Bank of Wichitas v. Ledford

Decision Date10 October 2006
Docket NumberNo. 102,946.,102,946.
Citation2006 OK 73,151 P.3d 103
PartiesBANK OF the WICHITAS, an Oklahoma Banking Corporation, Plaintiff/Appellant, v. Maxine LEDFORD, Herman Ledford, Voyle C. Holder, and Janet S. Holder, Defendants/Appellees, Tommie J. Holder, Ellen J. Holder, Janet S. Wright, Jackson County Treasurer, and The Board of County Commissioners of Jackson County, Defendants, Bank of the Wichitas, an Oklahoma Banking Corporation, Plaintiff/Appellant, v. Maxine Ledford, Herman Ledford, Voyle C. Holder, and Janet S. Holder, Defendants/Appellees, Tommie J. Holder, Ellen J. Holder, and Deanna Beamon Miller, Kiowa County Treasurer, and The Board of Commissioners of Kiowa County, Defendants.<SMALL><SUP>1</SUP></SMALL>
CourtOklahoma Supreme Court

On Appeal from the District Court, Jackson County.

¶ 0 Plaintiff brought actions in Kiowa County and Jackson County to collect on two promissory notes and to foreclose related mortgages. The trial court, sitting in Kiowa County, Richard B. Darby, judge, gave summary judgment to plaintiff on the notes. He then consolidated the mortgage foreclosure issues in the actions for disposition before him in Jackson County. In prejudgment proceedings, the trial court determined that the two mortgages allegedly securing the first note were "surety mortgages." He then ruled that as sureties, the current owners of a portion of the mortgaged property are entitled to tender payment of the note secured by their property and be substituted by subrogation to the plaintiff's position in the foreclosure action. After plaintiff accepted the tendered offer, the parties filed cross motions for summary judgment. The trial court gave judgment to the property owners, authorizing them to foreclose the mortgages securing the first note in whole or in part at their discretion. Plaintiff brought this appeal, which stands retained for this court's disposition.


Paul R. Foster and Carrie L. Foster, Paul Foster Law Offices, P.C., Norman, OK, and Newell E. Wright, Jr., Cheyenne, OK, for Appellant.

Nicholas D. Garrett, Lawton, Oklahoma and Ernest F. Godlove, Godlove, Mayhall, Dzialo, Dutcher & Erwin, Lawton, OK, for Appellees.2


¶ 1 The dispositive issues tendered on appeal are: (1) Are the mortgages at issue valid and enforceable? and if so (2) Is appellant entitled to require appellees to marshal assets? and if not (3) Are appellees entitled to summary judgment of foreclosure, authorizing them to choose the order in which the mortgaged property is sold and to be reimbursed from the proceeds of such sale in the full amount tendered by them in satisfaction of the secured debt? We answer the first question in the affirmative and the second and third questions in the negative.


¶ 2 On the 4th day of March 1997, Horace K. Holder ("Horace"), an elderly man residing in a nursing home, executed a durable power of attorney naming his three children, Tommie J. Holder ("Tommie" or "debtor"), Maxine Ledford ("Maxine"), and Voyle C. Holder ("Voyle"), as his attorneys-in-fact, and granting them inter alia the power to mortgage his property. Horace had periodically borrowed funds from plaintiff, Bank of the Wichitas ("Bank" or "plaintiff"), in connection with his farming and ranching activities, but had never mortgaged any of his land to secure his loans.

¶ 3 On 20 March 1997, Tommie executed a promissory note (the "1997 note") payable to Bank in the principal amount of $150,000.00. On the same date, Tommie, Maxine, and Voyle, as Horace's attorneys-in-fact, executed two mortgages (the "1997 mortgages") covering approximately 1,760 acres owned by Horace in Kiowa and Jackson Counties. Horace died on 25 March 1997, devising the 1,760 acres described in the 1997 mortgages to Tommie, Maxine, and Voyle, with Tommie receiving approximately 500 acres, Maxine 1,000 acres, and Voyle 260 acres. Tommie thereafter made sporadic payments on the 1997 note.

¶ 4 In 1999, Tommie, his wife, and a third person executed a promissory note to Bank in the amount of $349,000.00. To secure this note, Tommie gave Bank a lien on most of his personal property and a mortgage on the 500 acres he had received by testamentary devise from Horace. Tommie was unable to make the payments on this note either.

¶ 5 In 2003 Bank declared both of Tommie's notes to be in default. It then commenced this litigation to collect on the notes and foreclose the 1997 and 1999 mortgages. On 7 January 2004, the trial court sitting in Kiowa County gave Bank summary relief on the two notes. On 18 March 2004, Tommie and his wife filed a bankruptcy petition which ultimately resulted in the discharge of Bank's judgment debt. On 1 September 2004, the foreclosure actions in Kiowa and Jackson Counties were consolidated for disposition by the district court sitting in Jackson County.

¶ 6 After initially treating the 1997 mortgages as having been validly executed, Maxine and Voyle ("appellees") later filed an amended answer in which they challenged the mortgages' validity on the grounds that Horace had lacked the mental capacity to execute the durable power of attorney naming them as his attorneys-in-fact. Before the trial court had a chance to address that argument, appellees abandoned it, electing instead to argue that the 1997 mortgages were valid and enforceable as surety instruments by means of which Horace's property had been used to secure Tommie's 1997 note. Appellees contended that when they took ownership of the property by testamentary devise from Horace, they succeeded to his surety status with all the rights that status entails, including the right to pay their principal's debt and be substituted by equitable subrogation to the creditor's rights with respect to the debt and any collateral securing it.

¶ 7 Acting upon this contention, appellees tendered into court on 16 November 2004 the full amount owed by Tommie on the 1997 note and claimed the right to be substituted by subrogation to Bank's position as plaintiff in the foreclosure of the 1997 mortgages. They asserted that their only obligation to Bank was to pay off Tommie's debt after which they should be free to prosecute the foreclosure action "in any manner as they see fit."

¶ 8 Bank argued that the 1997 mortgages were not at their inception surety instruments and, even if they had originally been given in a surety capacity, appellees could not succeed by testamentary devise to Horace's surety status. Consequently, Bank argued, appellees' offer should be ruled ineffective. Alternatively, and in the event the trial court recognized Maxine and Voyle as sureties and substituted them as plaintiffs in the foreclosure action, Bank moved the court to declare appellees to be senior lien holders under the 1997 mortgages with the duty to marshal assets to protect Bank's junior lien under its 1999 mortgage on Tommie's separate tract. Finally, Bank argued that if the trial court did not order marshaling, it should order all the property subject to the 1997 mortgages sold and the debt repaid proportionately from the property now owned separately by Tommie and appellees.

¶ 9 Maxine and Voyle filed an alternative motion of their own on 10 January 2005. Citing 15 O.S.2001 § 379,3 they asked the trial court to require Bank to foreclose on Tommie's separately owned property first as property belonging to the principal debtor and, if Bank should fail to do so, declare the sureties' obligation exonerated.

¶ 10 The trial court heard oral argument on 12 January 2005 on the surety issue, concluding that Maxine and Voyle were indeed sureties.4 Bank asked the trial court to certify the decision for immediate appeal and to defer consideration of its marshaling motion until appellate resolution of the surety issue. On 24 January 2005, Bank changed course and accepted Maxine's and Voyle's tendered offer.5

¶ 11 With the surety issue resolved, the trial court on 2 March 2005 heard argument on Bank's alternative motions to marshal assets or to order ratable distribution of foreclosure-sale proceeds, rendering its decision by a journal entry of judgment dated 18 May 2005, in which it not only rejected both of Bank's motions, but also entered a final order disposing of the entire foreclosure action in favor of appellees. Bank moved to vacate the judgment, arguing that insofar as the trial court had decided matters beyond the issues heard at the 2 March 2005 hearing, it had violated Bank's right to due process of law. Bank also asked the trial court to reconsider its refusal to order marshaling or ratable distribution of the foreclosure-sale proceeds. The trial court on 17 August 2005 denied Bank's motion to reconsider, but vacated the judgment of foreclosure.

¶ 12 Both sides then filed motions for summary judgment. The trial court on 8 December 2005 gave judgment to appellees, ordering foreclosure of the 1997 and 1999 mortgages and the sale of the property mortgaged in 1997 in whole or in part and "in such order as determined by [appellees]." Because the sale of Tommie's tract first to reimburse appellees pursuant to the 1997 mortgages would leave Bank with little or nothing to satisfy the 1999 debt, Bank appeals. We granted Bank's motion to retain the case for disposition by this court.


¶ 13 Summary process—a special pretrial procedural track pursued with the aid of acceptable probative substitutes6—is a search for undisputed material facts which, sans forensic combat, may be utilized in the judicial decision-making process.7 Summary relief is permissible where neither the material facts nor any inferences that may be drawn from uncontested facts are in dispute, and the law favors the movant's claim or liability-defeating defense.8 Only those evidentiary materials which eliminate from trial some or all fact issues on the merits of the claim or defense afford...

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