Goodwin v. District Court In and For Sixteenth Judicial Dist., No. 88SA338

• Docket Nº: No. 88SA338
• Citation: 779 P.2d 837
• Case Date: September 18, 1989
• Court: Supreme Court of Colorado

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779 P.2d 837 Jack GOODWIN and Winona C. Goodwin, Petitioners,
v.
The DISTRICT COURT In and For the SIXTEENTH JUDICIAL
DISTRICT, State of Colorado, and the Honorable M.
Jon Kolomitz, District Judge, Respondents. No. 88SA338. Supreme Court of Colorado,
En Banc. Sept. 18, 1989.

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Roberta Strohson, Colorado Rural Legal Services, Inc., La Junta, and Daniel M. Taubman, Colorado Coalition of Legal Services Programs, Denver, for petitioners.

M. Jon Kolomitz, pro se.

Manuel A. Ramos, Denver, for amicus curiae The Legal Aid Soc. of Metropolitan Denver.

Chief Justice QUINN delivered the Opinion of the Court.

The question in this case is whether a district court, when ruling on a C.R.C.P. 120 motion for a court order authorizing the sale of encumbered real property in accordance with a power of sale contained in a deed of trust, should consider whether the moving parties are real parties in interest, and also the asserted defenses of waiver and estoppel, in determining the existence of a default or other circumstance authorizing the exercise of the power of sale contained in the deed of trust. The district court ruled that the only issue to be resolved at a Rule 120 hearing is whether there has been a default under the terms of the note and that the "real party in interest" defense, as well as the defenses of waiver and estoppel, should be raised in a separate action brought by the debtor to enjoin the authorized sale. We issued a rule to show cause and we now make the rule absolute.

I.

Colorado Rule of Civil Procedure 120(a) permits any interested person to file a motion seeking an order authorizing a sale of real property under a power of sale contained in a deed of trust. When such a motion is properly filed, the court must fix a time and place for hearing on the motion. Id. Pursuant to C.R.C.P. 120(d), the scope of inquiry at such hearing is limited to "the existence of a default or other circumstances authorizing, under the terms of the instrument described in the motion, exercise of a power of sale contained therein, and such other issues of which consideration may be required by the Soldiers' and Sailors' Civil Relief Act of 1940, as amended." The court conducting such a hearing is required to determine whether there is a reasonable probability that such default or other circumstance occurred and whether an order authorizing the sale is otherwise proper under the Soldiers' and Sailors' Civil Relief Act. Id.

In August 1988 Marjory Ollson and Etta Mae Vann filed a motion for an order authorizing the sale of real property by reason of the default of Jack Goodwin and Winona Goodwin on a promissory note payable to Joanna Boston, which note was secured by a deed of trust authorizing the exercise of a power of sale upon default in payment of the note. The motion alleged that Joanna Boston had assigned the promissory note to Marjory Ollson and Jeff Vann, who had since died, and that Etta Mae Vann was appointed administratrix of Jeff Vann's estate. The Goodwins filed a response to the motion, claiming that Marjory Ollson and Etta Mae Vann lacked any valid interest in the note and deed of trust, and that they had waived or were estopped from asserting any default in payment on the note.

A hearing was held on the motion on September 7, 1988, which established the following facts. The Goodwins executed a $13,000 promissory note on December 15, 1977, to Joanna Boston for the purchase of a house at 1006 Daniels Avenue, La Junta, Colorado. The note was secured by a deed of trust for the benefit of Joanna Boston, and provided for 204 monthly installment payments of $101.81, which included principal and interest at the rate of six percent per year, payable on the 15th day of each month. The deed of trust securing the note contained a provision authorizing a public trustee foreclosure sale upon default in payment of the note and also contained an acceleration clause which authorized the beneficiary of the deed of trust to declare the entire principal and interest payable at once in case of any default in payment.

On the same day the Goodwins executed the note, Joanna Boston assigned her interest in the note to her then living children, Marjory Ollson of San Miguel, California, and Jeff Vann of Tahlequah, Oklahoma.

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The assignment was dated December 15, 1977, and contained a wavering line drawn through the name "Marjory Ollson" or possibly just through the name "Marjory." Joanna Boston died in the summer of 1981 and was survived by Marjory Ollson and Jeff Vann.

After Joanna Boston's death, the attorneys for her estate established an escrow account at Empire State Bank in Rocky Ford, Colorado, for the receipt of the Goodwins' payments on the note and for the disbursal of the payments to Marjory Ollson and Jeff Vann. In November 1986 Jeff Vann died and was survived by his wife, who was apparently appointed administratrix of his estate in Oklahoma, although no duly authenticated copy of the order of appointment was offered or admitted into evidence.

An employee of Empire State Bank testified that the bank, beginning with the first escrow payment in October 1981, recorded the Goodwins' payments in its ledger, deducted bank fee services, and mailed cashier's checks to Jeff Vann or to his estate, and to Marjory Ollson. According to the bank employee, the Goodwins failed to make twenty-seven payments when due during the period from October 1981 to September 1988, with the result that the Goodwins were presently in arrears in the amount of $2,926.79. The bank employee also testified that since February 1988 the Goodwins had made each monthly payment and each payment had been accepted by the bank and then forwarded to Jeff Vann's estate and Marjory Ollson.

At the conclusion of the evidence submitted by Marjory Ollson and Etta Mae Vann, the Goodwins moved to dismiss the C.R.C.P. 120 motion on the basis that Ollson and Vann were not the real parties in interest to pursue the C.R.C.P. 120 motion and that, even if they were, they had waived any claimed default in payment or were estopped from asserting a default as a result of their acceptance of the recent payments made by the Goodwins. The district court denied the Goodwins' motion to dismiss.

Winona Goodwin testified that from 1977 to 1981 she made installment payments to Joanna Boston and that upon Boston's death she (Goodwin) made one installment payment to Boston's daughter, Marjory Ollson, and one installment payment to Boston's son, Jeff Vann. Thereafter, according to Winona Goodwin, she made subsequent payments to the escrow account established at the Empire State Bank. Winona Goodwin acknowledged that, while she had failed to make many of the payments in the past, she made each payment from February 1988 to the present and that every payment had been accepted by the bank. It was the Goodwins' contention that such evidence constituted a waiver by Marjory Ollson and Etta Mae Vann of any claim of default in the promissory note and estopped them from obtaining an order of sale.

The district court, at the conclusion of the evidence, ruled that the Goodwins' asserted "real party in interest" defense and the defenses of waiver and estoppel were not proper matters for the court to consider in resolving the C.R.C.P. 120 motion but, instead, should be raised in an independent action to enjoin the order of sale. The district court found that the Goodwins had failed to make a total of twenty payments since October 1981, that twenty-seven of the payments actually made were late, that all payments were timely made from March through August 1988, ¹ and that these recent payments were accepted by Marjory Ollson and Etta Mae Vann even subsequent to the filing of their motion for an order of public sale. On the basis of these findings, the district court entered an order authorizing the sale by the public trustee of the Goodwins' property.

The Goodwins petitioned this court for an order staying the execution of the order of sale, which we granted, and also for an order requiring the district court to show

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cause why it should not be prohibited from executing the order of sale.

II.

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