Terry Gibson v. First State Bank of Warren et al.

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CA 04-553

DECEMBER 15, 2004



[NO. CV2002-39-6]




John B. Robbins, Judge

This action involves a debtor's attempt to set aside a foreclosure sale and the order confirming it on the grounds of unfairness and inadequacy of the sale price. Although we affirm the circuit court's decision, we do so for a different reason. See McAdams v. McAdams, Ark. , S.W.3d (June 3, 2004).

After appellant Terry Gibson and appellee Pat Gibson were divorced, appellee First State Bank of Warren filed a foreclosure suit against them on loans that were secured by mortgages on four parcels of property. A decree of foreclosure was entered by the Cleveland County Circuit Court on February 10, 2003, and Mr. Gibson's first cousin, Alice Lindsey, and her husband, Michael Lindsey, purchased the property for $400,000 (the approximate amount of the remaining debt) at the public sale on March 12, 2003. The circuit court confirmed the sale on March 20, 2003.

On April 4, 2003, appellant moved to have the sale and the order confirming it set aside on the grounds that the sale price was grossly inadequate and that Mr. Gibson had

discouraged potential purchasers from bidding on the property. Appellant moved for Mr. Lindsey to be brought into the action, and Mr. Lindsey filed a cross-claim against her. Mrs. Lindsey was permitted to intervene and the Lindseys filed an amended cross-claim against appellant.

At the hearing, appellant testified that, around the time that the newspaper ran the advertisement for the sale, someone put up a sign about fifty yards from her house that stated: "This land has to be sold by FORECLOSURE COURT to settle a divorce. This is 3rd generation land owned and operated by the Gibsons. Please mind your own business by leaving. Thanks much!" She also stated that several of the windows of the house on the property were knocked out on the day that the foreclosure decree was entered, and that, because of that incident, she filed a motion for contempt in the divorce action. She further testified that someone had left a dead cow on a road leading to part of the property; had thrown some old furniture onto the front yard; and had placed hay in front of the gates to part of the property. Appellant produced the testimony of three witnesses who testified that they had been discouraged from bidding on the property. Appellant also introduced evidence that the land's value was between $694,500 and $800,000.

Appellees moved for directed verdict at the conclusion of appellant's case. From the bench, the trial court found that appellant had failed to prove that Mr. Gibson had committed the acts of which appellant complained or that the sale price was inadequate. On May 29, 2003, the court entered an order denying appellant's motion and granting appellees' motions for directed verdict. Appellant appealed that decision, and we dismissed the appeal for lack of an appealable order because there had been no ruling on the Lindseys' claims for damages against appellant. See Gibson v. First State Bank of Warren, No. CA03-942, 2004 WL740033 (Apr. 7, 2004). On April 20, 2004, the circuit court entered an order dismissing the outstanding claims without prejudice. This appeal followed.

In determining whether a directed verdict should have been granted, we review the evidence in the light most favorable to the party against whom the verdict is sought and give it its highest probative value, taking into account all reasonable inferences deducible from it. Woodall v. Chuck Dory Auto Sales, Inc., 347 Ark. 260, 61 S.W.3d 385 (2001). A motion for directed verdict should be granted only if there is no substantial evidence to support a jury verdict. Id. Where the evidence is such that fair-minded persons might reach different conclusions, then a jury question is presented, and the directed verdict should be reversed. Id.

Appellant makes four arguments on appeal: (1) the trial court erred in finding that there was insufficient evidence to prove that Mr. Gibson interfered with the sale of the property; (2) the evidence of his actions was sufficient to show that potential buyers were intimidated from bidding on the property; (3) the trial court erred in refusing to find that the sale price was inadequate in relation to the property's value; (4) the trial court erred in refusing to admit certain exhibits into evidence. We cannot, however, address these issues because appellant did not object to the sale until after an order confirming it had been entered.

The purpose and effect of an order confirming a commissioner's report of a judicial sale is to ascertain and adjudge whether the sale was held in conformity with the provisions of the decree of foreclosure and the applicable statute. Clarke v. Federal Land Bank of St. Louis, 197 Ark. 1094, 126 S.W.2d 601 (1939). The decree of confirmation imports a finding that the terms of the decree and the statute were complied with, and objections made thereafter that offer no reason why they were not made before confirmation come too late. Id. As a general proposition, a decree of confirmation cures any irregularities in the conduct of a sale if the court, in the first instance, might have authorized the sale to be held in the manner in which it was in fact conducted. Id. A confirmation of a judicial sale is a final decree from which an appeal may be prosecuted. Id. In Waldo v. Thweatt, 64 Ark. 126, 130, 40 S.W. 782, 783 (1897), the supreme court explained:

If the corrupt agreement between appellee and the attorney for appellants, as alleged, had not been discovered, and could not by reasonable diligence have been discovered, before the confirmation of the sale and approval of the deed by the court of common pleas, that fact should have been alleged in the complaint. No such allegation appears. The irregularities and fraud alleged, even if the sale had been under execution, and not to be reported to or confirmed by the court, could have availed only for setting aside the sale.

Even allegations that a party's attorney deliberately stifled the bidding at a judicial sale have been held to be untimely because they were raised after confirmation. See Dumas v. Owen, 210 Ark. 505, 196 S.W.2d 987 (1946).

In Almobarak v. McCoy, 84 Ark. App. 152, 137 S.W.3d 440 (2003), we held that an unsuccessful bidder's objection to a public sale of foreclosed land was untimely because it was filed forty-four minutes after an order confirming the sale was filed. In that case, the unsuccessful bidder (in whom title had previously been quieted, subject to a lien held by the successful bidders) argued that the notice of sale had not complied with the applicable statute and that the property was sold for an inadequate price. After the objection was deemed denied, the appellant brought an appeal. We affirmed the decision but declined to address the appellant's arguments, because he had offered no reason why he had not raised his objections to the sale before the order of confirmation was entered, stating:

We also note that Clarke [v. Federal Land Bank of St. Louis, 197 Ark. 1094, 126 S.W.2d 601 (1939)] is in accordance with other general authority. "The confirmation of a mortgage foreclosure sale is an act of consent, sanction, and approval which the court gives to the sale; and it is a judicial, rather than a ministerial, act, even where no contest is made." 59A C.J.S. Mortgages § 872 (1998). "It is generally considered that a foreclosure sale ordered by a court of equity is subject to confirmation by the court and that the sale is not final or complete or binding or conclusive, or is not fully a sale or a true sale in the legal sense or a legal sale or valid as such, unless, and until, it is confirmed, it being nothing more, prior to confirmation, than an unexecuted sale or an unaccepted offer to purchase." Id. Objections to confirmation should be seasonable and specific. They should not include objections which might and should have been made before the decree, or objections to the decree itself unless they involve the jurisdiction of the court to render the decree. 59A C.J.S. Mortgages § 874 (1998).

Appellant was under no obligation to present his objections to the sale either before or at the time of the sale. However, appellant must present all of his grounds for objection prior to the order of confirmation. Here, appellant appeared at the sale and participated in the bidding process on October 24, 2002. Thereafter, he failed to file an objection until after the order of confirmation was filed on November 12, 2002, at 8:11 a.m.

In order to be considered, an objection to the sale must be filed before the confirmation of sale is filed. See Clarke. Although appellant's objection was filed a mere forty-four minutes after the sale was confirmed, we must affirm the trial court's confirmation of the public sale.

84 Ark. App. at 157, 137 S.W.3d at 443.

It is clear from the testimony of appellant and one of her witnesses that she had knowledge of at least some of the relevant facts before the sale and, therefore, could have filed written objections to the sale before it was confirmed. Because she failed to present her grounds for objection prior to the order of confirmation, we have no choice but to affirm the circuit court's decision.

Gladwin and Vaught, JJ., agree.