Stretch v. Murphy

• Decision Date: 13 May 1941
• Citation: 112 P.2d 1018,166 Or. 439
• Parties: STRETCH <I>v.</I> MURPHY
• Court: Oregon Supreme Court

166 Or. 439

112 P.2d 1018

STRETCHv.

MURPHY

Supreme Court of Oregon.

Argued April 17, 1941.

Reversed May 13, 1941.

Mortgages — Deficiency judgment

1. The term "deficiency judgment" ordinarily refers to a personal judgment against a mortgagor for mortgage debt remaining unsatisfied out of proceeds of sale of mortgaged property, and was used in that sense in statute prohibiting deficiency judgments on foreclosure of purchase price mortgages.

Mortgages — Election of remedies

2. The holder of a note for unpaid balance of purchase price of realty secured by mortgage may waive mortgage and bring action on note for unpaid balance of purchase price and satisfy judgment out of any property of debtor that is subject to execution.

Mortgages — Election of remedies

3. The fact that second mortgagee was made defendant in suit by first mortgagee to foreclose its mortgage did not make it obligatory upon second mortgagee to foreclose her mortgage in that proceeding, but she was entitled to waive her mortgage and bring an action against mortgagor on note given by him.

Mortgages — Deficiency judgment

4. In suit to foreclose a purchase price mortgage on realty, the circuit court is without jurisdiction to enter a deficiency judgment against mortgagor.

Mortgages — Void judgment

5. Where personal judgment is entered against mortgagor on foreclosure of purchase price mortgage, the excess of judgment over and above what may be realized from sale of mortgaged realty is void.

Judgment — Cancelling void judgment

6. A court, when its attention is called to a void judgment, should purge its records of the nullity by cancelling the entry.

Mortgages — Deficiency judgment

7. The statute forbidding entry of deficiency judgments on foreclosure of purchase price mortgages did not create a mere personal privilege which could be waived, but effect of statute was to deprive circuit court of power theretofore granted it by the legislature.

Courts — Jurisdiction

8. Parties to contracts cannot by agreement invest courts with jurisdiction not conferred upon the courts by law.

Contracts — Mortgages

9. An agreement providing for execution of mortgages and that mortgagor waived all privileges arising out of any claim that second mortgage was a purchase money mortgage was void as violative of public policy of state expressed in statute prohibiting entry of deficiency judgments on foreclosure of purchase price mortgages, and no action could be maintained against mortgagor for alleged breach of the agreement.

                  Deficiency judgment in case of statutory provision against in
                purchase money mortgage, note, 6 A.L.R. 1425
                  41 C.J., Mortgages, § 645
                

Before KELLY, Chief Justice, and BAILEY, LUSK and RAND, Associate Justices.

Appeal from Circuit Court, Linn County.

L.H. McMAHAN, Judge.

Action by Viola Stretch, as executrix of the last will and testament of the estate of Annie Boggs, deceased, against C.W. Murphy, to recover damages for the alleged violation of a contract whereby defendant agreed not to assert that a mortgage given by him was a purchase price mortgage. Judgment for the plaintiff, and the defendant appeals.

REVERSED.

Lawrence T. Harris, of Eugene (Harris & Bryson, of Eugene, on the brief), for appellant.

Orval N. Thompson, of Albany (Weatherford & Thompson, of Albany, on the brief), for respondent.

BAILEY, J.

The plaintiff as executrix of the last will of Annie Boggs, deceased, brought this action against C.W. Murphy to recover damages for his alleged violation of the terms of a contract whereby he agreed not to assert that a certain mortgage given by him was a purchase price mortgage. From a judgment in favor of the plaintiff the defendant appeals.

In June, 1931, Leon Boggs and Annie Boggs, his wife, entered into a contract with the defendant herein to sell to him 72.5 acres of land in Lane county for a price of $20,000, of which amount $250 was paid on the execution of the contract and the further sum of $750 was to be paid on or before February 1, 1932. The balance, $19,000, with interest, was to be paid with whatever proceeds over ten cents per pound might be realized from the sale of hops grown on the land.

Thereafter, on February 19, 1935, Lena Boggs Cartwright, individually and as administratrix of the estate of Leon Boggs, deceased, Annie Boggs and the defendant Murphy entered into an agreement in lieu of the original contract of sale, by the terms of which substitute contract Lena Boggs Cartwright, individually and as such administratrix, and Annie Boggs agreed to convey the 72.5 acres of land above mentioned to the defendant Murphy, who in turn agreed that he would execute and deliver to The First National Bank of Harrisburg his promissory note in the sum of $2,500 in payment of certain indebtedness of the other parties to the contract, and would secure the note by a mortgage executed by himself and his wife, on the 72.5 acres of land, and further agreed that he, Murphy, would execute and deliver to Annie Boggs his promissory note in the sum of $9,000 with interest thereon at the rate of six per cent per annum and secure the payment thereof by a second mortgage on the same real property, executed by himself and his wife. In addition to the terms referred to, the contract provided as follows, in regard to the $9,000 mortgage:

"* * * and said mortgage shall expressly provide that Murphy waives all privileges and rights arising out of any claim that said mortgage is a purchase money mortgage, particularly in view of the fact that this substituted agreement will operate as an ultimate reduction in the purchase price to be payable by Murphy, and upon the further consideration that Annie Boggs has waived her claim against the Boggs estate for the sum in excess of $10,000.00, and for the benefit of said Murphy and the detriment to said Annie Boggs the said Murphy does hereby, by these presents, waive any benefit and claim for himself or those claiming by, through or under him, and his heirs, administrators and assigns, the right to assert the said $9,000.00 obligation is a purchase price mortgage, and covenants to and with the said Annie Boggs, for himself, his heirs, administrators and assigns, that he will not assert or attempt to assert that said $9,000.00 obligation secured by said mortgage is a purchase price mortgage, or that he is entitled to any of the privileges or benefits of a purchase price mortgage."

The other provisions of this substitute contract are not material to the matter here under consideration. The land herein mentioned was conveyed to Murphy as stipulated in the contract, and Murphy executed the notes, and with his wife, the mortgages, to The First National Bank of Harrisburg and Annie Boggs, respectively, as required by the contract.

In May, 1936, the bank commenced a suit in the circuit court for Lane county against Murphy, his wife and Viola Stretch, executrix of the last will of Annie Boggs, who died in April, 1935, to foreclose the mortgage given by Murphy and his wife to secure the $2,500 note payable to the bank. In July of the same year the defendant Viola Stretch, executrix, filed an answer to the complaint of the bank and in addition a cross-complaint against Murphy and his wife, in which cross-complaint she asked for judgment against C.W. Murphy for $9,000 with interest thereon at six per cent from February 19, 1935, and for a foreclosure of the mortgage given by Murphy and his wife to Annie Boggs. In her cross-complaint she set forth in haec verba the provision of the contract hereinabove quoted, whereby Murphy agreed to waive all right to assert that the mortgage sought to be foreclosed was given to secure the balance of the purchase price of the mortgaged property.

Thereafter a decree was entered in the circuit court, in which judgment was rendered in favor of the plaintiff and against C.W. Murphy for the amount of the plaintiff bank's note, with attorneys' fees and costs, and in favor of Viola Stretch, executrix, against the defendant Murphy for the amount of the note given by Murphy to her decedent, together with interest, attorneys' fees and costs. The mortgages given to the plaintiff and the cross-complainant, respectively, were foreclosed and the mortgaged property ordered sold, the proceeds from such sale to be first applied on the judgment in favor of the plaintiff and the excess thereof, if any, on the...