Appellees Brief — Richmond Mortgage & Loan Corp. v. Wachovia Bank & Trust Co.

FILE COPY ie

| | NOV14 1936 &

! CHARLES ELGRE CROPLEE

SUPREME COURT OF THE UNITHD—STaTES—<—-=<*¥

OCTOBER TERM, 1936

No. 235

¢

INE PELLT SS SS OR RUE pi Sa SLED ORS

RICHMOND MORTGAGE AND LOAN CORPORATION,

Appellant,

ey rte my:

vs.

WACHOVIA BANK & TRUST COMPANY anp ALEX-

ANDER GARRETT JOHNSTON, Execvrors or THE

Esrate or Roper P: Jounston, Deceased.

.« 4

2

?

APPEAL FROM THE SUPREME. COURT OF THE STATE OF NORTH

ae CAROLINA.

aa

,

a

APPELLEES’ BRIEF.

Rosert R. WiuaMs,

S. G. Bernarp,

Counsel for Appellees.

Bi i a nt ag te ee

A “ A ae Foe BE eT a

: . - r eee RP Se, PR Oe Reais STEN ae Kay ee ee

.

joa

—"

INDEX. . .

SUBJECT INDEX.

e Page

eae Bh DUR BOs occ ccc ccc cncececcecceesécccsccecdéeciee

Geatetnent mepntiiat -DUTOREICGIOM, occ cccdecccccccesecsccscceccessese 1

Appellant’s specifications of error... .. 0.6.6 ee cece cece cen ees 6

Hemmary OF GTEUMBTUR .ncccccccccccsccecccecccceccesecccccsecsse 6

Argument :

I. The statute in question deals solely with the remedy of ap-

pellant .in enforcing its rights under the depd of trust,

and is comstitutional 6... 6... cee ce ee eee eee eee we ry

Il. The judgment of the Supreme Court of North Carolina aftirm-

ing the jJudgments:of the Superier and General County

Courts of Buncombe*County is fully sustained by the facts

RG Ge Ee Oe Wie Gn ccacncc en dcedsawaseeuvekaeuccounc i3

INDEX OF CASES.

Adams Vv. Russell, 229 U.S. 353, 358, 57 L. hapes PE Daas d4ansakan 5,7

Adams vy. Spillyards, 86 A. L. R. 1498, ors % a: [fF Sees 14

Baker. v. Edwards & Sun, 176 N. €. 229, 234, gf =) a Te ee 3, 7,13

Bernheimer v. Converse, 206 U.S. 516, Gs pS Gb e6 de enesceecdenccee 6, 10

Campbell y. City ef Olney, 262 U.S. 352, 354, 67 L. Ed. 1021..... i

Ciome v. Siete BOD UW. GB BER Babe cw daccccccaccccevcncncace Keacus 7.12

Cuyahoga River Power Co. vy. Northern Realty Co., 244 U.S. 300, 304,

G1 L. Ed. 1158, 1 aéUSURSREARRECAEEEGAEHLEEO US acaesesugeeane oe)

Dovle v. Atwell, 261 U. GR, Te Ge Ba Tels GG ccassececspsssns pe

Great Northern a Co. vy. Donaldson, 246 U. 8. 121, 124, 62 L.

| Eee erry ery errr rrrirryrirrrrcrT whvadsbakenkedeaneessées 7.12

Hanex y. Shapira, $68 %. (. 34, 37, 04 8. Hh. BB... cccececcccsccces 5, 7, 13

Laugever v. Mille, 06 A. LL. BB. SEG, 76 HB. We CBR) Bs ccccccscscsee ; 2

National Surety Coe. vy. Architectural Decorating Co., 226 U. 8. 276,

cis ces sade aknuedad reubadbdbadeeiandeassauesecddokins 7,11

Newark Savings Institution v. Forman, 35 N. J. E. 430) ........64.- 7,15

New Orleans, ete, R. Co, v. Leuisiana, 157 U. S. 219, 224............ 4,12

Ohio ex rel. Eastman Co. ¥. Stuart et al. 201 U.S. G43..0....0...... 6

Ushkosh Water Works Co. v. Oshkosh, 187 U. 8. 437, 439............ 6,11.

Richmond Mortgage and Loan Corp. v. Wachovia Bank & Tr. Co.

et al., 210 N.C. QD. cecccesscessece Raaesdbddd tend biesbessanene 1

Sturges vy. Crow ningshleld, WU MRE, BEE, Bee cdc ccsescedsvisoesssen 7

Teaneasee ¢. Buded, GB WU. GT, GB, Thc cc ccccsccctcccccccccscesccscoss 6.11

The 134 William Street Co., Ine. ¥. Lynch et al, y U. & 868... .0¢ 5

U.S. v. Yuen Pak Sune, 183 Fed. 260, 266, 191 Fed. 825.......... 10s tome

Vanderbilt v. Brunton Piano Co., 80 A. L. R. 1080, 169 Atl. 177...... 7,15

Waggoner v. Flack, 188 U. 8. GOB, GOB. ......cccccssccccccess sevées 7,11

Wilson v. Standefer, 184 U. S. 399, 416........000 cc cee cece eeeee ae 6,10

STaTuTes CITED.

Chap. 275, Section 3, Public Laws of North Carolina, Session 1933... 7

—8376-C

~~~ ams Bae

SUPKEME COURT OF THE UNITED STATES

OCTOBER TERM, 1936

No. 235 >

RICHMOND MORTGAGE AND LOAN CORPORATION,

Appel llant,

’ | vs.

WACHOVIA BANK & TRUST COMPANY awnp ALEX-

ANDER GARRETT JOHNSTON, Execurors OF THE

Ksrate or Roserr P. Jounston, Deceased,

Appellees.

BRIEF OF APPELLEES ON APPEAL FROM THE

SUPREME COURT OF NORTH CAROLINA.

Opinion Below.

The opinion of the Supreme Court of North Carolina in

this ease is printed in full on pages 38 to 41 of the Recor d;

also in 210 North Carolina Reports, pages 29, 32.

Jurisdiction of the Court.

Consideration of jurisdiction was postponed to the hear- -

ing of the case on the merits. Appelfees submit here a

statement of matters making against the jurisdiction of

this Court.

2

The judgment of the Supreme Court of North Carolina

dealing particularly with the questions at issue, 210 North

Carolina Reports, pages 33, 34 and 30 is as follows:

‘In the instant case, the validity of section 3 of

the statute is challenged by the appellant on the ground

that its enactment by the General Assembly of this

State was in violation of section 10 of Article I of

the Constitution of the United States, of the Fifth

Amendment, and of section 1 of the Fovrteenth Amend-

ment of said Constitution, and was also in violation

-ef sections 7, 17 and 35 of Article I of the Constitution

of the State of North Carolina, in that said section

impairs the obligation of ft» contract entered into by

and between the plaintiff and the defendant prior to

its enactment. ;

‘Section 3 of Chapter 275, Public Laws of North

Carolina, 19338, is as follows: ‘Sec. 3. When any sale

of real estate or personal property has been made by

a mortgagee, trustee, or other person authorized to

make the same, at which the mortgagee, payee, or other

holder of the obligation thereby secured becomes the

purchaser and takes title either direetly or indirectly,

and thereafter such mortgagee, payee, or other holder

of the secured obligation, as aforesaid, shall sue for

and undertake to recover a deficiency judgment against

the mortgagor, trustor, or other maker of any such

obligation whose property has been so purchased, it

shall be competent and lawful for the defendant against

whom such deficiency judgment is sought to allege and

show as a matter of defense and offset, but not by way

of counterclaim, that the property sold was fairly

worth the amount of the debt secured by it at the time

and place of sale, or that the amount bid was substan-

tially less than its true value, and upon such. showing,

to defeat or offset any deficiency judgment against hin,

either in whole or in part: Provided, this section shall

not affect nor apply to the rights of other purchasers

or of innocent purchasers, nor shall it be held to affect

or defeat the neeotiability of any note,,bond, or other

3

obligation secured by such mortgage, deed of trust, or

other instrument: Provided, further, this section shall

not »pply to foreclosure sales made. pursuant to an

order or decree of court, nor to any judement sought.

or rendered in any foreclosure suit, nor to any sale

heretofore made and confirmed.’ ”’

“The ‘statute recognizes the obligation of a debtor

who lias secured the payment of his debt by a mortgage

or deed of trust to. pay his debt in accordance with his

contract, and does not. Hupair such obligation. Nor

does the statute hinder, delay, or defeat, in whole or

in part, the right of the creditor to enforce such ob-

ligation» by an action instituted by him against his

debtor in a court of competent jurisdiction. There is

nothing in the statute which prevents a recovery by the

creditor in such action of a judgment for the amount

due on the debt. The statute provides only that when

the creditor has .elected to become the purchaser of

the property conveyed by the mortgage or deed of

trust at a sale made under a power of sale contained

in the martgage or deed of trust, and thereafter, pur-

suant to such sale and purchase, acquires title to the

property, he shall not recover judgment against his

debtor. for any deficiency, after the application of the

amount of his bid as a payment on the debt, without

first accounting to his debtor for the fair value of the

property at the time and place of the sale, and that

such value shall’ be determined by the court. In such

‘ase, the amount bid by the ereditor at the sale, and

applied by him as a payment on the debt, is not con-

clusive as to the value of the property.

‘‘We are of the opinion that the statute is valid, and

so hold.

‘The statute involved in this action is not ‘emere-

ency legislation,’-nor is its purpose to provide a ‘mora-

torium’ for debtors during a temporary period of de-

pression. For this reason, the cases cited by appellant

from other jurisdictions are not applicable in fhe in-

stant case. The statute recognizes the validity of pow-

ers of sale contained in mortgages or deeds of trust,

4

-but regulates the exercise of such powers by the appli-

‘ation of well settled principles of equity. It does not

impair the obligation of contracts, but provides for

judicial supervision of sales made and conducted by

creditors whose debts are secured by mortgages or

deeds of trust, and thereby prov ides protection for

debtors whose property has been sold and purchased

by their ereditors for a sum which was not a fair value

- of the property .at the time of the sale. See Better

Plan Building & Loan Asso. v. Holden (N. J.) 169 Atl,

289.

“The statute is applicable in the instant case, and

supports the judgment of the Superior Court. For that

eason the judgment is Affirmed.”’

While it is true that appellant raised a federal question

in the courts below, it was not necessary to decide the fed-

‘eral question in disposing of the case. In fact, the case was

decided solely upon a state law, sufficient to support the

judgement, and the Federal.question was decided only in-

cidentally as the rights of appellants were affected by the

judgement.

Specifically ‘the decision of the Supreme € ‘ourt of North

Carolina is made to rest upon this statement of the law:

“The statute provides only that “when the ereditor

has elected to become tlie purehaser of the property

conveyed by the mortgage or deed of trust at a sale

made under a power of sale contained in the mort-

eage or deed of trust, and thereafter, pursuant to such

sale and purchase, acquires title to the property, he

shall not reeover judgement against his debtor for any

deficiency, after the application of the amount of his

bid as a payment on the debt, without first accounting

to his debtor for the fair -alue of the property at the

time and place of the sale, and that such value shall be

determined by the court.’’

It appears, therefore, that the Supreme Court of North

Carolina based its judgment upon the doctrine of election

4)

of remedies, an independent ground, not involving a Fed-

eral question.

The doctrine of election of remedies obtains in North

Carolina.

‘Where a person has presented to him an election

of inconsistent remedies, he must, onée for all, choose

between them, and is bound by his choice _ made.”’

Hanes v. Shapiro, 168 N.C. 24, 84S. E. 33.

‘‘An election once made, with knowledge of the facts,

between coexisting remedial rights which are incon-

sistent, is irrevocable and conclusive, irrespective of

intent, and constitutes an absolute bar to any action,

suit or proceeding based upon a remedial ice incon-

sistent ‘with that asserted by the election, or to the

maintenance of a defense founded on such oe

right.’’ .

Baker v. Edwards & Son, 176 N. C. 229, 97 S. E.

16, 18.

The State law upon which the Supreme Court of North

Carolina bases its decision in the instant case is sufficient

to support the judgment.

It is settled law that where the record discloses that the

judgment of a State Court was based not alone upon a

ground involving a Federal question but also upon another

and independent ground broad enough to maintain the

judgment, this Court will not take jurisdiction to review

such judgment. and will dismiss the writ of error brought

for that purpose.

People of the State of New York ex rel. Thomas F.

Doyle et al. v. Atwell, 261 U.S. 590, 592,°67 L. ld.

S14;

Cuyahega River Power Co. v. Northern Realty Co.,

244 U.S. 300, 304, 61 L. Ed. 1153, 1157;

Adams v. Russell. 399 U.S. 393, 308, 57 L. Ed. 1224,

1226;

6

The 134 W ham Street Co., Inc., v. Lynch et al., 295

U. S. 526;

Ohio ex rel. Eastman Co. v. Stuart et al., 291 U.S. 643.-

For the reasons set forth, we respeetfully submit that

the Supreme Court of the United States is without jurisdic-

tion to hear this case upon appeal and, therefore, appellees’

motion to dismiss this case should be allowed.

-

Appellant’s Specifications of Error.

Appellant’s Specification of Error #1 (page & of the

brief) deals with what it terms an unconstitutional app)ica-

tion of the statute. We will endeavor to show in our ie

ment in opposition to this Specification of Error’that the

statute deals solely with a remedy, is a constitutional exer-

cise of legislative power, and does 1ot affect a substantial

right of appellant.

Appellant’s Specifications of Error Nos. 2,3 and 4 (pages

8-9 of the brief) are so related that we will discuss them

together, and endeavor to show that the judgment of the

Supreme Court of Xonkh 1 Carolina is fully sustained by the

facts and the law of the case.

Summary of Argument.

i,

Tue Srarcre 1x Question Dears Sotety Witit) THE

Remepy or APPELLANT IN Enrorcine Its Ricurs Unper |

THE DeEED oF TRUST, AND IS CONSTITUTIONAL.

Public Laws, N. C., 1933, pages 402 and 403;

Wilson v. Standefer, 184 U.S. 399, 416;

Bernheimer v. Converse, 206 U.S. 516, 5380;

Tennessee v. Sneed, 96 U.S. 69, 74;

Oshkosh Water Works Co. v. Oshkosh, 187 U. S. 48%,

, 439;

7

National Surety Co. v. Architectural Co., 226 U.S. 276,

283 ;

Waggoner v. Flack, 188 U. 8. 595, 602;

New Orleans, etc., R. Co. v. Louisiana, 157 U: S. 219,

224 ; .

Crane v. Hahlo, 258 U.S. 142, 147;

Sturges v. Crowninshield, 4 Wheat. 122, 200.

IT.

THE JUDGMENT OF THE SUPREME Court oF NortH Caro-

LINA AFFIRMING THE JUDGMENTS OF THE Superior Court

AND GENERAL County Courts or BuNncomBE County, Is

Fuuty Sustainep sy THE Facts anp tHe Law OF THE Cask. |

Great Northern Railway Co. v. Donaldson, 246 U. 8S.’

- 121, 124, 62 L. Ed. 616:

Campbell v. City of Olney, 262 U.S. 302, 354, 67 L. Ed.

1021;

U.S. v. Yuen Pak Sune, 183 Fed. 260, 266, 191 Fed. 825;

Hanes v. Shapiro, 168 N. @. 24, 27, 84S. E. 33;

Baker v. Edwards & Son, 176 N. C. 229, 234, 97 S. E. 18.

Adams v. Spillyards, 86 A. L. R. 1493, 61 S. W. (2d)

686 ;

Vanderbilt v. Brunton Piano Co., 89 A. L, R. 1080, 169

Atl. 177. ;

Newark Savings Institution y. Forman, 33 N. J. KE.

436;

Langever vy. Miller, 96 A. LL. R. 836: 76S. W. (2d) 1025.

ARGUMENT.

i

The statute in question deals solely with the remedy of

appellant in enforcing its rights under the deed of trust, and

is constitutional.

The statute complained of was enacted by the General

_ Assembly of North Carolina ‘at its legislative session in

the year 1933, being Section 3 of Chapter 275 of the Public

8

Laws of North Carolina for the year 1933, at pages 402 and

403, and is in words and figures as follows:

‘*Sec. 3. When any sale of real estate or personal

property has been made by a mortgagee, trustee, or

other person authorized to make the same, at which the

mortgagee, payee or other holdér of the obligation

thereby secured becomes the purchaser and takes title

either directly or indirectly, and thereafter such mort-

evagee, payee or other holder of the secured obligation,

as aforesaid, shall sue for and undertake to recover a

deficiency judgment against the mortgagor, trustor

or other maker of any such obligation whose property

has been so purchased, it shall be competent and law-

ful for the defendant against whom such deficieney

judgment is sought to allege and show as matter of

defense and. off-set, but not by way of counter-claim, |

that the property sold was fairly worth the amount of

the debt secured by it at the time and place of sale or

that the amount bid was substantially less than its true

value, and, upon such slrowing, to defeat. or off-set any

deficiency judgment against-him, either in-whole or in

part; Provided, this section shall not affect nor apply

to the rights of other purchasers or of innocent third

parties, nor shall it be held to affect or defeat the

negotiability of any note, bond or other obligation sc-

cured by such mortgage, deed of trust, or other instru-

ment; provided, further, this section shall not apply to

foreclosure sales made pursuant to an order or decree

of court nor.to.any judgment sought or rendered in

any foreclosure suit nor to any sale heretofore made

and confirmed.”’

While appellant contends that -the application of the

statute to it impairs substantial contractual rights, it ad-

mits that the statute operates only on the remedy (Brief,

page 22). ‘

The statute does not take from appellant ll remedies

which it enjoyed for the enforcement ofits contract.

’ P 2

9

After the enactment of the statute, appellant had three.

courses of procedure open to it:

(1) Appellant could have instituted a suit against the

appellees and recovered judgment for the amount due and

at the same time asked for and obtained a decree of fore-

closure of the deed of trust. Upon a sale of the property,

the net amount of the sales prices would have been credited

upon the judgment, and if the amount was insufficient to

pay the judgment in full, appellant would have had a jude-

ment for any deficjency..

(2) Appellant could have caused a sale of the property

to be made by the Trustee under the power of sale contained

in the deed of trust, stood by and permitted the property

to be sold to someone else, and if the sales price Was in-

sufficient to pay the debt in full, appellant could have sued

appellees and obtained a judgment for any deficiency.

(3) Appellant could adopt the course of procedure which

it did, cause the property to be sold by the Trustee under

the power of sale contained in the deed of trust, and itself

bid at the sale and become the purchaser thereof. In this

event, and only in this event, appellant was required under

the above mentioned statute secant to appellees for

the fair value of the property at the time of the sale. If

it be found that the fair value of tlie property Was then

equal to thé amount of the debt, appellant could not re-

cover a deficiency, but if it be found that the fair value of

the property at that time was less than the amount of the

debt, appellant could have recovered judgment against the

appellees for the difference between the fair value of the

property and the amount of the debt.

Appellant was under: no compulsion to bid at the sale

and, therefore, voluntarily became the purchaser of the

property mentioned in the deed of trust and subjected it-

self to the provisions of the statute. If the recovery of

10

a judgment for a deficiency had been an important con-

sideration at the time of the sale, two courses whereby

appellant might have obtained a judgment for a deficiency

were open to it as above stated. , We are strongly inclined

to believe that appellant at the time of the sale preferred

to take its chances ‘of recovering payment of its debt by

purchasing the property and thereafter selling the same

at a better price. We are led to this conclusion by reason

of the fact that the debt at that time amounted to $7,375.90,—

(R. 21) and after appellant became the owner of the prop-

erty, it listed the/same for-sale with real estate brokers

at the price of $12,500.00 (R. 18). A sale of the property

by appellant at the above price, less the usual. brokers’

commissions, would have yielded the appellant the net

amount of $11,875.00 in settlement of a debt of $7,375.90;

and now, if such a sale could be ‘effected and appellant re-

cover of appellées in this action, appellant would have some

£16,000 in settlement of its said claim plus interest.

The power of legislatures of the several states to pass

Jaws affecting the remedy for the enforcement of edntacts

seems first to have been considered by this Court in the

case of Sturges v. Crowninshield, 4 Wheat. 122, 200, where

Chief Justice Marshall stated the rule as follows:

‘The distinction between the obligation of a contract

and a remedy given by the legislature to enforce that

obligation exists in the nature of things, and without

impairing ‘the obligation of the contract, the remedy

may certainly be modified as the wisdom of the nation

may direct.”’ :

Wilson v. Standefer, 184 U. S. 399, 416;

Bernheimer y. Converse, 206 U. 8S. 516, 530.

The rule of law laid down by Chief Justice Marshall

_has been followed by this Court to the present day.

‘‘The rule seems to be that in modes of proceeding

and of forms to enforce the contract the legislature

11

has the control, and may enlarge, limit, or alter, pro-

-vided that it does not deny a remedy, or so embarrass

it with conditions and restrictions as seriously to im-

pair the value of the right.’’

Tennessee v. Sneed, 96 U.S. 69, 74;

Oshkosh Water Works Co. y. Oshkosh, 187 U.S.

437,439;

National Surety Co. v. Architectural Decorating

Co., 226 U. S. 276, 283.

By the express provisions of the statute the ancient right

of foreclosure through the courts is preserved,

‘‘Provided, further, this section shall not apply to

foreclosure sales made pursuant to an order or decree

of court nor to any judgment sought or rendered in

any foreclosure suit nor to any sale heretofore made

and confirmed.’’

Public Laws N. C. 1935, pages 402, 403.

The right of foreclosure through the courts preserves

to appellant the authority to obtain for itself every right

and advantage which the contract and the law conferred

upon it at.the time the contract was entered into.

‘*It is true that the remedy for the enforcement of

@ contract sometimes enters into the contract itself,

but that is where an endeavor has been made to so

change the existing remedy that there is no effective

and enforceable one left, or the remedy is so far im-

paired that the party desirous of enforcing the con-

tract is left practically without any efficient means: of

doing so; but in the case of an alteration of a remedy,:

‘if one is left or provided which is fairly sufficient, the

obligations of a contract are not impaired, although

the remedies existing at the time it was entered into

are taken away.’’

Waggoner v. Flack, 188 U. S. 595, 602. ;

‘“‘Modes of procedure in the courts of a State are

so far within its control that a particular remedy exist-

ing at the time of the making of a contract may be

12

abrogated altogether without impairing the obligation

of a contraet if another and equally adequate remedy

for the enforcement of that obligation remains or is

substituted for the one taken away.

New Orleans, etc., R. Co. v. Louisiana, 157 U.S.

219, 224.

‘‘No one has a vested right in any given mode of

procedure and so long as a substantial and efficient

remedy remains or is provided, due process of .law is

not denied by a legislative change.’

Crane v. Hahlo, 258 U.S. 142, 147.

a

The judgment of the Supreme Court of North Carolina

affirming the judgments of the Superior ard General County

Courts of Buncombe County is fully sustained by the facts

.and the law of the case.

Appellant’s Specifications of Error 2, 3 and 4 (Brief,

pages 8-9, are so related that, with the permission of the

Court. we will discuss these Specifications of Krrors to-

eether.

The facts. set forth in the record (pp. 10 to 20) amply

support the verdict of the jury.

“The trial court held that there was sufficient evi-

dence to sustain the verdict, and refused to disturb it.

The Supreme Court of W ashington affirmed the judg.

ment. In this situation it is enough to say that it is

not the province of this Court to weigh conflicting

evidence. The record shows testimony supporting the

verdict, and that is as far as this Court enters upon a

consideration of that question.”’

Great Northern Railway Co. v. Donaldson, 246

U. S. 121, 124.

While the judgment had the effect of depriving appellant

of a right which it had prior to the enactment of the statute

13

in question, under the facts it did not take away from ap-

pellant the right to a judgment for a deficiency under two

courses of procedure which were open to it, under either of

which appellant could have enforced every right which it

claims in this action. The Supreme Court of North Caro-

lina based its decision upon the well-established doctrine

of election of remedies, an independent non-Federal ques-

tion.

‘*Unless a Federal right is involved,-the State court’s

application of local laws will not be reviewed here.’’

Campbell v. City of Olney, 262 U.S. 352, 354.

‘‘Broadly speaking, an election of remedies is the

choice by a party to an action of one of two or more

coexisting remedial rights where several such rights

arise out “of the same facts.”’

U.S. v. Yuen Pak Sune, 183 Fed. 260, 266 (af-

firmed, 191 Fed. 825).

The doctrine of election of remedies obtains in North

Carolina:

‘*Where a person has presented to him an election

of inconsistent remedies, he must, once for all, choose

between them, and is bound by his choice so made.’’

Hanes v. Shapiro, 168 N. C. 24, 27, 84S. E. 33.

‘An election once made, with knowledge of the

facts, between coexisting remedial rights which are in-

consistent, is irrevocable and conclusive, irrespective

of intent, and constitutes an absolute bar to any action,

suit or proceeding based upon a remedial right. incon-

sistent with that asserted by the election, or to the

maintenance of a defense founded on such inconsistent

right.’’

Baker v. Edwards & Son, 176 N. C. 229, 234, 97

S. E. 16, 18.

Appellant complains that it should not be put to the ex-

_ pense, trouble and delays attending foreclosure suits in

14

.order to establish its right to a judgment for a deficiency

(Brief, page 25).

The answer to appellant’s position in ‘this respect is that

in order to obtain. a Judgment for a deficiency, in any ev ent,

it had to prosecute a suit, or action at law, against the appel-

lees, and it might as well have instituted a foreclosure suit

iiythe first instance. Appellant’s suggestion, that fore-

closure suits are attended with delays, relates more particu-

larly to suits in which the mortgagors have obiained injune-

tions because of some equitable right belonging to or claimed

by the debtor. Our experience leads us to believe that no

such delays as appellant complains of attend foreclosure

suits by mortgagees; because the institution of such suits

usually preclude injunctive relief in favor of mortgavors.

Further, if appellant refrained from instituting a fove-

closure suit because of anticipated obstacles to a speedy

‘termination thereof, this would in itself constitute a rea-

-son for requiring such procedure, because it assumes that

equities exist in favor of the mortgagor, the solution of

which would require time. Moreover, if the prosecution of

a foreclosure suit had been attended with all the delays

and difficulties suggested by appellant and, therefore, ob-

jectionable on that ground, it could have allowed someone

else to become the purchaser at the sale, and in the event

of a deficiency, could have instituted an action therefor and

the procedure for the collection of a deficiency would have

been precisely the same as appellant followed in the in-

stant case, with no more delays and at no greater cost.

We.do not agree that the following cases cited in appel-

lant’s brief support its contentions, for that:

The statute construed by the Supreme Court of Arkansas.

in the case of Adams v. Spillyards, 86 A. L. R. 1493, 61

S. W. (2d) 686, provides, among other things, that:

‘Section 1. In any foreclosure, in any court in the

State of Arkansas in which real’ estate is involved,

15

the real estate securine the loan sought to be fore-

closed, shall be considered to be the value of the loan

made, irrespective of the amount Which may be real-

ized from the sale of such real property.’’

The statute under investigation by the Supreme Court

of Arkansas, arbitrarily fixed the value of the security at

the amount of the debt, without any regard to the real, fair,

or market value thereof. We do not regard this ease as

being in point here,

The statute construed by the New Jersey Court of Er-

rors and Appeals in the case of Vanderbilt v. Brunton

Piano Company, 89 A. L. R. 1080, 169 Atl. 177,-is not

printed in the report of the case available to appellees, but

we assume from a statement appearing in the opinion that

the statute set up the fair market value of the security

standing alone as a self-sufficient, resistless fact in redue-

tion of an otherwise collectible debt. ;

That is not the ease here in several respects. Under the

North Carolina statute there are two courses of procedure

whereby appellant could recover judgment for a deficiency,

the difference between the amount of the debt and the

amount for which the property might be sold, i. ¢., a sale

under the power of sale contained in the deed of trust to

any person other than appellant, and a sale at foreclosure

under decree to any one, including appellant.

While the New Jersey court, in the ease of Vanderbilt y.

Brunton Piano Company, supra, held the statute there in

question unconstitutional, it quoted with apparent approval

from the case of Mewark Savings Institution y. Forman,

33 N. J. E. 436, as follows: .

‘“‘The act under consideration leaves the complain-

ant a substantial remedy of the same kind as that

taken away,:according to the course of justice, as it

existed when the contract was made, a remedy which

is not only of the same sort, but is even.-more effica-

16.

cious than that which is taken away. It has only taken

away one of two remedies of a like character, one at

law and the other in equity, and that is no contravas:

tion of the complainant’s constitutional vieht.”’

Upon a careful examination of the opinion in the above

case, we are persuaded to believe the New Jersey court

would have sustained a statute similar to. the one here in

question.

The statute construed by the Supreme Court of Texas

in the case of Lungever v. Miller, 96 A. L. R. 836, 76S. W.

(2d) 1025, is not in point here, for the reason that appel-

lant could have had a judgement for a deficieney in North

‘Carolina since the passage of the statute if it had elected to

prosecute a foreclosure suit. Moreover, the Texas statute

seems to resemble the New Jersey statute more nearly

than that of North Carolina. It would seem that the pro-

cedure followed in the Texas case is the only procedure

available to mortgagees, whereas even now there are three

methods of procedure available to beneficiaries under deeds

of trust in North Carolina for the enforcement of their

contracts.

III. :

The pues of the Supreme Court of North Carolina

should be sustained.

- Respectfully submitted,

Rorert R. WItiiams,

Counsel for Appellees.

S. G. Bernarp,

Of Counsel for Appellees.

Service of the foregoing brief accepted and receipt of a

copy thereof is hereby acknowledged, this the 3rd day of

November, 1936. -

Kes & Watton,

Counsel for Appellant.

(8376-C)