Gilroy v. Ryberg, S-02-487.

• Decision Date: 15 August 2003
• Docket Number: No. S-02-487.,S-02-487.
• Citation: 266 Neb. 617,667 N.W.2d 544
• Parties: Cynthia H. GILROY, Appellant, v. Daniel W. RYBERG, Successor Trustee, et al., Appellees.
• Court: Nebraska Supreme Court

667 N.W.2d 544

266 Neb. 617

Cynthia H. GILROY, Appellant, v. Daniel W. RYBERG, Successor Trustee, et al., Appellees.

No. S-02-487.

Supreme Court of Nebraska.

August 15, 2003.

John A. Sellers for appellant.

Duane M. Katz, Omaha, for appellees Robert L. Cummins and Frank L. Huber.

Daniel W. Ryberg, pro se.

HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

CONNOLLY, J.

This case presents us with our first opportunity to examine when a trial court should invoke equity to set aside a foreclosure sale conducted under a power of sale in a trust deed.

After Cynthia H. Gilroy and John M. Gilroy failed to make payments on a note secured by a trust deed, Daniel W. Ryberg, the successor trustee, conducted a sale.

Cynthia appeals from the district court's decision refusing to set aside the sale. She argues that the notice of default did not comply with the Nebraska Trust Deeds Act, Neb.Rev.Stat. § 76-1001 et seq. (Reissue 1996 & Cum.Supp.2000) (the Act). She also claims that Ryberg failed to comply with the Act and terms of the trust deed in conducting the trustee's sale.

We determine that the notice of default met the requirements of the Act. Although we agree that Ryberg did not conduct the sale in compliance with the terms of the trust deed, we affirm the district court's decision because Cynthia failed to show that she was prejudiced by Ryberg's errors.

I. FACTUAL BACKGROUND

On July 11, 2000, John and Cynthia executed and delivered to Robert L. Cummins a promissory note for $80,000. At the time, Cynthia owned improved property, described as "Lot 139, Riverside Lakes, a Subdivision, as surveyed, platted and recorded, in Douglas County, Nebraska, commonly known as 440 Shorewood Lane, Waterloo, Nebraska 68069" (the property). To secure the note, John and Cynthia executed and delivered to Cummins a trust deed. The trust deed conferred a power of sale upon the trustee.

Cummins executed a substitution of trustee that named Ryberg as the successor trustee. On June 27, 2001, Cummins instructed Ryberg to foreclose by using the power of sale in the trust deed. Ryberg then prepared a notice of default and filed it with the register of deeds. The notice of default stated that "a breach of the obligation of the Trustor for which such Deed of Trust was made has occurred, to wit: non-payment."

Afterward, Ryberg prepared and filed a notice of trustee's sale with the register of deeds. The notice of trustee's sale stated that the property would "be sold at public auction to the highest bidder for cash on the first floor, Jury Assembly Room, Hall of Justice, 17th & Farnam, Omaha, Nebraska on the 8th day of November, 2001, at 1:30 P.M."

On November 8, 2001, Ryberg conducted the trustee's sale. Frank L. Huber and a junior lienholder submitted bids, but Huber submitted the highest bid at $128,500. Later that day, Huber gave Ryberg a cashier's check for 10 percent of the winning bid. Nine days after the sale, Huber paid the balance by personal check. After receiving payment, Ryberg executed and delivered a trustee's deed to Huber and Huber's wife, and on November 19, Ryberg filed the trustee's deed with the register of deeds.

II. PROCEDURAL BACKGROUND

Cynthia filed a declaratory judgment action naming Ryberg, Cummins, and Huber as defendants. John was neither named as a plaintiff, nor has he been made a party to the action. In her petition, Cynthia sought an order (1) setting aside the sale because it did not comply with either the Act or the terms of the trust deed and (2) quieting title to the property in her.

The court set March 7, 2002, as the date for trial, but before trial, Cynthia moved for a continuance. She complained that she had planned to take Huber's deposition on March 4, but that she could not because Huber was hospitalized. The judge did not expressly overrule the motion; instead, he told Cynthia to let him know if she had been able to secure Huber's deposition and that then he would rule on the motion. Apparently, Cynthia was able to take Huber's deposition, and the court overruled the motion for a continuance.

After a trial on March 7, 2002, the court denied Cynthia relief.

III. ASSIGNMENTS OF ERROR

Cynthia's brief contains eleven assignments of error. Assignments of error Nos. 2, 3, and 4 address the court's decision denying her motion for partial summary judgment. We will not consider these three assignments of error because the question whether summary judgment should have been granted generally becomes moot after a full trial on the merits. See McLain v. Ortmeier, 259 Neb. 750, 612 N.W.2d 217 (2000).

Assignments of error No. 5 (which refers to the notice of default) and No. 8 (which refers to the Uniform Commercial Code's duty of good faith and fair dealing) are so confusing that we will not consider them. See McLain, 259 Neb. at 758-59, 612 N.W.2d at 224 (holding that "a generalized and vague assignment of error does not advise the appellate court of the issue submitted for decision and will not be considered").

In assignment of error No. 10, Cynthia complains that the court erred in failing to quiet title in her because Ryberg refused payment in full, which was tendered before commencement of the sale. No such argument, however, is made in her brief, and we will not consider this assignment of error. See In re Application of Lincoln Electric System, 265 Neb. 70, 655 N.W.2d 363 (2003). Also, Cynthia argues that the trust deed required that she be notified by certified mail of the appointment of Ryberg as the successor trustee. She argues that the sale should be set aside because she was sent notice of Ryberg's appointment by first class mail instead of certified mail. Cynthia does not, however, assign as error the court's rejection of this argument. Errors argued but not assigned will not be considered on appeal. Forget v. State ex rel. State Bd. of Public Accountancy, 265 Neb. 488, 658 N.W.2d 271 (2003). Accordingly, we will not consider this argument.

We will consider the remainder of Cynthia's assignments of error, which, restated and consolidated, contend that the court erred in (1) failing to set aside the sale and to order title quieted in her because the notice of default failed to set forth the nature of the breach, (2) failing to set aside the sale and to order title quieted in her because Ryberg allowed Huber to pay the balance of his bid 9 days after the sale, (3) failing to set aside the sale and to order title quieted in her because Ryberg allowed Huber to pay the balance of his bid by personal check, and (4) overruling her motion for a continuance.

IV. STANDARD OF REVIEW

An action to set aside a trustee's sale and to quiet title sounds in equity. See, Burk v. Demaray, 264 Neb. 257, 646 N.W.2d 635 (2002); 1 Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law § 7.22 (3d ed.1993). In an appeal of an equitable action, an appellate court tries factual questions de novo on the record and reaches a conclusion independent of the findings of the trial court, provided, where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Stoetzel & Sons v. City of Hastings, 265 Neb. 637, 658 N.W.2d 636 (2003).

Deeds of trust are subject to the principles of interpretation and construction that govern contracts generally. See, Cache Nat. Bank v. Lusher, 882 P.2d 952 (Colo.1994); Starcrest Trust v. Berry, 926 S.W.2d 343 (Tex.App.1996). Accordingly, the construction of a trust deed is a matter of law, and an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determinations made by the court below. Cf. Reichert v. Rubloff Hammond, L.L.C., 264 Neb. 16, 645 N.W.2d 519 (2002) (stating same rule for construction of contracts).

Statutory interpretation presents a question of law, on which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below. In re Interest of J.K., 265 Neb. 253, 656 N.W.2d 253 (2003).

V. ANALYSIS

1. SETTING ASIDE TRUSTEE'S SALE

Before 1965, Nebraska did not allow power of sale foreclosure, and any attempted extrajudicial sale of real property, for the satisfaction of a mortgage, was absolutely void. Cullen v. Casey, 1 Neb. (Unoff.) 344, 95 N.W. 605 (1901). Because trust deeds were treated as mortgages, the same rule applies to them, even if the trust deed in question contained a power of sale. See Comstock v. Michael, 17 Neb. 288, 22 N.W. 549 (1885).

In 1965, the Legislature altered the landscape of real estate financing when it passed the Act. The Act specifically authorized the use of power of sale foreclosure for trust deeds. See § 76-1005. We stated:

[The Act] authorizes the use of trust deeds to secure the performance of obligations and prescribes, generally, the procedures for their execution and enforcement. The [A]ct provides that a trust deed may confer a power of sale upon the trustee. In the event of a default, the trust property may be sold by the trustee to satisfy the obligation secured. The [A]ct also provides for the substitution of trustees, reinstatement after default, and the procedure for the sale and conveyance of the trust property by the trustee.

....

The ... Act authorizes the use of a security device which was not available prior to its enactment. The [A]ct permits the use of an instrument which may be foreclosed by sale without the necessity of judicial proceedings. It authorizes and permits a method of financing which was not formerly available, since trust deeds have been considered to be subject to the same rules and restrictions as mortgages.

Blair Co. v. American Savings Co., 184 Neb. 557, 558-59, 169 N.W.2d 292, 293-94 (1969). By authorizing the use of power of sale foreclosure, the Legislature provided...