Wright v. Wimberly

Opinion by

Me. Chief Justice Moore.

1. A statute of this state, enacted in 1854, declares in effect that, when a promissory note is secured by a realty mortgage, upon a foreclosure thereof a deficiency judgment may be rendered against the mortgagors: Section 7106, L. O..L. This clause of the law was impliedly amended in part February 24, 1903, by an act which reads:

“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”: Section 426, L. O. L.

The defendant L. Wimberly testified in support of the averments of new matter in the answer as to the mortgage having been executed to evidence a part of the purchase price of the mortgaged premises. The plaintiff’s testimony substantiates the averments of the reply with respect to the payment of the face value of the note, and that he took an assignment thereof without knowledge or notice that the mortgage had been executed to secure any part of the purchase price of the mortgaged real property. Neither the note nor the mortgage contains any statement that either was exe*630cuted to evidence any part of the consideration of the land so purchased.

It will be remembered that the statute quoted declares the “mortgagee” shall not be entitled to a deficiency judgment. If the phrase “the owner and holder of the mortgage” had been employed, instead of the word “mortgagee,” the restriction in such cases might have been freed from all doubt. A perusal of the statute referred to will show that it is remedial in character, and for that reason it should be liberally construed. So interpreting the word “mortgagee,” it is believed that the term is employed to mean that each assignee of the security is to be deemed, during the term of his ownership of the lien, as the mortgagee, thereby prohibiting him from securing a deficiency judgment on the foreclosure of a mortgage given to secure any part of the purchase price of land. Any other conclusion would permit a mortgagee of real property to assign a mortgage thereof, and thus defeat a right expressly granted by statute to the mortgagor for his benefit and protection. It is the undoubted policy of the law to protect the head of a family by granting to him a homestead that is exempt from execution. So, too, upon principle, it must be true that the legislative assembly encourages the acquisition of title to land, even upon payment of a part of the consideration, and the giving of security for the remainder of the purchase price by the execution of a mortgage of. the premises, limiting a recovery, in case of foreclosure, to a forfeiture of the payment made as a part of the consideration, and restoring to the mortgagee his original estate in the premises. By such statutory restriction a timid purchaser might venture to secure a home for himself and family by giving part of the consideration, hoping to be able to meet the payment *631of the remainder of the purchase price when it matured according to the terms of a mortgage of the premises; but he would undoubtedly hesitate to pledge his future energy and prospects of success in life in order to liquidate a deficiency judgment when the mortgagee was allowed to retain the sum which had been paid and also permitted to secure a title to the premises pursuant to the decree of foreclosure.

The right thus granted may be defeated by the mortgagee, who, by waiving his lien and maintaining an action at law on the promissory note or other obligation so secured, can procure a judgment for the entire amount due and obtain the sum so awarded by execution, if the debtor have sufficient property by the sale of which the judgment can be discharged: Page v. Ford, 65 Or. 450 (131 Pac. 1013, Ann. Cas. 1915A, 1048, 45 L. R. A. (N. S.) 247); Walters v. Cooper, 71 Or. 139 (142 Pac. 359). The practice pursued in these cases and the method of procedure resorted to therein were rendered possible because Section 426, L. O. L. prohibiting the granting of a deficiency judgment in case of a purchase price mortgage of real property, applies only to suits instituted to foreclose such lien, and not to actions at law based upon the note or other obligation. The original mortgagee knew, when the mortgage was given, that it was executed to secure a part of the purchase price of the mortgaged premises. When the promissory note and mortgage were assigned, it was incumbent upon the assignee to ascertain whether or not the security which he obtained was a purchase money mortgage, if he desired to foreclose the lien instead of bringing an action at law on the note to recover the amount thereof.

“All proceedings,” says a text-writer, “to collect any deficiency arising on the sale of mortgaged prem*632ises under a foreclosure, are purely statutory ”: Wiltse, Mort. Foreclosure (3 ed.), § 733.

Such being the case, it was not necessary to state in the note or mortgage herein that the lien was created to evidence a part of the purchase price of the mortgaged premises.

Finding no error, we must affirm the decree, and it is so ordered. Aeeirmed. Rehearing Denied.

Mr. Justice Benson and Mr. Justice McBride concur in the result.