Bank of Baker v. Mikelson Land Co., 98-297

• Decision Date: 20 April 1999
• Docket Number: No. 98-297,98-297
• Citation: 979 P.2d 180,1999 MT 76
• Court: Montana Supreme Court
• Parties: BANK OF BAKER, Plaintiff and Respondent, v. MIKELSON LAND COMPANY, R.A. Mikelson, Williston Basin Interstate Pipeline Company, Fallon County Treasurer, Et Al.,Defendants And Appellants.

Page 180

979 P.2d 180

1999 MT 76

BANK OF BAKER, Plaintiff and Respondent, v. MIKELSON LAND COMPANY, R.A. Mikelson, Williston Basin

Interstate Pipeline Company, Fallon County

Treasurer, Et Al.,Defendants And Appellants.

No. 98-297.

Supreme Court of Montana.

Submitted on Briefs Nov. 5, 1998.

Decided April 20, 1999.

Peter T. Stanley, Attorney at Law, Billings, Montana, For Appellants.

Carey E. Matovich; Matovich & Keller, Billings, Montana, For Respondent.

Justice KARLA M. GRAY delivered the Opinion of the Court.

¶1 Mikelson Land Company and its owner, R.A. Mikelson (collectively, Mikelson), appeal from a deficiency judgment and the underlying findings of fact, conclusions of law and order entered by the Sixteenth Judicial District Court, Fallon County. We affirm and remand.

¶2 Mikelson raises the following issues on appeal:

¶3 1. Whether the District Court erred in concluding that proper notice of the sale was given.

¶4 2. Whether the District Court erred in valuing the real property.

¶5 3. Whether the District Court erred in determining the Bank of Baker's entitlement to a deficiency.

¶6 4. Whether the District Court erred in calculating interest.

BACKGROUND

¶7 In 1986, Mikelson executed a promissory note to the Bank of Baker (Bank)in the ¶8 Mikelson stopped making payments under the promissory note in September of 1989, at which time the balance was $85,289.03. Mikelson also failed to pay the real estate taxes levied on the real property from 1987 to 1992.

principal amount of $93,041.08, at 10.5 percent interest per annum, in exchange for a loan in the same amount. Mikelson also executed a deed of trust indenture on real property to the Bank to secure the new loan. The real property contained a large vacant structure, a smaller structure housing the town's only liquor store and a parking lot.

¶9 The Bank filed a foreclosure action against Mikelson and other defendants not involved in this appeal in 1993. Discovery ensued, motions were filed and resolved, and the case was tried to the District Court on August 9, 1994. The District Court entered its findings of fact, conclusions of law and order in favor of the Bank on January 2, 1996, and entered judgment thereon February 10, 1997. The total judgment was for $170,507.41, which included the principal amount remaining due on the promissory note of$85,289.03, $66,073.30 in interest, and attorneys' fees and costs of$19,145.07. The District Court also ordered the Fallon County Sheriff to sell the real property according to law and concluded that, if the proceeds of the sale did not satisfy the $170,507.41 judgment, the Bank would be entitled to a deficiency judgment against Mikelson.

¶10 The Sheriff posted notices of the sale at four different locations in Baker, including next to the main door of the large vacant structure on the real property. Neither Mikelson nor Mikelson's counsel was personally served with notice of the sale.

¶11 The real property was sold on July 7, 1997. Two parties, both unaffiliated with the Bank, submitted bids. The high bidder paid $10,000 for the property and those sale proceeds were applied to Mikelson's unpaid taxes, which totaled $21,112.17 at the time of the sale. The remaining tax obligation transferred with the property to the new owner. Thus, the effective price paid for the real property was $21,112.17.

¶12 Following the sale, the Bank moved for a determination of the amount of the deficiency and Mikelson moved to set aside the sale and in opposition to entry of a deficiency. The District Court held a hearing on October 28, 1997, and both parties presented testimony on the value of the real property. Mikelson's expert witness opined that the intrinsic value of the property when sold was $101,500, but that his intrinsic value amount was not equivalent to fair market value. The Bank's expert witness appraised the property at between zero and $21,000.

¶13 On February 23, 1998, the District Court entered its findings of fact, conclusions of law and order implicitly denying Mikelson's motions to set aside the sale and in opposition to entry of a deficiency, and determining that the fair market value of the real property was equal to or less than the $21,112.17 in accrued taxes, penalties and interest as of the date of the sale. On that basis, the court concluded that the Bank was entitled to a deficiency judgment against Mikelson in the amount of $197,690.49, which included the judgment amount entered February 10, 1997, interest on that judgment at 10.5 percent interest per annum to the date of the hearing on October 28, 1997, in the amount of $12,753, and additional attorneys' fees and costs in the amount of $14,430.08. On February 27, 1998, the District Court entered a final deficiency judgment against Mikelson in the amount of $199,193.64, and Mikelson appeals.

DISCUSSION

¶14 1. Did the District Court err in concluding that proper notice of the sale was given?

¶15 Mikelson's motion to set aside the sale was premised on two alleged inadequacies in the notices of the sale of the real property. The District Court implicitly denied the motion, concluding that the locations where the Sheriff posted the notices of sale met the requirements of § 25-13-701(1)(c), MCA, and that the law does not require that notice be personally served on Mikelson or Mikelson's counsel. Mikelson asserts error regarding both of the court's conclusions, and we review a district court's legal conclusions to determine whether the interpretation of the law is correct. See Choteau Library Bd. v. Teton County Bd. (1997), 283 Mont. 87, 90, 938 P.2d 1357, 1359.

¶16 Mikelson's first contention is that the notice posted next to the main door of the large vacant building on the real property was in a private place rather than a public place as required by § 25-13-701(1)(c), MCA, because the building was not open to the public. We disagree.

¶17 Section 25-13-701(1)(c), MCA, mandates that notice of a sheriff's sale of property must be posted "in three public places in the county where the property is situated...." The term "public place" means a place where the general public has a right to go and to be. Territory v. Lannon (1889), 9 Mont. 1, 4, 22 P. 495, 496. A "public place" also is defined as a "place to which the general public has a right to resort; not necessarily a place devoted solely to the uses of the public, but a place which is in point of fact public rather than private...." Black's Law Dictionary 1230 (6th ed.1990).

¶18 The record before us reflects that the notice posted next to the main door of the large vacant structure on the real property was located in Baker's shopping area, across the street from the United States Post Office, next door to the County Attorney's office and just west of the only liquor store in town. Moreover, the building on which the notice was posted was immediately adjacent to a publicly traveled road and sidewalk. Thus, while it is true that the notice was posted on a privately owned building, the notice need only be posted in a location where the public had a right to be. See Lannon, 9 Mont. at 4, 22 P. at 496. The public clearly had access to the notice posted next to the main door of the large vacant structure; in fact, the successful bidder learned of the sale from that very notice. As a result, we conclude that the notice at issue was posted in a public place and we hold that the District Court did not err in concluding that the Sheriff complied with the notice requirements contained in § 25-13-701(1)(c), MCA.

¶19 Mikelson's second contention, largely undeveloped, is that Rules 81(c)and 5(a), M.R.Civ.P., read together, required the Bank to serve either Mikelson or Mikelson's counsel with notice of the sale. Again, we disagree.

¶20 The Montana Rules of Civil Procedure were enacted in 1961, and Rule 81(c), M.R.Civ.P., was enacted as part of the "General Provisions" of those Rules. It provides that any pre-existing statute requiring any act in a district court civil proceeding to "be done in the manner provided by law ... or as provided by any statute superseded by these rules" is to be done in accordance with the newly enacted civil procedure rules. Rule 81(c), M.R.Civ.P. Rule 5(a), M.R.Civ.P., provides, in part:

Except as otherwise provided in these rules, every order required by its terms to be served, every pleading subsequent to the original complaint unless the court otherwise orders because of numerous defendants, every paper relating to discovery required to be served upon a party unless the court otherwise orders, every written motion other than one which may be heard ex parte, and every written notice, appearance, demand, offer of judgment, designation of record on appeal, and similar paper shall be served upon each of the parties.

¶21 While Mikelson's argument relating to these rules is less than clear, it is clear that they do not--either standing alone or taken together--require service of the notice of the sale on Mikelson or Mikelson's counsel. Nothing in the statutes governing execution sales and notice thereof renders acts associated with execution sales acts in a district court civil proceeding, as contemplated by Rule 81(c), M.R.Civ.P. Similarly, the Rule 5(a), M.R.Civ.P., requirement that every written notice be served on all parties relates only to written notices within a district court civil proceeding. That requirement does not relate to execution sales, which are governed by the notice requirements contained in § 25-13-701, MCA, which--as discussed above--were met here.

¶22 Mikelson further argues that the District Court erred in relying on Kansas City Life Ins. Co. v. Bratsky Farms (1989) 238 Mont. 398, 778 P.2d 859, as support for its conclusion that the Sheriff was not required to personally serve Mikelson or Mikelson's counsel with the notice of the sale. The record reflects, however, that the District Court concluded that nothing in § 25-13-701, MCA, required...