First Federal Sav. and Loan Ass'n, Chickasha, Okl. v. NathAnnotate this Case
First Federal Sav. and Loan Ass'n, Chickasha, Okl. v. Nath
1992 OK 129
839 P.2d 1336
63 OBJ 2574
Case Number: 71255
Supreme Court of Oklahoma
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, CHICKASHA, OKLAHOMA, APPELLEE, v. ROSALEE NATH, TREASURER OF GRADY COUNTY, OKLAHOMA, AND BOARD OF COUNTY
COMMISSIONERS OF GRADY COUNTY, OKLAHOMA, APPELLANTS.
Appeal from the District Court, Grady County, James R. Winchester, J.
CERTIORARI TO THE COURT OF APPEALS, DIV. 1.
[839 P.2d 1337]
In a mortgage lender's equity suit against county taxing authorities, the "quiet title" judgment of the District Court, Grady County, James R. Winchester, Judge, implicitly decreed that: (1) the mortgagee's first mortgage lien did not [839 P.2d 1338] merge in its legal title upon mortgagee's purchase of the property at sheriff's sale following foreclosure but survived as a first lien and (2) County's unforeclosed personal property tax liens, which not only stand inferior to the surviving first mortgage lien but are also extinguishable sans foreclosure as a "cloud" on mortgagee's title, should be released. The Court of Appeals affirmed the nisi prius decree. Certiorari previously granted,
THE COURT OF APPEALS' OPINION IS VACATED; THE TRIAL COURT'S "QUIET TITLE" DECREE IS AFFIRMED IN PART AND REVERSED IN PART.
Max A. Martin, Asst. Dist. Atty., Melvin R. Singleterry, Dist. Atty. Chickasha, for appellants.
Ron Dirickson, Huckaby, Fleming, Frailey, Chaffin & Darrah, Chickasha, for appellee.
OPALA, Chief Justice.
[839 P.2d 1338]
¶1 The issues presented on certiorari are: (1) Did the trial court err when it implicitly applied the equitable "anti-merger doctrine"
THE ANATOMY OF LITIGATION
¶2 When First Federal foreclosed its first mortgage on property in Grady County [the property],
¶3 First Federal, which sought below the court's declaration that its first mortgage survived the sheriff's sale and had priority over County's unforeclosed personal property tax liens,
¶4 County's bid for new trial proved unsuccessful. On appeal the nisi prius decision was affirmed.11 On rehearing before the Court of Appeals, County pressed, for the first time, the same argument as that in its petition for certiorari now before us - namely, that the agreed facts in the record show there was error in allowing First Federal to preserve its mortgage lien past the earlier foreclosure.12 Rehearing was denied; we granted certiorari.
[839 P.2d 1340]
WHERE CIRCUMSTANCES MAY WARRANT, EQUITY WILL INTERPOSE ANTI-MERGER RELIEF TO KEEP A MORTGAGE ALIVE, AFTER ITS EARLIER FORECLOSURE, VIS-A-VIS AN INFERIOR LIEN OF ONE WHO WAS NOT A PARTY TO THE PRIOR FORECLOSURE
ELEMENTS OF THE ANTI-MERGER DOCTRINE
¶5 A common-law rule, made statutory by 42 O.S. 1981 § 22 ,13 teaches that when two estates in property in the same right14 meet in the same person, a merger takes place.15 By Oklahoma law - explained in Yoder v. Robinson16 - it is firmly settled that when the owner of an equitable interest acquires the legal title to the property, the merger of title that follows at law does not always meet with chancery's recognition. Equity's interposition to prevent the effect of merger at law is called the "anti-merger doctrine."17 Yoder teaches that the intention of the person acquiring the two interests controls.18 If the intention that the estates not merge is divinable, it will be followed in equity; and even when it is not clearly expressed, the intention that the interests not merge will be presumed, if the circumstances indicate the party acquiring both interests would benefit from avoiding a merger.19
¶6 When the mortgagee fails to join an interest-holder as defendant in a mortgage foreclosure and then purchases the mortgaged property at sheriff's sale, equity will, in a proper case, afford relief to keep the mortgage alive vis-a-vis the omitted party's interest.20 Although legal merger may be avoided in equity and the foreclosed mortgage preserved, an [839 P.2d 1341] unforeclosed junior encumbrance is not eo ipso extinguished. The mortgagee is afforded an opportunity to foreclose its mortgage once again, this time against the previously omitted lien.21
FIRST FEDERAL'S EQUITABLE QUEST TO CURE THE PROBLEMS CAUSED BY ITS OMISSION OF COUNTY FROM THE EARLIER FORECLOSURE
¶7 When First Federal learned it had left out a junior lienholder from its foreclosure suit, it sought corrective action below. Its quest may have paraded as a proceeding under 68 O.S. 1981 § 24305 22 to determine the continued effectiveness of the liens and the order of their priority.23 As we characterize the instant post-foreclosure contest, it was nothing more or less than an equity suit for a declaration that: (1) First Federal's mortgage lien did not merge in its legal title but survived as the first lien upon the property and (2) the unforeclosed County tax liens not only stand inferior to the surviving First Federal lien but are also extinguishable sans foreclosure as a "cloud" which should be ordered removed.
¶8 County argues on certiorari that the record shows no equitable ground for keeping First Federal's mortgage alive.24 It directs our attention to a Court of Appeals decision in Creditthrift of America, Inc. v. Amsbaugh25 where that court refused to allow the anti-merger doctrine in favor of a lienholder who admitted an intentional failure to join in the foreclosure action a party with a known interest.26 County seems to suggest we may infer from agreed fact No. 527 that First Federal had failed to interpose a valid equitable ground for County's omission from foreclosure.
¶9 We do not concur that any agreed fact in the record of this appeal deprives First Federal of the anti-merger doctrine's protection and requires reversal of the trial court's implicit finding that disallowed merger. There is no proof that First Federal's failure to join County in the earlier foreclosure was attended by some inequitable conduct. In short, the trial court's finding against legal merger, implicit in its [839 P.2d 1342] decree, cannot be declared as clearly contrary to the weight of the evidence.28
¶10 Legal error may not be presumed from a silent record; it must be affirmatively demonstrated.29 On review, we always indulge in the presumption that a trial court's decision is correct; every fact not disputed by the record must be regarded as supporting the trial court's judgment.30 County has not met its burden31 to provide for our review a record that would pierce or overcome the presumption of nisi prius correctness that attaches by force of law.32 In short, nothing in this record affirmatively demonstrates error in shielding First Federal's foreclosed mortgage by interposition of equity's anti-merger doctrine.
THE NISI PRIUS DECLARATION AGAINST LEGAL MERGER BINDS COUNTY BUT DOES NOT ENTITLE FIRST FEDERAL TO THE LIENS' CANCELLATION AND RELEASE SANS FORECLOSURE
¶11 At nisi prius County defended against First Federal's plea for extinguishment of its tax liens.33 Although it may [839 P.2d 1343] not have clearly articulated the correct legal theory in opposition to its adversary's claim for their "removal" as an unauthorized "cloud,"34 County is benefited here by a public-law exception35 to the general rule that an appellate court will not review a case on a theory different from that presented in the trial court. County's interest in its tax liens is a public-law issue. Within the parameters of the noted exception we may, and do today, supply here the correct authority for reversal of that part of the trial court's decree which cancels the inferior County liens.
¶12 First Federal urges that (1) an action such as this one - under 68 O.S. 1981 § 24305 - rather than a new foreclosure is the most efficient way to resolve the problems caused by County's omission from the earlier foreclosure and (2) everything that re-foreclosure of First Federal's mortgage could accomplish has already been done in this case. We reject the notion that another foreclosure of First Federal's mortgage is unnecessary to extinguish the County liens. The mortgage foreclosure statute36 provides that all parties who have liens upon mortgaged property may be joined in the proceeding. County has at least two important interests to be protected: (1) it may insist that the land's sale be conducted fairly and for a fair value37 and (2) it may timely redeem the property from the superior lien.38 This may not be accomplished except by foreclosure.
¶13 First Federal urges that we would reach "an absurd result" if we were to require a re-foreclosure of its mortgage. It contends that when the trial court ruled in this case it considered the earlier foreclosure's appraisal and the results of the sheriff's sale. [839 P.2d 1344] According to First Federal's argument, if the sale in that case had been for an inadequate amount, the trial court could have denied cancellation relief in the present case. First Federal submits it should be relieved of having to go "through the motions of a [new] Sheriff's sale simply to say there was a Sheriff's sale."
¶14 A judicial sale on foreclosure is not conclusive or binding until it is confirmed.39 But County was not a party to the prior foreclosure and is not bound by the earlier sheriff sale's confirmation.40 Confirmation is ineffective against one who was neither a party to, nor a participant in, a foreclosure proceeding.41 Even though First Federal may have its first mortgage reimpressed as a superior lien, it must once again foreclose that lien, this time against County's previously omitted interest.42
¶15 One who holds a lien inferior to another on the same property has a right to redeem, just as the owner must be allowed to redeem from a superior lien.43 First Federal urges that it gave County the opportunity to redeem the property at the May 27 hearing in this case.44 This informal offer in a non-foreclosure context is no substitute for a foreclosure conducted in accordance with statutory strictures.45 We hence reverse the trial court's decree insofar as it "quiets First Federal's title" against County's unforeclosed tax liens and orders them released.46 Another foreclosure is here the law's sine qua non requirement.
¶16 County failed to bring for appellate review a record that would show (a) its own tax liens to be superior to First Federal's first mortgage lien or (b) the trial court's implicit finding that disallows legal merger to be clearly contrary to the weight of the evidence. That part of the nisi prius decision which implicitly preserves the foreclosed mortgage as a first lien must be affirmed. But since County's tax liens stand unforeclosed, the trial court's decision, insofar as it cancels and orders them released, is reversed without prejudice to a later foreclosure.
¶17 Certiorari previously granted; the Court of Appeals' opinion is vacated; the trial court's "quiet title" decree is affirmed in part and reversed in part.
¶18 HODGES, V.C.J., and LAVENDER, SIMMS, HARGRAVE, SUMMERS and WATT, JJ., concur;
¶19 ALMA WILSON and KAUGER, JJ., concur in result.
"1. Appellee obtained Mortgage covering certain real property. The Mortgage was recorded on January 16, 1979.
2. The owner of real property failed to pay personal property taxes for years 1983, 1984, 1985, 1986 and 1987.
3. That such personal property taxes for each year became liens in favor of the Appellants upon real property on or about July 1, of the following year.
4. That during 1987 Appellee filed action foreclosing its Mortgage.
5. That Appellants were not joined as parties to foreclosure action.
6. That the real property was sold to Appellee at Sheriff's Sale in foreclosure proceeding.
7. That the sales price of property was not sufficient to satisfy Appellee's judgment against owners.
8. That the foreclosure proceeding did not foreclose Appellants' personal property tax liens because Appellants were not party to the foreclosure proceeding.
9. That Appellee then filed a separate civil action against Appellants requesting Court (a) to determine Appellee's Mortgage had priority over Appellants' personal property tax lien, (b) to quiet Appellee's title as to Appellants' tax liens, (c) to order Appellant, Rosalee Nath, County Treasurer, to release the personal property tax liens as to property in question.
10. The trial court granted the relief requested by Appellee.
11. That Appellants timely filed Motion for New Trial which was overruled on May 27, 1988."
"A. Within thirty (30) days after publication of the general notice required in the provisions of Section 24305 of this title, the county treasurer shall cause a personal tax lien record to be made in a docket for such purpose, showing the names and addresses of all persons . . . owing delinquent personal taxes, setting forth the delinquent years and amounts due and unpaid, together with penalty and costs. . . . Said liens are inferior to all other liens, conveyances or encumbrances filed prior thereto, on real or personal property. The tax lien shall be a lien on all personal and real property of the person . . . owing the delinquent tax for a period of seven (7) years . . ."
This statute was amended and renumbered as
". . . From and after the entry of such tax upon such tax lien docket, any person claiming any interest in any land or personal property can sue the county treasurer and board of county commissioners in the district court to determine the validity or priority of said lien." [Emphasis supplied.]
This statute was amended and renumbered as
"The sale of any property on which there is a lien, in satisfaction of the claim secured thereby . . . extinguishes the lien thereon." [Emphasis supplied.]
The record in the present case does not reflect any misconduct by First Federal nor suggest that it is undeserving of equitable relief
Generally, uncontroverted extra-record facts admitted in the briefs may be regarded as supplementing the appellate record. Womack v. City of Oklahoma City, Okl.,
Some extant jurisprudence holds that a county attorney may not agree to a judgment against a county and that a judgment based upon a county's answer which confesses judgment, or facts on which the claim is based, will not withstand a collateral attack. See, e.g., Sinclair Prairie Pipe Line Co. v. Excise Board, 173 Okl. 375,
We need not decide today whether counsel's concessions on legal points are binding upon County here.
"In actions to enforce a mortgage . . . judgments shall be rendered for the amount or amounts due as well to the plaintiff as other parties to the action having liens upon the mortgaged premises by mortgage or otherwise . . . and for sale of the property charged and the application of the proceeds; * * *" [Emphasis supplied.]
A junior encumbrancer may be joined in the foreclosure. Although it is not an indispensable party to foreclosure brought by a senior encumbrancer, if it is not joined its lien remains unaffected by the decree. McCredie v. Dubuque Fire & Marine Ins. Co., 63 Okl. 184,
"One who has a lien, inferior to another upon the same property, has a right: 1. To redeem the property in the same manner as its owner might, from the superior lien. . . ."