823 F.2d 1395 (10th Cir. 1987), 84-2384, McVay v. Western Plains Service Corp.

Docket Nº:84-2384.
Citation:823 F.2d 1395
Party Name:Karen A. McVAY, Plaintiff/Appellant, v. WESTERN PLAINS SERVICE CORPORATION, Defendant/Appellee.
Case Date:July 14, 1987
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 1395

823 F.2d 1395 (10th Cir. 1987)

Karen A. McVAY, Plaintiff/Appellant,



No. 84-2384.

United States Court of Appeals, Tenth Circuit

July 14, 1987

Page 1396

Jack R. Gage of Hanes, Gage & Burke, P.C., Cheyenne, Wyo., for plaintiff/appellant.

G. Verne Goodsell of Gunderson, Palmer & Goodsell, Rapid City, S.D., and Nick G. Kalokathis of Lathrop & Uchner, P.C., Cheyenne, Wyo., for defendant/appellee.

Before LOGAN, ANDERSON and TACHA, Circuit Judges.


After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Cir.R. 34.1.8(c). The cause is therefore ordered submitted without oral argument.

Karen A. McVay appeals from a summary judgment of dismissal. In the capacity of a judgment creditor she sued Western Plains Service Corporation ("Western") seeking an assignment to her of an alleged property right under a mortgage held by Western. Western acknowledged it was the mortgagee on a certain piece of real property, and that a loan secured by the mortgage was in default. However, it denied ownership of any attachable property right, asserting it was merely acting as a trustee for lending institutions which had loaned money, the repayment of which was secured by the mortgage. The interests of the lending institutions were established by a written Loan Participation Agreement with, and Participation Certificates issued by, Western. On stipulated facts and cross motions for summary judgment, the district court, in a detailed opinion, ruled, inter alia, that Western held no more than a bare legal interest in the note and mortgage in question, and that such interest was without value susceptible of attachment. All valuable rights were owned by the lending institutions which funded the loan. We agree and affirm.


This case is presented to us on a narrow set of facts consisting mostly of the loan and loan participation documents: Loan Participation Agreement, Participation Certificates, note, and mortgage. There is a short stipulation of facts, including the described documents; brief affidavits submitted by Western; and copies of three documents filed in other litigation attached to McVay's motion below. The record as presented establishes the following facts.

On September 10, 1979, Helm Plan I ("Helm"), a real estate development entity, borrowed $600,000 for land acquisition and construction of a townhouse project in Casper, Wyoming. Western originated the loan with Helm and appeared throughout all the loan and security documents as the lender. A written loan commitment between Helm and Western was dated August 22, 1979, and shown to have been accepted by Helm on August 23, 1979. By a signed Loan Participation Agreement ("Agreement"), dated the same day, Western sold the entire loan, on the basis of a one-third participation each, to three savings and loan associations: Aberdeen Federal Savings & Loan Association, Aberdeen, South Dakota; Midwest Federal Savings & Loan Association, Minot, North Dakota; and First Dakota Home Savings & Loan Association, Pierre, South Dakota. 1

Page 1397

In addition to the Agreement, Participation Certificates were also executed by Western and the savings and loan associations on the same date. The loan was funded and closed on September 10, 1979. On that date Helm signed its promissory note for the $600,000, and secured payment of the note by its mortgage on the acquired property. As stated, the note and mortgage listed Western as payee and mortgagee. All the loan funds were provided by the respective savings and loan associations ($200,000 each), as contemplated by the Agreement.

By virtue of the Agreement Western loaned no money and kept no interest in the loan itself. It received a fee for originating the loan and for servicing the transaction through collection and remittance of principal and interest payments, and other services. The Agreement provided that Western "will continue to hold legal title to such loan as trustee for the owner or owners of the respective participation interests therein." Agreement, par. IV, R. Vol. I at 44. Subsequently, Helm defaulted on its loan, leaving an unpaid principal balance of $300,000, plus interest, and the land was subject to foreclosure pursuant to the mortgage.

McVay, as a judgment creditor of Western, seeks an assignment to her of Western's mortgage interest in the Helm property pursuant to Wyo. Stat. Sec. 1-17-401, which provides:

When a judgment debtor does not have personal or real property sufficient to satisfy the judgment, any equitable interest he has as mortgagor, mortgagee or otherwise, or any interest he has in any joint stock company, money contract, claim or chose in action due or to become due to him, or in any judgment or order, or any money, goods or effects which he has in the possession of any person, is subject to the payment of the judgment by action. (emphasis added).

She advances multiple arguments in support of her theory that Western held a valuable equitable property interest under the mortgage:

(a) Western is shown as the lender under all of the documents relating to the transaction and the payee/mortgagee under the note and mortgage; therefore it owns both legal and equitable interests in the note and mortgage. The lending institutions own nothing more than an interest in Western. The Participation Certificates "were like stock certificates and no more represented equitable interest in the mortgage than a share of stock in Ford Motor Company represents an equitable interest in Ford Motor Company's building headquarters in Dearborn, Michigan." Appellant's Opening Brief at 5.

(b) Only the real party in interest can foreclose a mortgage under Wyoming law. Western, as named mortgagee, commenced foreclosure proceedings. This proves, therefore, that Western is the real party in interest, i.e., the equitable owner.

(c) Western is barred by the doctrine of judicial estoppel from denying ownership of an equitable interest because in other cases the savings and loans have resisted personal jurisdiction on grounds that they were "merely shareholders" of Western.

(d) The Loan Participation...

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