1. Mortgages.
In mortgagee's action at law against mortgagor to recover deficiency due on mortgage notes after applying thereon proceeds of foreclosure sale, allegation in mortgagor's answer that price paid at foreclosure sale was inadequate stated no defense.
2. Banks and Banking.
In action by a Federal Land Bank to recover a deficiency due on mortgage notes, after applying thereon proceeds of foreclosure sale a mortgagor could not set off or counterclaim for the value of stock held in First National Farm Loan Association, since such association and the Federal Land Bank are distinct corporations. (Federal Farm Loan Act, 12 U.S.C.A. § 641 et seq.)
PER CURIAM.
The plaintiff, Federal Land Bank of Omaha, commenced this action against the defendant to recover a deficiency resulting from the foreclosure of a mortgage on certain lands in Beadle County, South Dakota. At the time the mortgage loan was made there was issued to the defendant stock in the First National Farm Loan Association of Huron to the extent of five per cent of the mortgage loan. This farm loan association was organized under the provisions of the Federal Farm Loan Act, 12 U.S.C.A., Chapter 7, Subchapter 1, § 641 et seq., and the stock in the First National Farm Loan Association was issued in accordance with the terms of this same act.
The defendant in his answer alleged: First, that the property was purchased at the mortgage foreclosure sale by the mortgagee at a grossly inadequate price; and second, by way of counterclaim sought to have setoff against any alleged deficiency, or, if there were no deficiency, to recover the value of the stock issued to him in the First National Farm Loan Association at the time the loan was made. These two pleaded defenses present the issues for our determination under this record.
The defense that the sale price was inadequate cannot be maintained in this action to recover a deficiency. Federal Farm Mortgage Corp. v. Noel, 66 S.D. 481, 285 N.W. 871.
The second alleged defense and counterclaim cannot be sustained. The First National Farm Loan Association is a corporation distinct from the plaintiff, Federal Land Bank, and in this action by the plaintiff, Federal Land Bank, against the defendant mortgagor, the mortgagor cannot setoff or counterclaim for the value of stock which he holds in the First National Farm Loan Association, a corporation distinct from the plaintiff corporation. Byrne v. Federal Land Bank of St. Paul, 61 N.D. 265, 237 N.W. 797; Federal Land Bank of Berkeley v. Warner, 42 Ariz. 201, 23 P.2d 563; Knox National Farm Loan Association et al. v. Phillips, 300 U.S. 194, 57 S.Ct. 418, 81 L.Ed. 599, 108 A.L.R. 738. A complete discussion of the various steps in the operation of the Federal Farm Loan Act is to be found in these cited cases, and discussion here is unnecessary.
The judgment and order appealed from are reversed.
All the Judges concur.