Bullington v. . Angel , 220 N.C. 18 ( 1941 )

ScheN'ck:, J.

Tbe plaintiff alleges in effect tbat be contracted in tbe State of Virginia witb tbe defendant for tbe sale and purchase of a tract of land in Virginia, tbat be executed a deed to tbe defendant for said land, and tbe defendant paid bim a part of tbe purchase price and executed to trustees a deed of trust on said land to secure several notes representing tbe balance of tbe purchase price therefor; tbat there was a default in tbe payment of one of said notes when due, and plaintiff exercised tbe right given in said deed of trust to declare tbe remaining notes due, and called upon said trustees to sell tbe land to provide funds witb which to pay tbe unpaid notes; tbat said trustees advertised and sold said land and applied tbe funds arising therefrom to tbe payment of said notes; tbat after such application of such funds there was a deficiency still due on said notes and this action is to recover such deficiency.

To tbe complaint tbe defendant filed a demurrer upon tbe .ground tbat it failed to state facts sufficient to constitute a cause of action, for tbat it appears from tbe face thereof tbat tbe action is to recover a deficiency judgment on notes given for tbe purchase price of real estate.

Tbe court entered judgment overruling tbe demurrer, to which tbe defendant preserved exception and appealed.

Tbe question presented is: When it appears from tbe complaint tbat tbe notes and deed of trust upon which tbe action is predicated were executed subsequent to 6 February, 1933, in Virginia, and relate to real estate in Virginia, do tbe provisions of tbe law of North Carolina, cb. 36, Public Laws 1933 (N. C. Code of 1939 [Micbie], sec. 2593 [f]), prevent tbe bolder of tbe notes secured by sucb deed of trust from obtaining a deficiency judgment tbereon in tbe courts of North Carolina? Tbe answer is in tbe affirmative.

Section 1, cb. 36, Public Laws 1933, which was ratified 6 February, 1933, in part, reads: “In all sales of real property by mortgagees and/or trustees under powers of sale contained in any mortgage or deed of trust hereafter executed, or where judgment or decree is given for tbe foreclosure of any mortgage executed after tbe ratification of this act to secure payment of tbe balance of tbe purchase price of real property, tbe mortgagee or trustee or bolder of tbe notes secured by sucb mortgage or deed of trust shall not be entitled to a deficiency judgment on account of sucb mortgage, deed of trust or obligation secured by tbe same; . . .”

It will be noted that tbe limitation created by tbe statute is upon tbe jurisdiction of tbe court in that it is declared that tbe bolder of notes given to secure tbe purchase price of real property “shall not be entitled to a deficiency judgment on account” thereof. This closes tbe courts of this State to one who seeks a deficiency judgment on a note given for tbe purchase price of real property. Tbe statute operates upon tbe adjective law of the State, which pertains to tbe practice and procedure, or legal machinery by which tbe substantive law is made effective, and not upon tbe substantive law itself. It is a limitation of tbe jurisdiction of tbe courts of this Stated

Tbe Legislature, within constitutional limitations, can fix and circumscribe tbe jurisdiction of tbe courts of this State. Tbe Legislature has exercised its prerogative to so limit tbe jurisdiction of tbe courts of this State that holders of notes given for purchase price of real estate are not entitled to a deficiency judgment tbereon in sucb courts. We cannot bold that this action upon part of tbe legislative branch of our government impinged tbe full faith and credit clause of tbe Constitution of tbe United States or tbe general doctrine that tbe validity of a contract is determined by tbe law of tbe place where made, tbe lex loci contractus as distinguished from tbe lex fori. Both tbe constitutional provision urged and tbe general doctrine invoked by tbe appellee are substantive law and tbe statute involved, as aforesaid, relates solely to tbe adjective law. No denial of tbe full force and credit of tbe Virginia contract is made, and no interpretation or construction of tbe contract involved is attempted. Tbe court, being deprived of its jurisdiction, has no power to render a judgment for tbe plaintiff in tbe cause of action alleg'ed'.'^. “Jurisdiction is power to declare tbe law, and when it ceases to exist, tbe only function remaining to tbe court is that of announcing tbe fact and dismissing tbe cause. And this is not less clear upon authority than upon principle.” Ex parte McCardle, 7 Wall (74 U. S.), 506, 19 Law Ed., 264.

It would be an anomaly to bold that the courts of North Carolina are closed to a plaintiff having a claim for a deficiency on notes secured by real estate in North Carolina and are yet open to a plaintiff having a similar claim secured by real estate in a state other than North Carolina.

The court should have sustained the demurrer and dismissed the action, and to the end that this may now be done the case is remanded to the Superior Court.

Eeversed.