Urbach v. Monchamp Corp.

EDMONDS, J.

This is an action on a promissory note. Defendant appeals a judgment for plaintiff. We affirm.

In February, 1980, plaintiff agreed to sell real property to Robert and Patricia Miller, who would then exchange it for property owned by defendant. As consideration for the sale, plaintiff received a promissory note from Robert Miller for $315,210 secured by a trust deed, and a promissory note from defendant for $59,750 secured by a separate trust deed. Each trust deed described the same property as security.

Robert Miller defaulted on his note. Plaintiff thereafter foreclosed non-judicially on his trust deed and, at the trustee’s sale, obtained title to the real property that he had originally sold. After the sale, defendant refused to make any further payments on his note. Plaintiff then commenced this action. The court entered judgment in plaintiffs favor.

Defendant argues that when, as a result of a default on a promissory note, a party elects to foreclose non-judicially on property that secures two promissory notes, the party is prohibited under ORS 86.770(2) from bringing an action on the other note. Plaintiff argues that ORS 86.770(2) applies only to those persons who are obligated on the note secured by •the trust deed that is the subject of the foreclosure and that, because defendant’s note was not connected with the foreclosure in this case, ORS 86.770(2) is inapplicable.

At the time of these proceedings, ORS 86.770(2) provided, in part:1

“When a sale is made by a trustee under ORS 86.705 to 86.795, or under a judicial foreclosure, no other or further action shall be brought, nor judgment entered against the grantor or the grantor’s surety, guarantor or successor in interest if any, on the note, bond, or other obligation secured by the trust deed or against any other person obligated on such note, bond or other obligation * * (Emphasis supplied.)

Under the plain, natural and obvious meaning of the statute, see SAIF v. Wright, 312 Or 132, 137, 817 P2d 1317 (1991), after a trustee’s sale no action may be taken on the note that *278is secured by the deed that was foreclosed. Plaintiff foreclosed on the Millers’ trust deed and thereby waived his right to collect a deficiency on the secured note. Nothing, however, prevents plaintiff from suing on defendant’s note, because the trust deed that secured it has not been forclosed, and ORS 86.770(2) is inapplicable.

Affirmed.

ORS 86.770 has since been amended. Or Laws 1989, ch 190, § 6.