CONFLICT OF LAWS-PROPERTY-LAW GOVERNING MORTGAGE DEFICIENCY JUDGMENTS

Defendant, a Michigan corporation, became a guarantor on a mortgage of land located in Alabama. Both the mortgage and underlying note were executed in Alabama and the note was payable there. Upon default, mortgagee, acting under a power of sale, foreclosed the mortgage and became the purchaser at the sale, which was duly conducted according to Alabama law. Mortgagee then brought this action in the federal district court for Michigan to recover the deficiency remaining due after foreclosure. Defendant claimed that the fair market value of the mortgaged property exceeded the balance due on the mortgage debt, and that under a Michigan statute defendant should be allowed to use that value in computing the deficiency. No such statute was in force in Alabama. Held, the Michigan statute is inapplicable. The right to recover a deficiency judgment is a substantive right, and as such is governed by the law of Alabama. Reconstruction Finance Corp. v. Mercury Realty Co., (D.C. Mich. 1951) 97 F. Supp. 491