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Tucson Manor, Inc. v. Federal Nat. Mortgage Ass'n

Supreme Court of Arizona

March 24, 1952

TUCSON MANOR, Inc.
v.
FEDERAL NAT. MORTGAGE ASS'N

Judgment affirmed.

Jennings, Strouss, Salmon & Trask, of Phoenix, for appellant.

Hall, Catlin & Molloy, of Tucson, for appellee.

Udall, Chief Justice. Stanford, Phelps, De Concini and La Prade, JJ., concurring.

OPINION

Udall, Chief Justice.

[73 Ariz. 388] The sole question presented by this appeal is whether the amendment to section 2324, Revised Code 1928, now appearing as section 62-517, A.C.A.1939, and known as the deficiency judgment statute, is valid. If the amendment is valid then the judgment of the lower court must be reversed as the plaintiff-appellee, Federal National Mortgage Association, wholly failed at the trial to establish the necessary factual predicate for obtaining a deficiency judgment.

The admitted facts are that defendant-appellant, Tucson Manor, Inc., executed and delivered its promissory note for $ 5,600, secured by a realty mortgage on certain real estate, to the Phoenix Realty Insurance Company. Plaintiff became the owner of the instruments by assignment. Defendant defaulted in the monthly payments as they became due and plaintiff began this action to foreclose the mortgage, praying for a deficiency judgment in the event the proceeds of the sale of the real property were insufficient. Defendant admitted the default but contested the plaintiff's right to a deficiency judgment because of the beneficent provisions of section 62-517, supra. Nevertheless the lower court ordered a foreclosure of the mortgage, directed that the real property be sold and the proceeds after the payment of costs be applied to the plaintiff's judgment, and if the proceeds of the sale were insufficient to cover the amount found due then decreed that the plaintiff should have a deficiency judgment against defendant for the amount of such deficiency.

Section 2324, supra, reads as follows: "When a mortgage or deed of trust is foreclosed, the court shall render judgment for the entire amount found to be due, and must direct the mortgaged property, or so much thereof as is necessary, to be sold to satisfy the same".

The Eleventh Legislature amended the above section by adding the following provisions relating to the granting of deficiency judgments: "provided, that when a note, secured by a first mortgage or deed of trust on real property, is foreclosed and the

Page 1127

property sold to satisfy such judgment, no deficiency judgment can be had against the defendant unless the complaint specifically asks for a deficiency judgment. If such deficiency judgment is contested by the defendant, the plaintiff must prove on the trial that at the time the note and mortgage, or deed of trust, were executed the real property was not of a value in excess of the amount remaining due on the note or that the depreciation in value was caused by some act of the defendant or the original mortgagor, and the question of such value [73 Ariz. 389] shall be a question of fact. * * *" Chap. 88, Session Laws of 1933.

A referendum was filed against this amendment.

Due to the resignation of the Honorable Lewis W. Douglas, then representative in Congress from Arizona, the Governor by virtue of section 1157, R.C.A.1928, called a primary election for August 8, 1933 and a general election for October 3, 1933, to fill such vacancy. The legislature by chap. 5, 1933, First Special Session Laws, Eleventh Legislature (see page 487, Revised Code Supplement, 1934) provided for an election on the same date, i. e., October 3, 1933, to vote upon certain enumerated proposed constitutional amendments. The Secretary of State without authority ...


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