Nussbaumer v. Superior Court In and For Yuma County

• Decision Date: 15 October 1971
• Docket Number: No. 10408,No. 28744,28744,10408
• Citation: 107 Ariz. 504,489 P.2d 843
• Parties: Fred NUSSBAUMER et al., Petitioners, v. The SUPERIOR COURT of the State of Arizona IN AND FOR THE COUNTY OF YUMA; the Honorable John A. McGuire, a Judge of the Superior Court of the State of Arizona in and for the County of Yuma, and the Presiding Judge in Causein the Superior Court of the State of Arizona in and for the County of Yuma, and Imperial-Yuma Production Credit Association, plaintiff below and real party in interest herein, Respondents.
• Court: Arizona Supreme Court

Page 843

489 P.2d 843

107 Ariz. 504

Fred NUSSBAUMER et al., Petitioners, v. The SUPERIOR COURT of the State of Arizona IN AND FOR THE COUNTY OF YUMA; the Honorable John A. McGuire, a Judge of the Superior Court of the State of Arizona in and for the County of Yuma, and the Presiding Judge in Cause No. 28744 in the Superior Court of the State of Arizona in and for the County of Yuma, and Imperial-Yuma Production Credit Association, plaintiff below and real party in interest herein, Respondents.

No. 10408.

Supreme Court of Arizona, In Banc.

Oct. 15, 1971.

Rehearing Denied Nov. 16, 1971.

Ralph F. Brandt, Yuma, and Snell & Wilmer, by James A. Honer, Phoenix, for petitioners.

Westover, Keddie & Choules, by Ted B. Bowen, Yuma, for respondents.

UDALL, Justice:

Petitioners, by this Petition for Special Action, seek review of an order of the Superior Court of Yuma County granting respondents' motion to set aside the sheriff's sale of July 28, 1970. The proceedings and circumstances relating to said order granting the motion to set aside the sale are more fully set forth below.

Petitioners, Fred and June Nussbaumer, are engaged in agricultural pursuits in Yuma County, and for a period of at least five years have been financed in these operations by respondent, Imperial-Yuma Production Credit Association (hereinafter 'P.C.A.'). Substantial loans of money, totalling approximately $378,656.16, were made to the Nussbaumers and these loans were secured by real estate mortgages, as well as crop and chattel security agreements. The Nussbaumers defaulted on their obligations and P.C.A. instituted action below (Cause No. 28744), seeking foreclosure of its chattel, crop and real estate mortgages. Shortly thereafter, P.C.A. and the Nussbaumers entered into an agreement for settlement.

On or about June 24, 1970, and pursuant to the May 20, 1970 settlement agreement, P.C.A. obtained judgment against the Nussbaumers in the amount of $444,621.99, which sum included the principal due and owing P.C.A., costs of suit, accrued interest, attorneys' fees of $40,000.00, and accruing interest at the rate of 9.75% Per annum from the date of judgment.

On July 28, 1970, pursuant to a writ of execution, the sheriff of Yuma County sold the Nussbaumers' property at execution sale. At this sale, P.C.A. bid in the sum of $460,231.64 (apparently the amount of the judgment of $444,621.99, plus interest at the rate of 9.75% From the date of judgment to the date of sale and the cost of the execution sale).

Prior to the July 28th foreclosure sale, on February 9, 1970, P.C.A. filed an action against McElhaney Cattle Company (hereinafter 'McElhaney'), an Arizona corporation, in the Yuma County Superior Court (Cause No. 28701). P.C.A.'s complaint alleged therein, that McElhaney had paid $20,000.00 directly to the Nussbaumers for the purchase of crops in which P.C.A. allegedly had a security interest, thereby occasioning a loss of security to P.C.A. in the amount of $20,000.00. McElhaney answered P.C.A.'s complaint and filed a third party complaint against the Nussbaumers, seeking recovery over and against, and indemnity from, the Nussbaumers to the extent that McElhaney might be held liable to P.C.A. A similar complaint was filed against Desert Seed Company and several others. (Cause No. 29197).

These actions, brought by P.C.A., were still pending when P.C.A. bid in the full amount of its judgment against the Nussbaumers at the July 28th foreclosure sale. On October 6, 1970, McElhaney filed a motion for summary judgment in Cause No. 28701, asserting that since its liability to P.C.A. was 'derivative and secondary' to that of the Nussbaumers, it was entitled to judgment as a matter of law. The basis for said motion for summary judgment was that P.C.A.'s judgment against the Nussbaumers was satisfied in full when P.C.A. bid in the full amount of its judgment at the foreclosure sale; consequently resulting in termination of McElhaney's derivative or secondary liability. A similar motion was subsequently filed by the Desert Seed Company in Cause No. 29197.

On October 13, 1970, P.C.A. filed a motion for modification in this action below (against the Nussbaumers), seeking to have the judgment obtained by it and the July 28th foreclosure sale modified or vacated on the grounds that their attorney had made a mistake in bidding in the full amount of its judgment at the foreclosure sale. On November 16, 1970, a hearing was held on P.C.A.'s motion and on November 23, 1970, the trial judge entered an order setting aside the foreclosure sale. The order provided that P.C.A. might have special execution issued and could hold a new sale of the Nussbaumers' real property at its own expense.

From that order, petitioners filed this Petition for Special Action, contending that P.C.A.'s motion 'was not well taken and should have been denied, and that the court erred, abused its discretion and exceeded its jurisdiction in entering the November 23, 1970 Order.'

We have reviewed the arguments advanced by petitioners to this Special Action and, having found them to be meritorious in that the trial judge abused his discretion in granting P.C.A.'s motion to vacate the sale, we hereby grant petitioners the relief requested. Arguments advanced by petitioners are as follows:

(1) 'The lower court lacked jurisdiction to entertain P.C.A.'s motion for modification and to enter an order granting their motion to set aside the foreclosure sale.'

The rule in Arizona is well-settled that an execution sale may be set aside on motion in the court which issued the process or in an independent action in a court possessing equitable jurisdiction. Redman v. White, 85 Ariz. 82, 331 P.2d 1096 (1958); See also 33 C.J.S. Executions §§ 237 and 238; 21 Am.Jur. Executions § 634. The power of a court to set aside an execution sale naturally arises from the inherent power to control its own process. Johnson v. Jefferson Standard Life Insurance Co., 5 Ariz.App. 587, 429 P.2d 474 (1967).

(2) 'Assuming the court had jurisdiction to hear and rule upon P.C.A.'s motion for modification, nevertheless, as a matter of law P.C.A. was not entitled to equitable relief (i.e., setting aside of the July 28, 1970 foreclosure sale) on the basis of its alleged mistake' and 'the trial court erred in entering an order granting the motion to set aside sheriff's sale in view of the equities in favor of Petitioners.'

In granting respondent's motion, the lower court stated that it was 'painfully evident' that the $460,231.64 bid was a 'substantial unilateral mistake on the part of the plaintiff's attorney.' It appears that the trial judge, in arriving at his decision to order vacation of the July 28th foreclosure sale, was as impressed by the testimony given regarding the post-sale depressed value of the Nussbaumer property as he was by the fact that P.C.A.'s attorney had, through his own inadvertence, made a unilateral mistake in bidding in the full amount of the judgment.

In Arizona, it is well established that execution sales may be set aside on motion and, while such motions are addressed to the sound discretion of the court issuing the...