First Federal Sav. and Loan Ass'n, Chickasha, Okl. v. Nath, 71255
| Citation | 839 P.2d 1336,1992 OK 129 |
| Decision Date | 15 September 1992 |
| Docket Number | No. 71255,71255 |
| Parties | FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, CHICKASHA, OKLAHOMA, Appellee, v. Rosalee NATH, Treasurer of Grady County, Oklahoma, and Board of County Commissioners of Grady County, Oklahoma, Appellants. |
| Court | Supreme Court of Oklahoma |
CERTIORARI TO THE COURT OF APPEALS, DIV. 1.
THE COURT OF APPEALS' OPINION IS VACATED; THE TRIAL COURT'S "QUIET TITLE" DECREE IS AFFIRMED IN PART AND REVERSED IN PART.
Max A. Martin, Asst. Dist. Atty., Melvin R. Singleterry, Dist. Atty. Chickasha, for appellants.
Ron Dirickson, Huckaby, Fleming, Frailey, Chaffin & Darrah, Chickasha, for appellee.
The issues presented on certiorari are: (1) Did the trial court err when it implicitly applied the equitable "anti-merger doctrine" 1 to keep a mortgage lender's [First Federal's] 2 first mortgage alive and superior to unforeclosed personal property tax liens after First Federal's earlier foreclosure of that first mortgage in a proceeding in which a tax lienholder [County] was not joined and First Federal purchased the mortgaged property at the sheriff's sale? and (2) Were County's unforeclosed personal property tax liens extinguishable sans foreclosure as a "cloud" upon First Federal's title? 3 We answer both questions in the negative.
When First Federal foreclosed its first mortgage on property in Grady County [the property], 4 it failed to join County 5 as First Federal, which sought below the court's declaration that its first mortgage survived the sheriff's sale and had priority over County's unforeclosed personal property tax liens, 8 also prayed that the court extinguish County's interest in the property by ordering the tax liens released without foreclosure. County defended against the suit. 9 The nisi prius court granted First Federal the relief it sought. 10
a defendant in the foreclosure. 6 County holds liens on the property for the mortgagor's unpaid personal property taxes. 7 First Federal bought the property at the sheriff's sale, but the proceeds did not satisfy the amount that was due upon its judgment
County's bid for new trial proved unsuccessful. On appeal the nisi prius decision was affirmed. 11 On rehearing before the Court of Appeals, County pressed, for the first time, the same argument as that in its petition for certiorari now before us--namely, that the agreed facts in the record show there was error in allowing First Federal to preserve its mortgage lien past the earlier foreclosure. 12 Rehearing was denied; we granted certiorari.
WHERE CIRCUMSTANCES MAY WARRANT, EQUITY WILL INTERPOSE
ANTI-MERGER RELIEF TO KEEP A MORTGAGE ALIVE, AFTER ITS
EARLIER FORECLOSURE, VIS-A-VIS AN INFERIOR LIEN OF ONE WHO
WAS NOT A PARTY TO THE PRIOR FORECLOSURE
A common-law rule, made statutory by 42 O.S.1981 § 22, 13 teaches that when two estates in property in the same right 14 meet in the same person, a merger takes place. 15 By Oklahoma law--explained in Yoder v. Robinson 16--it is firmly settled that when the owner of an equitable interest acquires the legal title to the property, the merger of title that follows at law does not always meet with chancery's recognition. Equity's interposition to prevent the effect of merger at law is called the "anti-merger doctrine." 17 Yoder teaches that the intention of the person acquiring the two interests controls. 18 If the intention that the estates not merge is divinable, it will be followed in equity; and even when it is not clearly expressed, the intention that the interests not merge will be presumed, if the circumstances indicate the party acquiring both interests would benefit from avoiding a merger. 19
When the mortgagee fails to join an interest-holder as defendant in a mortgage foreclosure and then purchases the mortgaged property at sheriff's sale, equity will, in a proper case, afford relief to keep the mortgage alive vis-a-vis the omitted party's interest. 20 Although legal merger may be avoided in equity and the foreclosed mortgage preserved, an unforeclosed
junior encumbrance is not eo ipso extinguished. The mortgagee is afforded an opportunity to foreclose its mortgage once again, this time against the previously omitted lien. 21
B
FIRST FEDERAL'S EQUITABLE QUEST TO CURE THE PROBLEMS CAUSED
When First Federal learned it had left out a junior lienholder from its foreclosure suit, it sought corrective action below. Its quest may have paraded as a proceeding under 68 O.S.1981 § 24305 22 to determine the continued effectiveness of the liens and the order of their priority. 23 As we characterize the instant post-foreclosure contest, it was nothing more or less than an equity suit for a declaration that: (1) First Federal's mortgage lien did not merge in its legal title but survived as the first lien upon the property and (2) the unforeclosed County tax liens not only stand inferior to the surviving First Federal lien but are also extinguishable sans foreclosure as a "cloud" which should be ordered removed.
County argues on certiorari that the record shows no equitable ground for keeping First Federal's mortgage alive. 24 It directs our attention to a Court of Appeals decision in Creditthrift of America, Inc. v. Amsbaugh 25 where that court refused to allow the anti-merger doctrine in favor of a lienholder who admitted an intentional failure to join in the foreclosure action a party with a known interest. 26 County seems to suggest we may infer from agreed fact No. 5 27 that First Federal had failed to interpose a valid equitable ground for County's omission from foreclosure.
We do not concur that any agreed fact in the record of this appeal deprives First Federal of the anti-merger doctrine's protection and requires reversal of the trial court's implicit finding that disallowed merger. There is no proof that First Federal's failure to join County in the earlier foreclosure was attended by some inequitable conduct. In short, the trial court's finding against legal merger, implicit in its Legal error may not be presumed from a silent record; it must be affirmatively demonstrated. 29 On review, we always indulge in the presumption that a trial court's decision is correct; every fact not disputed by the record must be regarded as supporting the trial court's judgment. 30 County has not met its burden 31 to provide for our review a record that would pierce or overcome the presumption of nisi prius correctness that attaches by force of law. 32 In short, nothing in this record affirmatively demonstrates error in shielding First Federal's foreclosed mortgage by interposition of equity's anti-merger doctrine.
decree, cannot be declared as clearly contrary to the weight of the evidence. 28
THE NISI PRIUS DECLARATION AGAINST LEGAL MERGER BINDS COUNTY
BUT DOES NOT ENTITLE FIRST FEDERAL TO THE LIENS'
At nisi prius County defended against First Federal's plea for extinguishment of its tax liens. 33 Although it may First Federal urges that (1) an action such as this one--under 68 O.S.1981 § 24305--rather than a new foreclosure is the most efficient way to resolve the problems caused by County's omission from the earlier foreclosure and (2) everything that re-foreclosure of First Federal's mortgage could accomplish has already been done in this case. We reject the notion that another foreclosure of First Federal's mortgage is unnecessary to extinguish the County liens. The mortgage foreclosure statute 36 provides that all parties who have liens upon mortgaged property may be joined in the proceeding. County has at least two important interests to be protected: (1) it may insist that the land's sale be conducted fairly and for a fair value 37 and (2) it may timely redeem the property from the superior lien. 38 This may not be accomplished except by foreclosure.
not have clearly articulated the correct legal theory in opposition to its adversary's claim for their "removal" as an unauthorized "cloud," 34 County is benefited here by a public-law exception 35 to the general rule that an appellate court will not review a case on a theory different from that presented in the trial court. County's interest in its tax liens is a public-law issue. Within the parameters of the noted exception we may, and do today, supply here the correct authority for reversal of that part of the trial court's decree which cancels the inferior County liens.
First Federal urges that we would reach "an absurd result" if we were to require a re-foreclosure of its mortgage. It contends that when the trial court ruled in this case it considered the earlier foreclosure's appraisal and the results of the sheriff's sale.
According to First Federal's argument, if the sale in that case had been for an inadequate amount, the trial court could have denied cancellation relief in the present case. First Federal submits it should be relieved of having to go "through the motions of a [new] Sheriff's sale simply to say there was a Sheriff's sale."
A judicial sale on foreclosure is not conclusive or binding until it is confirmed. 39 But County was not a party to the...
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