600 A.2d 1
(14294)Supreme Court of Connecticut
PETERS, C.J., SHEA, CALLAHAN, GLASS and COVELLO, Js.
The plaintiff, which had sought, pursuant to statute (52-380a [c]), to foreclose a judgment lien it had recorded against the defendant’s interest in certain real property and which had obtained a judgment of strict foreclosure, appealed challenging the trial court’s denial of its motion for a deficiency judgment. The trial court based the denial on its conclusion that the deficiency judgment statute (49-14 [a]) that applies to judgments of strict foreclosure of mortgages did not apply to a foreclosure of a judgment lien. Held that 52-380a (c), which provides that a “judgment lien on real property may be foreclosed . . . in the same manner as mortgages on the same property,” must be read together with 49-14 (a) to afford a judgment creditor like the plaintiff access to a proceeding to determine the deficiency remaining after strict foreclosure of a judgment lien; accordingly, the judgment of the trial court was reversed and the matter remanded for further proceedings on the plaintiff’s motion for a deficiency judgment.
Argued October 31, 1991
Decision released December 17, 1991
Action to foreclose a judgment lien on certain of the defendant’s real property, brought to the Superior Court in the judicial district of Fairfield, where the court, Thim, J., granted the plaintiff’s motion for judgment of strict foreclosure and rendered judgment thereon; thereafter, the court, Jones, J., denied the plaintiff’s motion for a deficiency judgment, from which the plaintiff appealed. Reversed; further proceedings.
Joel Z. Green, for the appellant (plaintiff).
David G. Volman, for the appellee (defendant).
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PETERS, C.J.
The principal issue in this appeal is whether a judgment creditor who has foreclosed upon a judgment lien pursuant to General Statutes 52-380a (c)[1] is entitled to a deficiency judgment pursuant to General Statutes 49-14
(a).[2] After concluding that the provisions of 49-14 (a) concerning deficiency judgments do not apply to judgment lien foreclosure proceedings, the trial court, Jones, J., ruled that the plaintiff, Fairfield Plumbing and Heating Supply Corporation, was not entitled to a deficiency judgment against the defendant, William Kosa. The plaintiff appealed the denial of its motion for a deficiency judgment to the Appellate Court and we transferred the appeal to this court pursuant to Practice Book 4023. We reverse.
On November 22, 1988, the plaintiff obtained a judgment against the defendant in connection with an action on an account for plumbing hardware and supplies sold and delivered by the plaintiff to the defendant. Pursuant to 52-380a (a),[3] the plaintiff recorded a judgment lien on the land records of the towns of Fairfield and Easton on December 15, 1988. At that time, the defendant owned a one-half interest in properties
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located in each town. On June 12, 1989, because the judgment debt had not been satisfied, the plaintiff commenced a foreclosure action on both properties in the Superior Court for the judicial district of Fairfield.[4]
The plaintiff sought relief in the form of strict foreclosure and a deficiency judgment.[5] On March 5, 1990, the trial court rendered a judgment of strict foreclosure on the Fairfield property. In that proceeding, the trial court, Thim, J., determined that the debt owed to the plaintiff was $152,210.12[6] and set May 1, 1990, as the law day. When the defendant did not redeem on May 1, the title to the one-half interest in the Fairfield property vested in the plaintiff. The plaintiff took title to the property subject to prior encumbrances.
Alleging that the value of the one-half interest in the property minus the encumbrances that were superior in right was less than the value of the judgment, the plaintiff filed a motion for a deficiency judgment pursuant to 49-14 (a) within thirty days of the vesting of title in the plaintiff. See Practice Book 528. At the hearing held in conjunction with the motion, the trial
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court, Jones, J., heard extensive testimony from both parties about the value of the subject property[7] and the amount of the encumbrances that were superior to the plaintiff’s interest in the property. The court thereafter denied the plaintiff’s motion, not on evidentiary grounds, but because of its conclusion that, as a matter of law, the provisions with respect to deficiency judgments contained in 49-14 (a) did not apply to the foreclosure of a judgment lien. The court made no findings concerning the amount of the deficiency claimed by the plaintiff.
Section 49-14 (a) provides that any party to a mortgage foreclosure may, within thirty days after the time limited for redemption, file a motion seeking a deficiency judgment. The court must then hold a hearing, hear evidence, establish a value for the mortgaged property, and render judgment for the mortgagee for any difference between such value and the mortgagee’s monetary claim.[8] In any further action upon the debt, note or obligation, the mortgagee can recover only the amount of such deficiency judgment. The question before us is whether 52-380a (c), which provides that “[a] judgment lien on real property may be foreclosed or redeemed in the same manner as mortgages on the same property,” incorporates by implied reference the deficiency judgment provisions of 49-14 (a). We agree with the plaintiff that the two statutes must be read
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together to afford the plaintiff access to a proceeding to determine the deficiency remaining after strict foreclosure of a judgment lien
I
At common law, a mortgagee was required to elect between a foreclosure action or an action on the underlying debt. In Derby Bank v. Landon, 3 Conn. 62, 63 (1819), this court held that “a foreclosure and consequent possession, is in the nature of satisfaction of a debt secured by mortgage. It is deemed an appropriation of the thing pledged, in payment of the demand, for which it was security.”[9] See also Swift v. Edson, 5 Conn. 532, 534-35 (1825). Because the entry of judgment of foreclosure precluded any further common law proceedings upon the note, the legislature, in Public Acts 1833, c. 18, 1, 2, created the remedy of the deficiency judgment as the only available means of satisfying a mortgage debt when the security is inadequate to make the plaintiff whole. D. Caron, Connecticut Foreclosures (2d Ed. 1989) 9.05A, p. 158. “[A] statute forbidding suit upon the . . . original indebtedness to recover the deficiency, does not operate to prevent suit upon a judgment for deficiency actually obtained in a foreclosure action.” C. Wiltsie, 2 Mortgage Foreclosure (4th Ed. Eager 1927) 949, p. 1206.
Before rendering a deficiency judgment, the court must have a mechanism for establishing the value of the subject property to determine whether and to what extent a deficiency exists. While a foreclosure by sale automatically establishes the value of the property, a strict foreclosure does not have this secondary
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consequence. Only a proceeding for a deficiency judgment following a strict foreclosure establishes the amount of remaining indebtedness. In 1878, the predecessor to 49-14 (a) “provide[d] for an appraisal which [was] conclusive as to the value of the property where a deficiency [was] sought by the plaintiff upon a strict foreclosure . . . .” Cronin v. Gager-Crawford Co., 128 Conn. 688, 694, 25 A.2d 652
(1942). Prior to 1979, the statute required the court presiding over the foreclosure action to appoint three disinterested persons to appraise the property. The appraisers were to submit a written report of their appraisal to the clerk of the court in which the foreclosure was had and the report was to be a part of the file of the foreclosure suit. The appraisal was final and conclusive as to the value of the mortgaged property. Mere subtraction was all that was required to render a deficiency judgment.
In 1979, the legislature amended the procedure for calculating a deficiency in a strict foreclosure action in response to a decision by this court holding the existing procedure unconstitutional.[10] See Conn. Joint Standing Committee Hearings, Judiciary, Pt. 2, 1979 Sess., pp. 539-52. The only change wrought by the amendment contained in 49-14 (a) is the procedure by which the valuation of the mortgaged property is accomplished. Following the amendment, if a motion for deficiency judgment is filed within thirty days after the time limited for redemption, the court hears evidence on the value of the property from both parties and then establishes a conclusive valuation of the property.
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II
In light of this history, we agree with the defendant’s observation that the remedy of a deficiency judgment is necessary in mortgage foreclosures because a judgment of foreclosure precludes further proceedings on the underlying debt. Concededly, a judgment of foreclosure does not have the same effect on a judgment lien. Foreclosing on a judgment lien does not extinguish the original judgment, which continues to be valid as to any uncollected portion. Cf. Gushee v. Union Knife Co., 54 Conn. 101, 107, 6 A. 192 (1886). The defendant maintains that this distinction in rationale obviates the need for granting a deficiency judgment to the holder of a partially unsatisfied judgment lien. We are unpersuaded.
It is true that, unlike a mortgagee, a judgment lienor may pursue a debtor in a separate action, i.e., through execution pursuant to General Statutes 52-350f. Thus, the process for obtaining a deficiency judgment contained in 49-14 (a) is not absolutely necessary to a judgment creditor left with a partially unsatisfied judgment following a strict foreclosure. Undoubtedly, however, in a separate action maintained by the judgment creditor, the debtor would raise the claim of whole or partial satisfaction of the debt in a set-off. At that point, in order to calculate the amount of the judgment that had been satisfied through strict foreclosure, the court would be required to determine the value of the property at the time of foreclosure. This becomes increasingly difficult as time passes. Outside of the process prescribed by 49-14 (a), there is no other procedural framework for establishing the value of the property contemporaneously with a strict foreclosure on a judgment lien.[11] Thus, even though the alternative
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procedure of bringing a separate action may be available to a judgment lienor, it is far more efficient for the parties and the court to have the issue of valuation determined as part of the foreclosure proceeding rather than as part of a subsequent action. We are unpersuaded that the legislature, in enacting the predecessors to both 52-380a (c) and 49-14 (a) in 1878, intended to leave only an inefficient lien enforcement procedure for judgment lienors, while creating such an efficient and logical procedure for mortgagees.
Our construction of 49-14 (a) as applicable both to the strict foreclosure of a mortgage and to the strict foreclosure of a judgment lien finds further support when we consider related rights arising out of a foreclosure by sale proceeding. With regard to such foreclosures, the legislature has not distinguished between mortgagees and judicial lienholders. General Statutes 49-28 explicitly provides for a deficiency judgment in a foreclosure by sale when “the proceeds of a sale are not sufficient to pay in full the amount secured by any mortgage or lien thereby foreclosed . . .” (Emphasis added.) Having afforded a judgment lienor in this state a deficiency judgment in a foreclosure by sale, the legislature probably did not intend to differentiate between mortgages and liens with respect to deficiency judgments in strict foreclosures. We can discern no policy reason why the legislature would have required a judgment lienor to pursue a foreclosure by sale rather than a strict foreclosure in order to obtain a deficiency judgment.
“[C]ompelling principles of statutory construction . . . require us to construe a statute in a manner that will not thwart its intended purpose or lead to absurd results. Sutton v. Lopes, 210 Conn. 115 [201 Conn. 115], 121,
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513 A.2d 139, cert. denied sub nom. McCarthy v. Lopes, 479 U.S. 964, 107 S.Ct. 466, 93 L.Ed.2d 410 (1986); Narel v. Liburdi, 185 Conn. 562, 571, 441 A.2d 177 (1981), cert. denied, 456 U.S. 928, 102 S.Ct. 1974, 72 L.Ed.2d 443 (1982). We must avoid a construction that fails to attain a rational and sensible result that bears directly on the purpose the legislature sought to achieve. Peck v. Jacquemin, 196 Conn. 53, 63-64, 491 A.2d 1043
(1985).” Turner v. Turner, 219 Conn. 703, 712-13, 595 A.2d 297 (1991).
The predecessor to 49-14 (a), as originally enacted in 1878, provided that the appraisal report was to be “a part of the files of such foreclosure suit, and such appraisal shall be final and conclusive as to the value of such mortgaged property.” The valuation of the property was, and remains, part of a strict foreclosure action. We are persuaded that when the legislature wrote, in the same year, that “[a] judgment lien on real property may be foreclosed or redeemed in the same manner as mortgages on the same property,” it intended precisely that. Every aspect of a mortgage foreclosure applies equally to a foreclosure of a judgment lien, including the right to a deficiency judgment pursuant to 49-14 (a). Accordingly, we hold that, pursuant to 52-380a (c), the provisions of 49-14 (a) concerning deficiency judgments apply to strict foreclosures upon judgment liens.[12]
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The judgment is reversed and the case is remanded for further proceedings on the plaintiff’s motion for a deficiency judgment.
In this opinion the other justices concurred.