Dominex, Inc. v. Key

• Court: Alabama Supreme Court
• Writing for the Court: BEATTY
• Citation: Dominex, Inc. v. Key, 456 So.2d 1047 (Ala. 1984)
• Decision Date: 24 August 1984
• Parties: DOMINEX, INC. v. Albert W. KEY. 83-129.

Page 1047

456 So.2d 1047

DOMINEX, INC. v. Albert W. KEY.

83-129.

Supreme Court of Alabama.

Aug. 24, 1984.

Bert W. Rice, of Maxwell & Rice, Atmore, for appellant.

Charles R. Godwin, Atmore, for appellee.

BEATTY, Justice.

This appeal is from the fifth lawsuit arising out of a mortgage foreclosure proceeding and the exercise of a statutory right to redeem 15 acres of land located in Escambia County. The appellant, Dominex, Inc., appeals from the grant of a motion to dismiss the complaint in which it sought to compel the appellee, Albert Key, to accept Dominex's contribution as co-tenant toward the cost of redeeming the subject property and to transfer a one-half interest therein to Dominex. We reverse and remand.

I

A summary of the relevant facts and prior proceedings follows:

On August 4, 1978, James D. Brunson and his first wife, Marie S. Brunson, jointly acquired the subject 15 acres by deed from Dahlia A. Brunson. They subsequently mortgaged the property to the First National Bank of Atmore for $25,000. Some four years later, James and Marie were divorced by a Florida circuit court; however, the divorce decree did not dispose of the realty owned by the parties.

By warranty deed executed April 30, 1982, James Brunson and his second wife, Terri S. Brunson, purported to convey their "interest" in the subject 15 acres to Joel W. Smith and his wife, Opal O. Smith. (This warranty deed, however, was held by the bank and was not recorded until July 19, 1983.) Thereafter, the First National Bank of Atmore commenced foreclosure proceedings on the mortgage, and, on June 23, 1982, the bank sold the 15 acres by mortgage foreclosure deed to Joel W. and Opal Smith for $25,000.

Following the foreclosure and sale, James and Terri Brunson purported to convey to Dominex, Inc., their statutory right of redemption in the 15 acres by using a quitclaim deed executed February 12, 1983. This quitclaim deed did not mention the statutory right of redemption.

Two days later, James Brunson's first wife, Marie Brunson Cole, joined by her second husband, Roy L. Cole, expressly assigned their statutory right of redemption to Albert W. Key, the appellee herein.

Initially, three complaints were filed by the several parties: first, Dominex filed suit on February 15, 1983, seeking to compel the foreclosure purchasers, Joel and Opal Smith, to permit Dominex to redeem the 15 acres from foreclosure; then, the Smiths filed suit on March 2, 1983, naming Dominex, Brunson, and Key as defendants, seeking a judgment declaring that Brunson had waived his right to redeem, and, therefore, Dominex was estopped from asserting any right of redemption, and further declaring the rights of all parties in or to the real estate in question; and, on March 3, 1983, Albert Key filed suit to compel the Smiths to permit him to redeem the property. On motions filed by Key, the circuit court consolidated these three actions on April 21, 1983.

Various motions were filed by the several parties in that consolidated action, but pivotal to these proceedings are the following:

(1) Brunson's motion to dismiss the Smiths' complaint against Brunson;

(2) Amendment filed by Dominex naming Brunson a party plaintiff to its complaint;

(3) Key's motion to strike Dominex's amendment; and

(4) Key's motion for summary judgment.

In its final judgment entered May 26, 1983, the circuit court granted Brunson's motion to dismiss and Key's motion to strike, the effect of which was to remove Brunson from the lawsuit; he was not permitted to become a party plaintiff and was dismissed as a party defendant. ¹

The trial court also granted Key's motion for summary judgment:

"ORDERED, ADJUDGED and DECREED that the Motion for Summary Judgment filed on behalf of Plaintiff, Albert W. Key be and hereby is granted in favor of said Albert W. Key and against all other parties in the above consolidated causes and against all claims and defenses advanced on behalf of such other parties.

"Albert W. Key has in all respects met the statutory requirements for redemption of the land in question and has in fact redeemed said land according to the Code of Alabama of 1975, § 6-5-230 et seq. The Court further finds that no other party to said consolidated causes has redeemed said land nor has any other party complied with the statutory requirements for redemption and that the redemption of said lands by Albert W. Key extinguished further redemption rights in said property as a matter of law."

Further, despite the yet unrecorded warranty deed executed prior to foreclosure by Brunson to Joel and Opal Smith, the court found that the Smiths, as the mortgage foreclosure purchasers "obtained title to said property by fee simple determinable and said fee was determined by Albert W. Key's redemption." Dominex did not appeal this judgment.

On June 10, 1983, James and Terri Brunson purported to expressly assign their statutory right of redemption to Dominex, which Dominex contends still existed, notwithstanding the May 26th judgment extinguishing all further redemption rights in the property as a matter of law and from which no appeal was taken by Dominex.

Assuming Brunson's post-judgment status to be that of co-tenant with Key, and Dominex's status to be that of assignee of Brunson's statutory right of redemption, Dominex tendered to Key $24,333.88 in contribution for one-half of the amount Key was required to pay to redeem the property from foreclosure. Key refused this tender. Dominex then proceeded with the present action, filed June 21, 1983, to compel Key to accept its contribution toward redemption and to grant to Dominex a one-half interest in the property. The circuit court granted Key's motion to dismiss on the basis of the prior judgment in the three consolidated actions and for the reasons stated in Key's motion, including Dominex's lack of standing to bring the action. Dominex appeals from the grant of Key's motion to dismiss, which was in fact summary judgment because evidence was introduced in support of Key's motion to dismiss. Rule 12(b)(6), A.R.Civ.P.

The following is a summary of the transactions and the procedural history of this case:

   1978
                -----------
                August 4     James and Marie Brunson purchased
                             the 15 acres and executed a
                             mortgage to First National Bank
                             of Atmore
                   1982
                -----------
                March 16     James and Marie Brunson divorced
                             without disposing of the 15 acres
                April 30     James Brunson and second wife,
                             Terri, by warranty deed conveyed the
                             15 acres to Joel and Opal Smith.
                June 23      First National Bank foreclosed on the
                             mortgage and sold the 15 acres to
                             Joel and Opal Smith.
                   1983
                -----------
                February 12  James and Terri Brunson executed a
                             quitclaim deed of the 15 acres to
                             Dominex, Inc.
                February 14  Marie Brunson Cole and second
                             husband, Roy Cole, assigned their
                             right to redeem the 15 acres
                             from foreclosure to Albert W. Key.
                February 15  Dominex filed suit to compel the
                             Smiths to allow Dominex to redeem.
                March 2      The Smiths filed a declaratory
                             judgment action against Brunson,
                             Dominex, and Key, seeking to prevent
                             redemption of the property.
                March 3      Key filed suit to compel the Smiths to
                             allow Key to redeem.
                April 21     The above three lawsuits were
                             consolidated.
                May 26       James Brunson was effectively
                             dismissed as a party to the
                             consolidated lawsuit, and summary
                             judgment was entered in favor of
                             Albert Key.
                June 10      James Brunson expressly assigned
                             his statutory right of redemption to
                             Dominex.
                June 21      Dominex filed the instant suit against
                             Key seeking to compel Key to allow
                             Dominex, as co-tenant, to contribute
                             one-half the cost of redemption, and
                             grant Dominex one-half interest in
                             the property.
                July 19      Joel and Opal Smith recorded the
                             April 30, 1982, warranty deed from
                             James and Terri Brunson, which prior
                             thereto had been held by the First
                             National Bank.
                September 7  Trial court granted Key's motion to
                             dismiss Dominex's complaint.
                

II

Resolution of the particular issues presented by this appeal necessitates a review and clarification of the law of redemption, both equitable and statutory.

When real property in Alabama is mortgaged, the legal title passes to the mortgagee and the mortgagor retains the equity of redemption, which he may convey. First National Bank of Mobile, v. Gilbert Imported Hardwoods, Inc., 398 So.2d 258 (Ala.1981). If the mortgagor conveys his equity of redemption, his grantee succeeds to this right of redemption, effectively standing in his grantor's (the mortgagor's) shoes. Flirt v. Kirkpatrick, 175 So.2d 755, 278 Ala. 61 (1965); Rumage v. Dry Dock Savings Bank, 278 Ala. 526, 179 So.2d 277 (1965). Consequently, because only those with an interest in the property can redeem, a mortgagor who has conveyed his equity of redemption cannot seek to redeem the property, before or after foreclosure. Rumage, supra; Cardwell v. Virginia State Ins. Co., 186 Ala. 261, 65 So. 80 (1914). A valid foreclosure sale of property subject to a mortgage extinguishes the equity of redemption; however, by virtue Code of 1975, § 6-5-230, set forth below, a post-foreclosure right of redemption arises in the mortgagor or his vendee:

"Where real estate, or any interest therein, is sold under execution or by virtue of any judgment in a court of competent jurisdiction or under any deed of trust or power of sale in a mortgage, the same may be redeemed by the debtor, junior mortgagee, vendee of the debtor or assignee of the equitable or statutory right of redemption, wife, widow, child, heir at law,...