Suring State Bank v. Giese

• Decision Date: 06 February 1933
• Citation: 210 Wis. 489,246 N.W. 556
• Parties: SURING STATE BANK v. GIESE ET AL.
• Court: Wisconsin Supreme Court

210 Wis. 489

246 N.W. 556

SURING STATE BANK

v.GIESE ET AL.

Supreme Court of Wisconsin.

Feb. 6, 1933.

Appeal from an order of the Circuit Court for Oconto County; Arold F. Murphy, Circuit Judge.

Action by the Suring State Bank against Ernestine Giese and others. From an order confirming a mortgage foreclosure sale on the condition that a deficiency judgment be denied, plaintiff appeals.--[By Editorial Staff.]

Reversed and remanded.

The order, which was entered on the 30th of June, 1932, confirmed the sale in an action for the foreclosure of a real estate mortgage “on the express condition that plaintiff's motion for a deficiency judgment against the defendants Giese be denied and such sale is thus confirmed and such deficiency judgment is expressly denied.” The complaint in the action included a prayer for a deficiency judgment, and the judgment was in the usual form, and contained, among other things, an order for a deficiency judgment in the event that the proceeds of the sale be insufficient to pay the amounts due under the mortgage. The sheriff's report of sale contained the report of a deficiency upon the sale of $1,379.16. Plaintiff's motion for an order confirming the sale and for a deficiency judgment followed.

The defendants, in opposition to the motion to confirm the sale, produced affidavits to the effect that the premises were worth from $2,000 to $3,000, while the affidavits in support of confirmation place the value of the premises at from $1,000 to $1,500. At the sheriff's sale plaintiff had bid in the property for $600, charged against the defendants $100.08 court costs and sheriff's fees, credited defendants with $499.12, and asked for a deficiency judgment of $1,379.16 upon an original loan of $2,000.Harold W. Krueger, of Oconto, for appellant.

Lehner & Lehner and Adolph P. Lehner, all of Oconto Falls, and V. J. O'Kelliher, of Oconto, for respondents.

WICKHEM, J.

It is the contention of the plaintiff that it is entitled to a deficiency judgment as a matter of course; the court having in the original judgment ordered a judgment for deficiency, which order was appealable and has never been appealed from. This may well be conceded without at all affecting the merits of this case. The order appealed from confirms the sale upon the express condition that plaintiff be not entitled to a deficiency judgment. The court finds in its order that the premises were reasonably worth a sum in excess of $2,000, and it is evident, from a reading of the order, that the trial court's theory is that plaintiff, having secured the premises at the grossly inadequate valuation of $600, should be required to credit defendants with the reasonable value of the premises.

[1] The question presented is one of great importance, and one to which earnest consideration has been given. The court takes judicial notice of the fact that the present economic depression has not merely resulted in a serious dislocation of the value of real estate, but also in the almost complete absence of a market for real estate. As a consequence there is no cash bidding at sales upon foreclosure. In normal times competitive bidding is the circumstance that furnishes reasonable protection to the mortgagor, and avoids the sacrifice of the property at a grossly inadequate sale price. In the present situation the device of a judicial sale largely fails of its intended purpose because of the lack of competitive bidding, and the question arises whether a court of equity is wholly impotent to rise to the needs of justice and see that the parties are fairly and properly protected. This is not a situation in which ordinary logic with respect to values has much vitality. In theory, a thing that cannot be sold has no value, and so with a parcel of real estate that is offered for sale at foreclosure. It may be argued that it is worth what purchasers will pay for it, and no more, and that if the only price offered constitutes but a negligible part of its theretofore assumed value, it nevertheless represents the value of the real estate at that time. Such a conclusion is shocking to the conscience of the court, or, as the old equity courts said, to the conscience of the chancellor, and to all notions of justice as applied to this situation. Certainly the land has...