Dominex, Inc. v. Key
| Decision Date | 24 August 1984 |
| Citation | 456 So.2d 1047 |
| Parties | DOMINEX, INC. v. Albert W. KEY. 83-129. |
| Court | Alabama Supreme Court |
Bert W. Rice, of Maxwell & Rice, Atmore, for appellant.
Charles R. Godwin, Atmore, for appellee.
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:
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,...
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