Bank of Oklahoma, N.A. v. Welco, Inc.

• Decision Date: 07 March 1995
• Docket Number: No. 82374,No. 3,82374,3
• Citation: 898 P.2d 172,1995 OK CIV APP 43
• Parties: 1995 OK CIV APP 43 BANK OF OKLAHOMA, N.A., Appellee, v. WELCO, INC., and Richard K. Ledbetter, Appellants. Court of Appeals of Oklahoma, Division
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 172

898 P.2d 172

1995 OK CIV APP 43

BANK OF OKLAHOMA, N.A., Appellee, v. WELCO, INC., and Richard K. Ledbetter, Appellants.

No. 82374.

Released for Publication by Order of the Court

of Appeals of Oklahoma, Division No. 3.

Court of Appeals of Oklahoma,

Division No. 3.

March 7, 1995.

Rehearing Denied May 2, 1995.

Appeal from the District Court of Oklahoma County, James B. Blevins, Judge.

Reversed and Remanded with Instructions.

James F. Howell, and Allen B. Massie, Midwest City, for appellant, Welco, Inc.

Raymond D. Munkres, Oklahoma City, for appellant, Richard K. Ledbetter.

Michael A. Rubenstein, McKinney, Stringer & Webster, P.C., Oklahoma City, for appellee.

OPINION

ADAMS, Judge:

Richard K. Ledbetter and Welco, Inc., appeal a trial court summary adjudication order in favor of the Bank of Oklahoma (BOK). The trial court entered judgment against Welco for the amount due on a promissory note executed by Welco and against Ledbetter as guarantor of that debt. For reversal, the appellants argue BOK was not entitled to summary judgment but that Welco and Ledbetter were entitled to judgment exonerating them from further liability for the debt represented by the note. We agree.

STANDARD OF REVIEW

In addressing the appellants' argument that BOK was not entitled to summary judgment, we must examine the pleadings, depositions, affidavits and other evidentiary materials submitted by the parties and affirm if there is no genuine issue as to any material fact and BOK was entitled to judgment as a matter of law. Perry v. Green, 468 P.2d 483 (Okla.1970). All inferences and conclusions to be drawn from the evidentiary materials must be viewed in a light most favorable to Welco and Ledbetter. Ross v. City of Shawnee, 683 P.2d 535 (Okla.1984).

Similarly, in determining whether Welco and/or Ledbetter were entitled to summary judgment, we must review the same material but consider it in the light most favorable to BOK. If the facts revealed by that material, when so considered, and all reasonable inferences from those facts are consistent only with judgment for Welco and/or Ledbetter, we must conclude the trial court should have granted judgment to Welco and/or Ledbetter. In both instances, we are limited to the issues actually presented below, as reflected by the record which was before the trial court, rather than one that could have been assembled. Frey v. Independence Fire and Cas. Co., 698 P.2d 17 (Okla.1985).

FACTS

In 1981, two commercial loans were made to Welco by BOK's predecessor, Fidelity Bank, N.A. Concurrently, Ledbetter, as Welco's President and major stockholder, executed two unlimited and continuing guaranty agreements covering the present and future debts of Welco. On January 1, 1984, the loans were consolidated into a single promissory note, No. 59 (Welco note), and renewed several times that year, the last time on October 18, 1984. All of the Welco notes were executed by Ledbetter as its President. On January 21, 1985, Ledbetter and his wife executed a second mortgage on their residence in favor of BOK to secure the last renewal of the Welco note. First Security Bank (FSB) held the first mortgage on the Ledbetter's residence.

Welco defaulted on its note. Although Welco, with BOK's consent, liquidated assets that had been pledged to secure the Welco note and paid those proceeds to BOK, a substantial amount remained unpaid. Meanwhile, the Ledbetters defaulted on their debt to FSB. As a result, in August, 1991, FSB sued to obtain judgment against the Ledbetters on its note and foreclose the first mortgage on the Ledbetters' residence (the 1991 case). FSB named BOK as a party defendant who claimed a lien on the mortgaged property.

BOK filed an answer admitting it claimed an interest in the property. BOK also cross-claimed against the Ledbetters, alleging the Welco note was in default and asking to foreclose its second mortgage on the residence which was given to secure the Welco note. It became apparent that the value of the Ledbetters' residence would not be sufficient to satisfy FSB's first mortgage, and BOK requested permission to join Welco as a third-party defendant in order to obtain judgment on the Welco note. BOK also asked to amend its cross-claim against Ledbetter to seek an in personam judgment for the amount due under his guaranty. The trial court denied that request in May, 1992.

Two days later, BOK filed this action, and on June 24, 1992, BOK dismissed its cross-claim in the 1991 case without prejudice. In September, 1992, the trial court in the 1991 case entered judgment for FSB and ordered the residence sold. FSB purchased the property at the sheriff's sale and the trial court confirmed the sale on December 4, 1992. BOK did not file a request for a deficiency judgment.

In February, 1993, Welco and Ledbetter jointly moved to dismiss this action, arguing that principles of res judicata, based upon the judgment in the 1991 case, barred BOK's claims. In March, 1993, Ledbetter filed a motion for summary judgment with relevant evidentiary materials attached. Ledbetter argued, inter alia, that pursuant to 12 O.S.1991 § 686 and 15 O.S.1991 §§ 338 and 344, BOK's failure to seek a deficiency judgment in the 1991 case discharged the Welco note and exonerated him from liability as a guarantor. Eighteen days later, Welco and Ledbetter jointly filed another motion for summary judgment raising basically the same arguments contained in Ledbetter's summary judgment motion. By order filed on May 10, 1993, the trial court denied all three motions.

BOK then moved for summary judgment on August 13, 1993. Welco and Ledbetter filed a joint objection to BOK's motion that incorporated by reference all of their previously denied motions. In its order granting summary adjudication in favor of BOK, the trial court found Welco and Ledbetter jointly and severally liable for Welco's note, No. 59, in the principal amount of $124,151.83, together with accrued interest of $82,343.78 and post-judgment interest. BOK filed a motion for attorney fees which was sustained by the trial court. Welco and Ledbetter appeal both orders.

ANALYSIS

Although they filed separate briefs in chief, both Welco and Ledbetter argue that reversal is required because BOK's failure to obtain both an in personam judgment and deficiency judgment in the foreclosure action satisfied Welco's indebtedness on the note and exonerated Ledbetter's guaranty liability. As authority for their argument, both rely on Apache Lanes, Inc. v. National Educators' Life Insurance Company, 529 P.2d 984 (Okla.1974), appeal on remand, 555 P.2d 600 (Okla.1976), wherein the Court determined the creditor's failure to obtain a deficiency judgment after the sale of the mortgaged property discharged the debtor's obligation and exonerated the six guarantors' liability on the note.

BOK claims there are two important facts in the present case that distinguish it from Apache Lanes and render it inapplicable: (1) Welco was never named or joined in the foreclosure action; and (2) Having dismissed its in rem claims against the Ledbetters after it was prevented from joining Welco in the lawsuit, BOK did not receive a judgment in the foreclosure action from which it could have obtained a deficiency judgment. The Apache Lanes creditor not only sued to foreclose its mortgage against the debtor but sought judgment against the debtor and six guarantors on the note in the initial foreclosure case.

As we view their arguments, the potential liability of both Welco and Ledbetter hinges on our interpretation of 12 O.S.1991 § 686 in deciding one pivotal question--Under § 686, is a creditor, who has been joined as a party to a mortgage foreclosure action because of its lien on the mortgaged property, required to proceed in that action to enforce its lien and the debt which the lien secures? We must find our answer in the language of the section.

When interpreting statutes, our goal is to ascertain and, if possible, give effect to the legislative intent and purpose as expressed in the statute. Public Service Co. of Oklahoma v. State ex rel. Corporation Commission, 842 P.2d 750 (Okla.1992). If the legislative intent is plainly expressed, however, no further inquiry will be necessary. Hughes Drilling Co. v. Morgan 648 P.2d 32 (Okla.1982). We must consider the statute as a whole, not just individual provisions. Keck v. Oklahoma Tax Commission, 188 Okl. 257, 108 P.2d 162 (1940). We may resolve any doubt about the meaning of a statute by reference to its history. Lekan v. P & L Fire Protection Co., 609 P.2d 1289 (Okla.1980).

The first sentence of § 686 has remained unchanged since the statute's adoption in 1893, and provides, in pertinent part:

In actions to enforce a mortgage, deed of trust, or other lien or charge, a personal judgment or judgment or 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, with interest thereon ... (Emphasis added).

While interpreting the first sentence of § 686 to determine whether an order ascertaining the amount of deficiency in a foreclosure action was a true judgment or a mere clerical act, the Court, in Bartlett Mortgage Co. v. Morrison, 183 Okl. 214, 81 P.2d 318 (1938), stated:

It must be noticed that it is commanded, by the use of the word shall, that judgment be taken for the money due. This means simply that the amount of the debts, for which a lien or charge on the property has been given, shall be ascertained and personal judgment rendered therefor ... Therefore, it is arranged by statute that the issues between the parties shall be decided in one judgment. (Emphasis added).

It is mandatory that "judgment(s) shall be rendered for the amount or amounts due," and considering the explanation by the Bartlett Court and the structure of the first sentence, that same command appears to extend to the next phrase in...