Ulrich v. Lincoln Realty Co. , 180 Or. 380 ( 1946 )

Argued on rehearing October 8; former opinion set aside and case affirmed December 10, 1946; second petition for rehearing denied February 11, 1947 ON REHEARING (175 P.2d 149) We granted a rehearing in this case because of doubts as to the correctness of our decision created by the consideration of points not specifically called to our attention in the original presentation of the case.

It was our view, as stated in our former opinion, that by reason of the proviso in Subd. 1, § 6-1602, O.C.L.A., a grantee of mortgaged property, acquiring title from the mortgagor after commencement of a suit to foreclose, who redeemed from the sale on execution in the foreclosure proceedings, took the property subject to the liability to have it sold again for the satisfaction of any balance remaining due on the judgment. We held that in those circumstances the lien of the mortgage to the extent of the unpaid balance was not extinguished but was reinstated against the property in the hands of such redeeming grantee, and could be enforced by execution, as in this case, directing satisfaction of such balance out of the mortgaged property. We have not altered our opinion as to the ultimate purpose intended to be accomplished by the legislature in passing the act in question; but, in the light of fresh argument and newly suggested objections, the conclusion is compelled that the legislature has neglected to provide the machinery for accomplishing its purpose, and that the proviso, so far as it relates to mortgages, must therefore be declared inoperative and void.

We thought that objections, urged by the respondent, that the right to issue the execution here in controversy could not be sustained without holding that certain sections of the statute relating to judgment liens and writs of execution had been impliedly amended, might be avoided by imputing to the legislature an intention to preserve the lien of the mortgage in the circumstances stated.

But that interpretation involves difficulties first brought to light upon the rehearing. It has long been the law of this state that in a mortgage foreclosure suit "when the decree is had and the property sold to satisfy it, the mortgagee has obtained all he contracted for; but, if there is also a personal decree against the mortgage debtor, this becomes, from the date of its docketing, a general lien upon his real property, as in the case of a judgment; and, if a deficiency remains after the application of the proceeds of the sale of the lands covered by the mortgage, the decree may be enforced by execution, as in ordinary cases"; but, "if the lien of the personal decree has never attached, by reason of the mortgagor not having the fee of the property at the time it was rendered, there never existed any lien to be reinstated against his successor in interest, who purchased prior to the decree." Flanders v. Aumack, 32 Or. 19, 29, 51 P. 447, 67 Am. St. Rep. 504. See former opinion in this case,168 P.2d 582, 584.

So, in this case, since the respondent Roehr held the legal title to the mortgaged property when the decree of foreclosure was docketed, the lien of the personal judgment against Lincoln Realty Company, the mortgagor, never attached to the property. One of the consequences of this doctrine is, that a party obtaining a judgment against the mortgagor while the foreclosure suit is pending, would, in case of redemption by the mortgagor or his grantee, have a lien superior to that of a deficiency judgment rendered in the foreclosure suit. At least this is true if such judgment creditor has not been made a party to the foreclosure suit. See Williams v. Wilson, 42 Or. 299,70 P. 1031, 95 Am. St. Rep. 745. The reason for this is that the judgment becomes a lien upon the defendant's real property "from the day of docketing" (§ 6-801, O.C.L.A.), and the deficiency decree is not a lien against the property in the hands of the redeeming mortgagor by virtue of the mortgage, but by force of the judgment lien statute. As the court said in Flanders v.Aumack, supra, "a redemption will not reinstate the specific mortgage lien, while it will the general lien acquired by the personal decree." So, the intervening judgment, being prior in time to the deficiency decree, is superior in right. It is not cut off by the decree and sale in the foreclosure proceedings, for when "an inchoate sale under the decree is arrested and the effect thereof terminated by the judgment debtor or his successor in interest redeeming, the judgment lien creditor is not deprived of his right to proceed on his judgment as against the debtor or his grantee". Kaston v. Storey, 47 Or. 150, 155, 80 P. 217, 114 Am. St. Rep. 912.

The effect of our decision, however, would be to subordinate the lien of such a prior intervening judgment to that of the subsequent deficiency judgment in all those cases where redemption is made by one who has acquired the legal title after the commencement of foreclosure proceedings, for the reason that, under the theory which we adopted, the lien of the deficiency judgment, being the lien of the mortgage itself, would relate back to the day of the execution of the mortgage. 34 C.J., Judgments, 583, § 890. As stated in 2 Freeman on Judgments (5th ed.) 2066: "Where the judgment is rendered in an action for the enforcement of a statutory or contract lien the lien of the judgment, at least as far as its priority is concerned, dates from the time of the previous lien which it enforces."

There was such an intervening judgment in this case. It was obtained by W.W. Banks, and execution was issued thereon after the foreclosure sale and the property bought in by Earle Goss, who was acting on behalf of the respondent Roehr. These facts were mentioned in the briefs and argument on the original presentation of the case, but counsel at that time apparently attached no special significance to them, nor did this court.

Under the law as it has always been in this state, the Banks judgment would be superior in right to the appellant's deficiency judgment. Under our decision the Banks judgment would lose its preferred position and be postponed to the deficiency judgment. We cannot believe that any such result was contemplated or intended by the legislature in enacting Subd. 1 of § 6-1602. That section does not deal with the rights of lien claimants other than the mortgagee, and was not intended, we think, to affect such rights; and, since the statute as construed by us would affect the rights of third persons in the manner here pointed out, we are persuaded that our decision cannot be adhered to.

We are faced then with the question whether, under existing statutes providing for the enforcement of judgments, there is any authority for the issuance of the writ of execution in question.

It will be remembered that the only personal judgment in the case was rendered against Lincoln Realty Company, and that, at the time of its rendition, title to the mortgaged lands was in the respondent. The relevant statutes are as follows:

Section 6-801, O.C.L.A., provides in part:

"From the date of docketing a judgment * * * such judgment shall be a lien upon all the real property of the defendant within the county or counties where the same is docketed, or which he may afterwards acquire therein, during the time an execution may issue thereon."

The foregoing provision is made applicable to suits by § 9-210.

Section 9-504, which deals with the enforcement of the decree in a suit to foreclose a lien, provides in Subd. 2:

"When the decree is also against the defendants or any one of them in person, and the proceeds of the sale of the property upon which the lien is foreclosed is not sufficient to satisfy the decree as to the sum remaining unsatisfied, the decree may be enforced by execution as in ordinary cases. When in such case the decree is in favor of different persons not united in interest, it shall be deemed a separate decree as to such persons, and may be enforced accordingly."

Section 6-1102, Subd. 1, provides in part with reference to the writ of execution:

"It shall require the sheriff to satisfy the judgment * * * out of the real property belonging to him (the judgment debtor) on the day when the judgment was docketed in the county, or at any time thereafter". (Italics added)

The writ of execution caused to be issued by the respondent did not follow the provisions of § 6-1102, Subd. 1, above quoted, but instead commanded the sheriff of Multnomah County to satisfy the judgment "out of the real property belonging to said debtor in this county on and after the 17th day of January, 1942", which was not the day on which the judgment was docketed, but the day on which the foreclosure suit was commenced.

Obviously, the right to proceed upon such a writ cannot be sustained except by holding that the effect of the proviso in Subd. 1 of § 6-1602 (the redemption statute) was to amend and partially repeal by implication both the judgment lien statute and the execution statute. It would be necessary to imply a legislative intention that in circumstances such as are here present a judgment becomes a lien against real property with which the judgment debtor had parted prior to its rendition, and that such judgment may be satisfied out of real property which did not belong to the judgment debtor when the judgment was docketed in the county nor at any time thereafter, but at some previous time. It may be conceded, as counsel for the appellant argues, that in all other instances the judgment lien and execution statutes would be unaffected in their operation; but, since the statutes as they read are intended to be exclusive, since under their provisions no judgment becomes a lien against a debtor's real property except as stated in § 6-801, and no writ of execution is authorized unless it complies substantially with § 6-1102, Subd. 1, it follows that under appellant's view a repeal pro tanto of both sections has been effected, as well as an amendment thereof.

It is a familiar rule that repeals by implication are not favored. Noble v. Noble, 164 Or. 538, 549, 103 P.2d 293, and cases there cited. "A repeal by implication", Mr. Justice HARRIS said in Swensen v. Southern Pacific Co., 89 Or. 275,279, 174 P. 158, "is effected if there be such positive repugnancy between the new and the old enactments that they cannot stand together or be harmonized", but "one statute is not repugnant to another unless they relate to the same subject and are enacted for the same purpose." See, to the same effect,Pacific Elevator Co. v. Portland, 65 Or. 349, 388, 133 P. 72, 46 L.R.A. (N.S.) 363.

The redemption statute on the one hand, and the judgment lien and execution statutes on the other, do not relate to the same subject and were not enacted for the same purpose. The latter are purely procedural; the former is concerned with an enumeration of the persons entitled to redeem property sold subject to redemption, and, in addition, is intended to restrict the extent of the right acquired by redemption in the three instances referred to in the proviso. It confers substantive rights, but, so far as the present case is concerned, leaves the restriction unenforceable. It does not deal with judgment liens or writs of execution, nor does it purport to prescribe a procedure by which the holder of a deficiency judgment can levy upon real property redeemed by one to whom such property has been transferred after commencement of a foreclosure suit. So far from amending, by implication or otherwise, the statutes concerning judgment liens and their enforcement by execution, the legislature has simply failed to provide the means by which its intended purpose is to be made effective.

As stated in Harrell v. Sullivan, 220 Ind. 108,40 N.E.2d 115, 41 N.E.2d 354, 140 A.L.R. 455, a legislative act may be declared invalid if it does not in some manner provide sufficient means whereby it may be executed. See 50 Am. Jur., Statutes, 484, § 472; In re Di Torio, (D.C.) 8 F.2d 279. This principle applies to the statute under consideration in so far as it attempts to limit the right in mortgaged lands redeemed by one not liable on the mortgage debt, who has acquired title to such lands after commencement of the foreclosure suit. To that extent, therefore, the proviso must be declared void.

For the foregoing reasons our former opinion will be set aside and the decree of the Circuit Court recalling the execution affirmed. No costs will be allowed.