satisfaction of the debt. Indeed, he may ignore the security and bring an action at law on the indebtedness, or he may proceed by foreclosure to satisfy his lien.

It is generally accepted that if the mortgaged premises are sold under a foreclosure decree and fail to bring a sufficient amount to satisfy the debt, the mortgagee is entitled, absent any statutory limitation or waiver on his part, to a personal judgment for the remaining deficiency. 55 Am.Jur.2d, Mortgages, § 905. "(I)f the mortgagee does not ask for a deficiency decree in the foreclosure suit, and no such decree is entered, he has a remedy at law by way of an action on the debt for what remains due." Id.

Under general principles of mortgage law, therefore, a mortgagee is not denied the full amount due him merely because he elects initially to pursue his remedy by foreclosure. An action for a deficiency judgment as a sequel to foreclosure is taken as a matter of course. See Glenn on Mortgages, Vol. 1, § 69. This appears to be true even when the mortgagee neglects to plead specifically for a deficiency judgment. It has been held that a court has "inherent power" to authorize a decree for deficiency, and that no specific notice or motion need be given to the defendant inasmuch as such decree follows implicitly. 92 C.J.S. Vendor & Purchaser § 448. "Moreover, since a decree for a deficiency is an incident of a foreclosure suit in equity, it may be granted under a prayer for general relief." 55 Am.Jur.2d, Mortgages, § 909.

The United States Supreme Court in Shepherd v. Pepper, 133 U.S. 626, 10 S.Ct. 438, 33 L.Ed. 706 (1890), held a decree for a deficiency to be a necessary incident of a foreclosure suit in equity. In upholding the lower court's decision to render a personal decree for a deficiency under a general prayer for relief in a bill of equity, the Court noted the matter was within the judge's discretion.

Prior to 1791, South Carolina adhered to the common law principle of mortgages whereby an action to foreclose a mortgage was regarded as strictly in rem. In the event of default, the mortgagee was required to commence an action in a court of equity to foreclose the mortgage, to bar the mortgagor's right to equity of redemption and to confirm good title in the mortgagee. In case a personal or deficiency judgment was sought, the mortgagee was required to commence an action at law to obtain a judgment.

In 1791, the South Carolina Legislature changed the nature of a mortgage from that of a conveyance on condition to a mere lien. The Act of 1791 is set forth in a note to Mitchell v. Bogan, 45 S.C.L. (11 Rich) 686, 691 (1857). In the subsequent case of Anderson v. Pilgram, 30 S.C. 499, 9 S.E. 587 (1888), the Court refused to follow the rule adopted elsewhere that a judgment for deficiency could not be rendered in a foreclosure suit since the latter was solely in rem. The Anderson court stated that in this State, an action for foreclosure was a proceeding in personam as well as in rem, and therefore, a deficiency judgment could be granted in a foreclosure suit. Accordingly, appellants' assertion that the instant action is solely in rem is inconsistent with the nature of a foreclosure proceeding in this State.

In McConnell et al. v. Barnes et al., 142 S.C. 112, 140 S.E. 310 (1927), this Court recognized in dicta that a judgment for deficiency is merely incidental to the relief sought in a foreclosure action. The court noted the Act of 1791 integrated the action for foreclosure and the action for the deficiency after sale, abandoning the strict distinction between actions in rem and in personam. This construction is consistent with the maxim that equity upon obtaining jurisdiction of an action will administer full equitable and legal relief. Generally, see 27 Am.Jur.2d, Equity, §§ 180 et seq.

Nothing in the State statutory scheme persuades us the lower court erred in granting respondent's motion for a deficiency judgment. Section 29-3-630 of the 1976 Code of Laws of South Carolina provides for the establishment of the debt secured prior to sale. In this case, respondent alleged the full amount of the debt owed in its complaint, and the special referee and the circuit judge both established the amount due in their report and order. Inasmuch as the debt was "established by the judgment of competent jurisdiction" pursuant to Section 29-3-630, we do not believe appellants were surprised by respondent's motion for a...

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20 cases
  • F.D.I.C. v. Prince George Corp.
    • United States
    • U.S. Court of Appeals — Fourth Circuit
    • July 10, 1995
    ...full, the lender is entitled to bring an action for a deficiency judgment as a matter of course. Perpetual Bldg. & Loan Ass'n of Anderson v. Braun, 270 S.C. 338, 242 S.E.2d 407, 408 (1978). This being so, PGC's interpretation of the language in the note as not providing a right to a deficie......
  • Bartles v. Livingston
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    ...denied the deficiency judgment. Underlying the circuit court's decision was its holding, based on Perpetual Building & Loan Association v. Braun, 270 S.C. 338, 242 S.E.2d 407 (1978), that the rendition of a deficiency judgment is discretionary with the court. The judge interpreted Braun to ......
  • Bank of Am. v. Wells
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    ... ... Sav. & Loan ... Assoc. v. Graham , 291 S.C. 178, 182, ... See e.g. Perpetual Bldg. & ... Loan Ass'n of Anderson v ... ...
  • Carolina First Bank v. Badd, L.L.C.
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    • January 28, 2015 render a deficiency judgment is included within the jurisdiction of courts of equity. See Perpetual Bldg. & Loan Ass'n of Anderson v. Braun,270 S.C. 338, 342, 242 S.E.2d 407, 409 (1978)(recognizing that a deficiency judgment is incidental to the relief sought in a foreclosure action and ......
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