242 N.W. 292 | Minn. | 1932
Lead Opinion
In May, 1927, the defendants gave to the plaintiff bank, herein referred to as plaintiff, a note for $8,000 and a real estate mortgage to secure the same. On November 19, 1928, defendant Gustolf Adolph Hagedorn, herein referred to as defendant, was duly adjudged *584 a bankrupt in the federal court. He properly listed the mortgage note mentioned as one of his liabilities in the bankruptcy proceeding. In February, 1929, plaintiff commenced suit in the state district court to foreclose the mortgage mentioned. The federal court granted permission to bring such suit. On October 1, 1929, judgment was rendered in the foreclosure suit and sale of the mortgaged premises directed. The findings and judgment so entered will be later considered. On January 13, 1930, defendant was discharged in bankruptcy in the federal court from all his listed debts subject to discharge under the bankruptcy law. The $8,000 mortgage debt, so far as his personal liability was concerned, was such a debt and was discharged.
On May 5, 1930, the mortgage foreclosure sale was had and the mortgaged premises sold or bid in by the plaintiff for a sum over $3,000 less than the amount due on the $8,000 note. Apparently on the same day, without any notice to defendant and without any order by the court, the clerk purported to enter a deficiency personal judgment against defendant for the sum of $3,507.62. Defendant learned of this deficiency judgment on June 18, 1930, and at once moved the court to vacate and set it aside as to him and to vacate and set aside so much of the judgment of October 1, 1929, as directed any recovery against him personally. The motion was granted, and this appeal followed.
1. The conclusions of law of the trial court, upon which the foreclosure judgment of October 1, 1929, was entered, were as follows:
"That the plaintiff have judgment against the defendants, Gustolf Adolph Hagedorn and Clara Hagedorn for the sum of Nine Thousand Five Hundred Thirty-five and 88/100 Dollars ($9,535.88) and One Hundred Dollars ($100) attorney's fees and Seven and 30/100 ($7.30) disbursements herein."
This was the full amount owing on the $8,000 note, with interest, attorney's fees, and disbursements. The conclusions of law then directed the sale of the land to satisfy said debt, and finally directed the defendants to pay to the plaintiff any deficiency on such sale. *585
The judgment entered by the clerk on October 1, 1929, is somewhat of a departure from the court's conclusions of law in that it does not directly adjudge that the plaintiff have judgment against the defendants for the $9,535.88 and attorney's fees and costs, as directed by the court, but adjudges that to be the amount due the plaintiff. The judgment then says:
"That in case the proceeds of such sale shall not be sufficient to satisfy said amounts the plaintiff recover of the defendants the deficiency."
Neither the conclusions of law nor the judgment expressly direct the entry of any deficiency judgment.
We come then to the decisive question in this case, whether the foreclosure judgment, entered some months before the defendant was discharged in bankruptcy, was a judgment imposing personal liability on defendant so that his discharge in bankruptcy discharged him from personal liability to plaintiff for the mortgage debt. That defendant had properly filed this mortgage debt as one of his debts in the bankruptcy proceeding and that his personal liability thereon was a debt properly dischargeable in the bankruptcy proceeding must be conceded. That this foreclosure judgment imposed personal liability upon defendant for any deficiency seems entirely clear.
The statute provides for only one judgment in a foreclosure action. G. S. 1923 (2 Mason, 1927) §§ 9636, 9642. It is a final judgment and determines all the issues and provides just what relief plaintiff is entitled to. Dodge v. Allis,
The practice of entering a deficiency judgment after sale of mortgaged premises, where the foreclosure is by action, appears to have been generally followed in this state. It is a convenient method of making a record of the exact amount of the deficiency. It should not be held to be a new or effective judgment as against the defendant, when not ordered by the court after hearing and opportunity to defendant to show his discharge or other defense thereto.
As pertains to the bankruptcy law, the original judgment of foreclosure stands as a final judgment determining conclusively the liability of the judgment debtor, and all his personal liability thereunder is discharged by his subsequent discharge in bankruptcy, conceding, as here, that the indebtedness on the mortgage was properly listed by him in the bankruptcy court. Having listed the mortgage debt and been discharged therefrom by the bankruptcy court, the debtor stands released so far as any personal liability is concerned. The fact that the bankruptcy court granted permission to the mortgagee to foreclose is immaterial. The foreclosure judgment, entered before defendants' discharge, was the only effective judgment against him. The so-called deficiency judgment did not impose any new or additional liability.
Going one step farther: The general rule laid down by the federal courts and followed here is that a judgment entered against the debtor before his discharge in bankruptcy on a debt properly listed by him in the bankruptcy proceeding and subject to discharge *587
therein is discharged, but that a judgment entered on such a debt after his discharge in bankruptcy is not discharged thereby. Crocker v. Bergh,
The case of Thompson v. Dale,
"The only authority for issuing a general execution is for the deficiency or balance after the application of the proceeds of sale to the debt."
That was the decisive point in the case. Justice Mitchell does speak of the practice of the court prior to 1866 of ordering, after the sale, a personal judgment for a definite sum, ascertained as being the actual deficiency, and does refer to such a judgment as a personal judgment. Such judgment was entered upon an order of the court for the definite amount of the deficiency. He also refers to the foreclosure judgment under our statute as an ordinary equity form, and states that the fact that it is called a judgment does not imply that it is a personal one. Our impression of the case is that it goes only to the extent of holding that no execution can issue in a foreclosure case until after the sale and the application of the proceeds. This statement in the opinion is of interest [
The foreclosure judgment "does not amount to a personal judgment, and only comes to have the effect of one aftercertain things are done by virtue of subsequent provisions ofthe statute."
But, as already pointed out, there are no provisions of the statutes for any subsequent entry of any judgment. Hence the foreclosure judgment, not any new judgment, becomes effective as a docketed judgment after the sale and application of the proceeds thereof.
In Winne v. Lahart,
To that extent we readily approve Thompson v. Dale,
The other case cited in the opinion as approving Thompson v. Dale is the case of Arendt Wartman v. Vossen,
"The case of Thompson v. Dale,
While this statement as to what was held in Thompson v. Dale may not be accurate, the citation cannot in any view be considered an approval of Thompson v. Dale.
We are unable to find in Thompson v. Dale or in any of the cases cited any sufficient authority for holding that a foreclosure judgment is not a final judgment which fully determines the mortgagor's liability and is released, as to the debtor's personal liability, by a subsequent discharge in bankruptcy when the debt has been properly listed in the bankruptcy court.
The case of Prentis v. Richardson's Estate,
"He could not contest the amount due on the mortgage, for there was no dispute about the amount. He could not question the lien upon the land, for the bankruptcy proceedings could not discharge the lien. He had no reason to suppose an attempt would be made to take a decree against him personally, for the statute, by its terms, did not authorize such a decree until after sale; and, as construed by the courts, the statute did not permit the taking of a personal decree without the filing of a petition, and notice to him personally."
What reason did the defendant in our present case have to suppose that the plaintiff would attempt to take a so-called deficiency judgment against him when we have no statute authorizing it?
The Michigan court further held [
The foreclosure judgment entered October 1, 1929, was the final judgment determining the defendant's entire liability in the matter. His subsequent discharge in bankruptcy discharged him from any personal liability on the mortgage debt, and the subsequent attempt to enter a deficiency judgment against him was neither authorized by our statute nor of any effect.
Order affirmed.
Dissenting Opinion
I dissent. *591