Capitol Federal Savings Bank v. Bewley

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Capitol Federal Savings Bank v. Bewley
1990 OK 79
795 P.2d 1051
61 OBJ 2098
Case Number: 69801
Decided: 07/24/1990
Modified: 09/04/1990
Supreme Court of Oklahoma

 
CAPITOL FEDERAL SAVINGS BANK, FORMERLY CAPITOL FEDERAL SAVINGS AND LOAN
ASSOCIATION, A CORPORATION, APPELLEE,
v.
NORMAN N. BEWLEY, ET AL., APPELLANT.

Certiorari to the Court of Appeals, Tulsa Division No. 2, Appeal from District Court of Oklahoma County; Leamon Freeman, Judge.

¶0 Appellant appeals from a district court order denying his motion to vacate a deficiency judgment rendered against him. The judgment was entered after foreclosure proceedings in which notice of the creditor's motion for deficiency judgment was mailed to the wrong address and not received by appellant. The order of the district court was affirmed by the Court of Appeals.

CERTIORARI PREVIOUSLY GRANTED OPINION OF THE COURT OF APPEALS VACATED; JUDGMENT OF THE DISTRICT COURT REVERSED.

Marianne Shimanek Ratliff, J. David Rambo, J. David Rambo, P.C., Norman, for appellant.

Jay B. Williams, Virginia K. Johnston, Jones, Blaney & Williams, Oklahoma City, for appellee.

DOOLIN, Justice.

[795 P.2d 1052]

¶1 Appellant, Norman N. Bewley ("Bewley"), and others entered into a loan transaction with Capitol Federal Savings Bank ("Capitol Federal") in which a promissory note and real estate mortgage was executed. Appellee, Northwest Federal Savings and Loan Association ("Northwest"), is the successor by merger to Arrowhead Federal Savings and Loan Association, which was the successor in interest to Capitol Federal. The promissory note was subsequently defaulted and Capitol Federal initiated an action on the note and foreclosure proceedings on the mortgage naming Bewley as a defendant.

¶2 Although personally served with summons and petition, Bewley did not enter an appearance in the foreclosure proceedings. On December 16, 1985, judgment was entered in favor of Capitol Federal and the foreclosed property was sold in a Sheriff's sale. Capitol Federal subsequently filed a motion for deficiency judgment under 12 O.S. 1981 § 686 .

¶3 It is not disputed that Bewley had no knowledge or notice of the court proceeding regarding the motion for deficiency judgment. In fact, Bewley asserts he had no knowledge that the deficiency judgment had been entered against him until he was served with an order to appear at an asset hearing in October of 1986. Bewley failed to appear at the asset hearing and the trial court issued a contempt citation ordering Bewley to appear at a show cause hearing on November 6, 1986. Bewley also failed to appear at that hearing.

¶4 On August 21, 1987, Bewley filed a motion to vacate the deficiency judgment asserting that at the time the judgment was entered he had no legal or actual notice of the deficiency proceeding, no knowledge the deficiency judgment was being sought by Capitol Federal, or that any further legal proceedings were being held which affected his rights in any way. After conducting a hearing, the trial court denied Bewley's motion to vacate the deficiency judgment. Bewley subsequently appealed and the Court of Appeals, Division No. 2, affirmed the district court's decision.

I.

¶5 The Court of Appeals found the issue to be whether the deficiency judgment was void or voidable. The court correctly stated that a void judgment may be attacked at any time,

¶6 The court's reasoning ignores Bewley's right to due process of law as required by the Constitution.

¶7 The Court of Appeals cited Union Texas Petroleum v. Corporation Commission

"A mere defect in formal style or nomenclature will not invalidate service of process unless it actually resulted in failure to give notice, as can be discerned from the excerpts from Mullane which demonstrate the inquiry is centered on what steps are necessary to impart actual notice, and not formalistic ritual of service [795 P.2d 1054] of process."

¶8 The instant case is distinguished by the fact that Bewley never received notice of the deficiency proceedings until after a judgment was rendered against him. This situation is analogous to that of the second party which moved to vacate the judgment in Union Texas. That party had not been mailed notice and was never actually notified of the action against it. With respect to that party, this Court held the order's attempt to adjudicate the party's rights was "ineffective, and a nullity insofar as it purport [ed] to affect its interests."

¶9 A void judgment is one that is void on the face of the judgment roll.

II.

¶10 Appellee further alleges that because the district court acquired jurisdiction over Bewley in the original foreclosure proceeding further notice was not required for the subsequent deficiency proceedings. Whether notice of subsequent proceedings is required after a court has acquired jurisdiction by original process is a matter of discretion.

¶11 The Oklahoma statutes require notice before a deficiency judgment may be entered. 12 O.S. 1981 § 686 specifically provides:

"Simultaneously with the making of a motion for an order confirming the sale or . . . within ninety (90) days after the date of the sale, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action." [emphasis added]

The deficiency judgment was entered against Bewley in clear violation of this statute and is therefore, void as a matter of law.

¶12 Section 1038 of Title 12 of the Oklahoma Statutes provides that "[a] void judgment may be vacated at any time, on motion of a party, or any person affected thereby."

¶13 The deficiency judgment rendered against Bewley is in clear violation of the Constitution of the United States and of the laws of the State of Oklahoma. We must uphold the Constitution as the supreme law of the land and, of course, the law of our State as enacted by the Legislature, and thus the deficiency judgment in its present form cannot stand. We therefore REVERSE the judgment of the [795 P.2d 1055] district court and the deficiency judgment entered against Bewley is hereby vacated.

¶14 OPALA, V.C.J., and HODGES, ALMA WILSON and KAUGER, JJ., concur.

¶15 HARGRAVE, C.J., and SUMMERS, J., concur in result.

¶16 LAVENDER and SIMMS, JJ., dissent.

Footnotes:

1 12 O.S. 1981 § 686 provides in part: ". . . Simultaneously with the making of a motion for an order confirming the sale or . . . within ninety (90) days after the date of sale, the party to whom such residue shall be owing may make a motion in the action for leave to enter a deficiency judgment upon notice to the party against whom such judgment is sought or the attorney who shall have appeared for such party in such action. Such notice shall be served personally or in such other manner as the court may direct. Upon such motion the court, whether or not the respondent appears, shall determine, upon affidavit or otherwise as it shall direct, the fair and reasonable market value of the mortgaged premises as of the date of sale or such nearest earlier date as there shall have been any market value thereof and shall make an order directing the entry of a deficiency judgment. Such deficiency judgment shall be for an amount equal to the sum of the amount owing by the party liable as determined by the judgment with interest, plus costs and disbursements of the action plus the amount owing on all prior liens and encumbrances with interest, less the market value as determined by the court or the sale price of the property whichever shall be the higher. If no motion for a deficiency judgment shall be made as herein prescribed the proceeds of the sale . . . shall be deemed to be in full satisfaction of the mortgage debt and no right to recover any deficiency in any action or proceeding shall exist."

2 12 O.S. 1981 § 1038 provides: ". . . A void judgment may be vacated at any time, on motion of a party, or any person affected thereby."

3 Fowler v. Goldfeder, 418 P.2d 317, 319 (Okl. 1966), 12 O.S. 1981 § 1031 provides: "The district court shall have power to vacate or modify its own judgments or orders within the times prescribed hereafter. First. By granting a new trial for the cause, within the time and in the manner prescribed in Section 653 of this title. * * * Third. For mistake, neglect or omission of the clerk of irregularity in obtaining a judgment or order. * * *"

4 Moran v. City Natl. Bank, 183 Okl. 308, 82 P.2d 682 (1938); United Bonding Ins. Co. v. State ex rel. Patrick, 373 P.2d 64 (Okl. 1962); 12 O.S. 1981 § 1035 provides: "A judgment shall not be vacated on motion or petition, until it is adjudged that there is a valid defense to the action on which the judgment is rendered, . . ."

5 U.S. Const. amend. XIV, § 1, provides: ". . . No State shall . . . deprive any person of life, liberty, or property, without due process of law . . ."; See also, Okla. Const. art. 2, § 7 which provides: "No person shall be deprived of life, liberty, or property, without due process of law."

6 Goss v. Lopez, 419 U.S. 565, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975), Groppi v. Leslie, 404 U.S. 496, 92 S. Ct. 582, 30 L. Ed. 2d 632 (1972); Boddie v. Connecticut, 401 U.S. 371, 91 S. Ct. 780, 28 L. Ed. 2d 113 (1971); Mullane v. Central Hanover Bank & Trust, 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950); Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972); See also Bomford v. Socony Mobil Oil Co., 440 P.2d 713 (Okl. 1968); Cate v. Archon Oil Co., Inc., 695 P.2d 1352 (Okl. 1985); State v. Mauldin, 602 P.2d 644 (Okl. 1979); In re White's Estate, 175 Okl. 439, 52 P.2d 1074 (1936); Greco v. Foster, 268 P.2d 215 (Okl. 1954).

7 Grannis v. Ordean, 234 U.S. 385, 394, 34 S. Ct. 779, 783, 58 L. Ed. 1363 (1914).

8 Goss v. Lopez, 419 U.S. 565, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975); Anderson Natl. Bank v. Luckett, 321 U.S. 233, 64 S. Ct. 599, 88 L. Ed. 692 (1944); Union Texas Petroleum v. Corporation Commission, 651 P.2d 652, 658 (Okl. 1981), cert. denied, 459 U.S. 837, 103 S. Ct. 82, 74 L. Ed. 2d 78 (1982).

9 Union Texas, supra note 8, at 658.

10 Id. See also Howell v. Blue Cross and Blue Shield of Okla., 609 P.2d 1283 (Okl. 1980) (held one having actual notice is not prejudiced by failure to receive statutory notice); First Natl. Bank v. Okla. Savings and Loan Bd., 569 P.2d 993 (Okl. 1977).

11 Union Texas, at 659.

12 Scoufos v. Fuller, 280 P.2d 720, 725 (Okl. 1954); Pettis v. Johnston, 78 Okl. 277, 190 P. 681 (1920); Crowther v. Schoonover, 130 Okl. 249, 266 P. 777 (1928).

13 Scoufos, at 725.

14 Archon, supra, n. 6.

15 12 O.S. 1981 § 686 ; See, Selby v. Kelly Rae Apartments, Inc., 634 P.2d 1303, 1305 (Okl. 1981) (A lien creditor is not entitled to a deficiency under Section 686 unless notice is given).

16 12 O.S. 1981 § 1038 .