Alert Building & Loan Ass'n of Newark v. Bechtold

The opinion of the court was delivered by Bodine, J. The defendants appeal from a determination in the Circuit Court that chapter 88, Pamph. L. 1935, p. 260 (Rev. Stat., 2:65-5.1), was unconstitutional. The statute in question was enacted after the decision of this court in Vanderbilt v. Brunton Piano Co., 111 N. J. L. 596. The statute provides that in a suit upon a bond for a deficiency, after foreclosure, the defendant may file an answer disputing the amount of the deficiency, in which event both the parties may introduce in evidence during the trial testimony of the fair market value of the mortgaged premises and the court, with or without a jury, may determine the amount of the deficiency by deducting from the debt the amount found to be the fair market value of the premises sold under foreclosure. Mr. Justice Case, in writing the opinion of this court in Vanderbilt v. Brunton Piano Co., supra, clearly indicated that determining the fair market value at law, in order to reduce the amount of the deficiency, impaired the obligation of contracts existing at the time of the enactment of the *398 statute, since the obligee on the bond had prior to the enactment of the statute, as an indicate of his contract, the right to recover and liquidate the same, first by receiving the proceeds from the pledged property and, supplementarily by a personal action for the deficiency, the statute providing an opportunity for the debtor to reduce the sum recoverable on the bond impaired the contract. Article 4, section 7, paragraph 3 of the state constitution provides: “The legislature shall not pass any * * * law impairing the obligation of contracts, or depriving a party of any remedy for enforcing a contract which existed when the contract was made.” It is to be noted that it is not only that the legislature may not pass a law impairing the obligation of the contract, but they may not deprive a party of any remedy for the enforcement thereof which existed when the contract was made. The Supreme Court of the United States in Richmond Mortgage and Loan Corp. v. Wachovia Bank and Trust Co., 300 U. S. 124, merely determined that a North Carolina statute providing for the determination of fair value did not offend article 1, section 10 of the federal constitution, which forbids the states from passing laws impairing the obligation of contracts. “Although the statute in question purports to postpone the right to sue for the deficiency during a period of years, or during an emergency, it does not in effect do so because it requires the action to be brought within three months after the confirmation of the sale and then provides not for the recovery of the amount of the deficiency after sale, but for the recovery of the amount of the deficiency as found in the law action. The statute does not afford a period of temporary relief from the enforcement of contractual obligations, but it changes and alters the nature of the relief which existed as a means of enforcing contractual obligations. The obligee is deprived of his right to liquidate the same and is forced to accept a right of action to determine the amount which he may recover.” Fidelity Union Trust Co. v. Bryant, 14 N. J. Mis. R. 243, 245. *399 It is urged that the preamble meets the objections to the 1933 enactment condemned in Vanderbilt v. Brunton Piano Co., supra. The enacting part of the statute being clear and unambiguous is not controlled or affected by anything in the preamble. Brown v. Erie Railroad Co., 81 N. J. L. 487; Den, Lloyd & Fox v. Urison, 2 N. J. L. 212. It is only when the statute is ambiguous and difficult of interpretation that the preamble may be resorted to. James v. DuBois, 16 N. J. L. 285. The judgment is affirmed with costs.