First Federal Sav. and Loan Ass'n of Storm Lake v. Blass
| Decision Date | 17 February 1982 |
| Docket Number | No. 65473,65473 |
| Citation | 316 N.W.2d 411 |
| Parties | FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF STORM LAKE, Iowa, Plaintiff, v. Joseph F. BLASS, Marlene M. Blass, Loring Hospital, Sherman J. Higgins, Sac County Implement, Inc., Simplot Soilbuilders, Reiter Feed Company, Inc., Wilmer Koessel, Citizens Savings Bank, and Sac County, Iowa, Defendants. SIMPLOT SOILBUILDERS, Appellant, v. SAC COUNTY IMPLEMENT, INC., Reiter Feed Company, Inc., Wilmer Koessel, Citizens Savings Bank, Loring Hospital, Appellees. |
| Court | Iowa Supreme Court |
Lon R. Tullar, Sac City, for appellant.
Colin J. McCullough of McCullough Law Firm, P. C., Sac City, for appellees.
Considered by REYNOLDSON, C.J., and UHLENHOPP, HARRIS, McGIVERIN, and SCHULTZ, JJ.
Appellant, Simplot Soilbuilders, appeals from an adverse ruling in a mortgage foreclosure action, distributing an overplus from a sale of real property in accordance with the provisions of section 654.9, The Code. Simplot contends that the trial court erred in determining that its garnishment of the overplus pursuant to a general execution under section 626.82, The Code, to the detriment of senior lienholders, was improper, and in determining that the senior lienholders were not precluded from asserting their superior rights by the doctrine of laches. Simplot also contends the trial court erroneously charged it interest for its allegedly wrongful use of the overplus. We affirm.
On November 9, 1977, First Federal Savings and Loan Association of Storm Lake, Iowa, filed a petition for mortgage foreclosure against Joseph F. and Marlene M. Blass. Several persons who held judgment liens against the property, including Simplot and the appellees, Sac County Implement, Inc., Reiter Feed Company, Inc., Wilmer Koessel, Citizens Savings Bank, and Loring Hospital, were also made parties defendant. A decree, which was entered on May 23, 1978, declared the mortgage foreclosed and provided for special execution and sale of the mortgaged real estate. The property was sold on June 23, 1978. The sale resulted in proceeds of $12,126.70 in excess of First Federal's judgment and the fees and taxable costs of the foreclosure action and sale. The foreclosure decree did not provide the manner in which this overplus was to be distributed, however.
When the foreclosure action was commenced, the parties who claim rights to the overplus in this appeal held unsatisfied judgment liens, listed by the date on which they were entered, as follows:
(1) November 10, 1976, Loring Hospital: $513;
(2) February 10, 1977, Sac County Implement, Inc.: $999.99;
(3) February 14, 1977, Simplot Soilbuilders: $6,321.64;
(4) April 11, 1977, Reiter Feed Company, Inc.: $26,699.10;
(5) April 11, 1977, William Koessel: $23,238.33;
(6) April 11, 1977, Citizens Savings Bank: $36,548.21.
The April 11 lienholders later stipulated that their judgments were entered simultaneously and agreed to share, on a pro rata basis, any monies available for partial satisfaction of their respective judgment liens.
On December 5, 1977, after the commencement of the foreclosure action but prior to the date the decree was entered, Simplot obtained another judgment against the Blasses, for $5,653.52. Thereafter, Simplot initiated a collateral proceeding to satisfy its two judgments. On June 22, 1978, pursuant to Simplot's request, the Sac District Clerk of Court issued a general execution to the Sac County Sheriff. On June 23, 1978, the date of the foreclosure sale, Simplot garnished the overplus from the sale, which was in the sheriff's possession pursuant to the general execution. Simplot then obtained a judgment on June 26, 1978, condemning the overplus and applying it to the satisfaction of its judgment liens. The other judgment lienholders were not given notice of this collateral proceeding.
On October 31, 1979, more than sixteen months after the foreclosure sale, Citizens Savings Bank, Wilmer Koessel, and Reiter Feed Company filed a motion in the foreclosure action to determine priorities in the overplus among all parties. Loring Hospital joined in the motion on November 6, 1979. The motion was resisted by Simplot, and a hearing was held on January 11, 1980. On February 5, 1980, the trial court entered an order determining that under sections 654.7 and 654.9, The Code, Simplot did not have a judgment lien superior to the liens of all other lienholders, and that the doctrine of laches did not bar such lienholders from asserting their rights to the overplus. The order vacated the judgment condemning the overplus and applying it in satisfaction of Simplot's judgment liens, required Simplot to repay the money it received from the overplus to the clerk of court, and provided that any party could apply for a hearing to determine lien priorities.
All of the parties to this appeal, including Simplot, applied for a determination of lien priorities. On June 11, 1980, the trial court entered an order that established lien priority chronologically, by the date that the respective judgments were entered. The court also ordered Simplot to pay interest at seven percent per annum from the time the overplus was garnished until it was paid to the clerk of court. The trial court's determination of priorities resulted in Simplot's February 14, 1977, lien being fully satisfied; its December 5, 1977, lien was left completely unsatisfied, however.
On appeal Simplot contends: (1) section 626.82, The Code, rather than sections 654.7 and 654.9, The Code, should govern the disposition of the overplus; (2) the equitable doctrine of laches should prohibit the other judgment lienholders from asserting their rights to the overplus; and (3) it should not be required to pay interest to the other judgment lienholders.
I. Applicability of section 626.82. Simplot maintains that the trial court erred in determining that sections 654.7 and 654.9 controlled distribution of the overplus. Section 654.7 provides: "If there is an overplus remaining after satisfying the mortgage and costs, and if there is no other lien upon the property, such overplus shall be paid to the mortgagor." Section 654.9 provides in pertinent part: "If there are any other liens on the property sold, ... they shall be paid off in their order." (Emphasis added).
Section 626.82, The Code, which appears in the general execution chapter of the Code, provides:
When the property sells for more than the amount required to be collected, the overplus must be paid to the debtor, unless the officer has another execution in his hands on which said overplus may be rightfully applied, or unless there are liens upon the property which ought to be paid therefrom, and the holders thereof make claim to such surplus and demand application thereon, in which case the officer shall pay the same into the hands of the clerk of the district court, and it shall be applied as ordered by the court.
Simplot argues that the overplus provisions of chapter 654 apply only to overplus in the possession of the mortgagee, and that garnishment of overplus in the possession of the sheriff after a mortgage foreclosure sale is proper under section 626.82.
We find no authority to support Simplot's contention that the overplus provisions of chapter 654 apply only when the overplus is in the possession of the mortgagee. Section 654.5, The Code, provides that when a mortgage is foreclosed the court shall direct the mortgaged property to be sold pursuant to special execution. The sheriff then levies on the property and conducts the sale, acting for the legal authority of the court. See § 337.3, The Code. The mortgagee is entitled to receive only proceeds sufficient to satisfy the mortgage. Any overplus is applied to other liens on the property or, if none, paid to the mortgagor. §§ 654.7, .9, The Code. The mortgagee should therefore never have possession of the overplus. Accordingly, it would be anomalous to limit the application of chapter 654 in the manner advocated by Simplot.
Mortgage foreclosures are specifically governed by chapter 654, The Code. Section...
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