KENTUCKY BANK & TRUST COUNTY BANK) v. RUSSELL C. HENSLEY AND BEULAH FAYE HENSLEY
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RENDERED: May 7, 1999; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-002662-MR
KENTUCKY BANK & TRUST
(FORMERLY THE GREENUP
COUNTY BANK)
APPELLANT
APPEAL FROM GREENUP CIRCUIT COURT
HONORABLE LEWIS NICHOLLS, JUDGE
ACTION NO. 91-CI-00557
v.
RUSSELL C. HENSLEY AND
BEULAH FAYE HENSLEY
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE; GUIDUGLI AND SCHRODER, JUDGES.
GUIDUGLI, JUDGE.
This is an appeal by Kentucky Bank & Trust
from an order of the Greenup Circuit Court on September 19, 1997,
denying the appellant’s motion to alter, amend or vacate its
order of June 26,1997; denying the appellant’s motion to set
aside the order of confirmation of sale; and affirming its
decision to sustain appellees’ motion to redeem the real
property.
We affirm.
In October of 1991, the appellant filed a foreclosure
action against the appellees, Russell C. Hensley and Beulah Fay
Hensley.
Some lengthy procedural maneuvering occurred between
the appellant and the appellees from October of 1991 through
December 18, 1996, none of which is germane to the issue before
this Court.
On December 18, 1996, the trial court entered a
second amended judgment and order of sale, placing for sale the
appellees’ mobile home and tract of real estate described as
“containing 30 acres, more or less” excepting a 2.42 acre tract.
The court appointed two (2) appraisers to appraise the
approximately 28 acre tract of land pursuant to KRS 426.520.
One of the appraisers, Billy Watson (Watson), contacted
Jeff Elswick (Elswick),an employee and agent of the appellant,
over some confusion with regard to the boundaries of the 28 acre
tract of land.
Apparently there were two (2) mobile homes
located on the total 30 acres.
Watson inquired as to which tract
of land the two (2) mobile homes were located, the 28 acre tract
or the 2.42 acre tract.
Elswick indicated to Watson that there
was one (1) mobile home located on each tract.
Thus, the
appraisers appraised the 28 acre tract with one mobile home
located thereon at $33,500.
On January 24, 1997, the appellant purchased the 28
acre tract for $18,000, an amount insufficient to foreclose the
appellees’ right of redemption pursuant to KRS 426.530.
Thereafter, the appellant filed a motion to confirm the report of
sale and deed and order of distribution (filed by the Master
Commission on January 27, 1997), which was sustained by the trial
court on February 13, 1997.
On June 11, 1997, the appellees
filed a motion to redeem the property pursuant to KRS 426.530 and
tendered to the trial court the purchase price of $18,000 and
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$400 for accrued interest.
On June 23, 1997, the appellant filed
a motion for an order of sale of the right of redemption pursuant
to KRS 426.540 or, alternatively, to set aside the order of
confirmation pursuant to CR 60.
On June 26, 1997, the trial court sustained the
appellees’ motion to redeem the real property and thereafter the
appellant filed a motion to alter, amend or vacate that order.
The trial court conducted an evidentiary hearing on the matter
and on September 19, 1997, issued an order denying the
appellant’s motion to alter, amend or vacate its order of
June 26, 1997; denying the appellant’s motion to set aside the
order of confirmation of sale; and affirming its decision to
sustain appellees’ motion to redeem the real property.
The
appellant filed a notice of appeal on October 17, 1997.
Initially we should point out that the appellees did
not file an opposing brief.
Although we are aware of our options
under CR 76.12(8)(c), we choose not to exercise those options as
we believe the trial court properly disposed of the appellant’s
motions.
Under KRS 426.530, the appellees had the right to
redeem the 28 acres within one (1) year from the date of the sale
since the appellant paid only $18,000 for the 28 acre tract, an
amount insufficient to foreclose the right of redemption as the
property appraised for $33,500.
Specifically, KRS 426.530(1)
provides:
If real property sold in pursuance of a
judgment or order of a court, other than an
execution, does not bring two-thirds of its
appraised value, the defendant and his
representatives may redeem it within a year
from the date of the sale, by paying the
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original purchase money and ten percent annum
interest thereon.
The appellant argues in this appeal that the appraisers made a
mistake with regard to the appraisal of the 28 acre tract, which
resulted in the tract being appraised for less than its actual
value.
Based upon this mistake, the appellant seeks to have the
sale of the 28 acre tract set aside and cites CR 60 and various
Kentucky cases as authority for such action.
There is no question that a mistake was made with
regard to the appraisal of the 28 acre tract that resulted in the
tract being appraised for less than its actual value.
matter the evidence is clear.
On this
Watson testified at the hearing
that he appraised the 28 acre tract with only one mobile home
based upon the information he received from the appellant’s
agent, Elswick, when in fact there were two mobile homes located
on the 28 acre tract.
Watson further testified that his
appraisal would have been different had he known there were two
mobile homes on the 28 acre tract.
Appraisement of real property subject to foreclosure is
“for the benefit of the debtor, and to secure him in his legal
right to redeem if the land does not bring two-thirds of its
appraised value.”
(1887).
Vallandingham v. Worthington, Ky., 2 S.W. 772
Further, an incorrect appraisement may provide grounds
to set aside the sale of real property if it is the product of
mistake other than one arising from an erroneous opinion.
Lawrence v. Edelen, 6 Bush 55; Kidd v. Stephens, Ky., 192 S.W. 44
(1917); Harris v. Gunnell, Ky., 9 S.W. 376 (1888).
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However, we
do not feel that setting aside this sale is justified under the
unusual circumstances of this case.
The appellant in this case is not only the creditor
that caused the foreclosure sale of the appellees’ property but
it is also the buyer of said property.
However, as the buyer of
the 28 acre tract, the appellant cannot have the sale set aside
unless it can show that it was misled by the incorrect
appraisement.
Berry v. Berry, Ky., 156 S.W.2d 133 (1941);
Landers v. Scroggy, Ky., 172 S.W.2d 557 (1943).
The appellant
cannot claim that it was misled in this case because its agent,
Elswick, provided the information to the appraiser that led to
the mistake in the appraisement.
In essence, the appellant is
the “misleader” instead of the misled.
Had the appellant made a
survey of the property it was about to purchase, as any
reasonable, prudent buyer should have done, it would not have
provided misleading information to the appraiser.
The appellant seeks relief from the trial court’s order
pursuant to CR 60.02, which provides:
On a motion a court may, upon such terms that
are just, relieve a party or his legal
representative from its final judgment,
order, or proceeding upon the following
grounds: (a) mistake, inadvertence, surprise
or excusable neglect;...or (f) any other
reason of an extraordinary nature justifying
relief. (emphasis added).
However, the appellant is not entitled to relief under CR 60.02
and here we adopt the trial court’s reasoning:
Relief from a judgment under CR 60.02 is an
extraordinary proceeding. The Court should
grant this type of relief only in instances
where matters do not appear in the record,
were not available by appeal, or otherwise,
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and were discoverable after rendition of
judgment without fault of the party seeking
relief. Board of Trustees of Policeman’s and
Fireman’s Retirement Fund of City of
Lexington v. Nuckolls,[Ky.,] 507 S.W.2d 183
(1974). [sic] In the case at bar, the
[Appellant] caused this problem when it
misinformed the Court’s Appraisers that there
was a mobile home on each tract of land. The
Court’s Appraisers, in good faith, relied on
this information given to them by the
[Appellant].
Under these circumstances, we see no just reason to set aside the
sale of the 28 acre tract.
The appellant strategically bid under the two-thirds
threshold taking into consideration what it could get out of the
28 acre tract when later sold.
Although this generally may be a
risk work taking, it backfired on this occasion.
Further, there
is absolutely no evidence in the record that the appellant would
have bid any more than $18,000 for the 28 acre tract had it known
that there were two mobile homes on the property instead of one
or had the appraisal been higher.
Thus, the appellees’ would
still have been able to redeem the 28 acre tract.
How and when the appellant “discovered” the mistake in
the appraisal raises serious concerns.
The appellant moved to
have the sale confirmed on February 7, 1997, without noting any
mistake in the appraisement at that time.
The sale was in fact
confirmed by the trial court on February 13, 1997.
Some five (5)
months pass before the appellees were able to come up with enough
money to move for redemption of the property on June 11, 1997.
During that five (5) months, the appellant never brought to the
attention of the trial court any mistake in the appraisal.
However, sometime in the twelve (12) day period between June 11,
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1997, and June 23, 1997, after the appellees were able to come up
with enough money to redeem the property, the appellant
“discovered” the mistake and moved to have the sale set aside.
Based upon these facts the timing of the “discovery” is suspect.
As such, we cannot say that the mistake was “discoverable after
rendition of judgment without fault of the” appellant.
Given the circumstances of this case, we do not feel
that the trial court abused its discretion in denying appellant’s
motions.
For the foregoing reasons, the decision of the trial
court is affirmed.
SCHRODER, JUDGE, CONCURS.
GUDGEL, CHIEF JUDGE, DISSENTS.
BRIEF FOR APPELLANT:
No brief for appellee
Phillip Bruce Leslie
Greenup, KY
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