Ohio Sav. Bank v. Ambrose

• Decision Date: 12 December 1990
• Docket Number: No. 89-1206,89-1206
• Citation: 56 Ohio St.3d 53,563 N.E.2d 1388
• Parties: OHIO SAVINGS BANK, Appellee, v. AMBROSE et al., Appellees; Engert et al., Appellants.
• Court: Ohio Supreme Court

Page 53

56 Ohio St.3d 53

563 N.E.2d 1388

OHIO SAVINGS BANK, Appellee, v. AMBROSE et al., Appellees; Engert et al., Appellants.

No. 89-1206.

Supreme Court of Ohio.

Submitted Sept. 25, 1990.

Decided Dec. 12, 1990.

Syllabus by the Court

Purchasers at a foreclosure sale have no vested interest in the property prior to confirmation of the sale by the trial court. As a result, the purchasers have no standing to appeal when the trial court denies confirmation.

On July 6, 1987, Ohio Savings Bank (the "bank") filed a complaint for money, foreclosure and other equitable relief against Anthony and Mary Lou Ambrose, formerly husband and wife. ¹ On January 28, 1988, the trial court found that Anthony Ambrose was in default for failing to respond, and that the bank was entitled to $57,629 plus interest. The court ordered that unless the money owed to the bank was paid within three days, the equity of redemption would be foreclosed and the property would be sold at a sheriff's sale.

The property was not redeemed within the required time. An order of sale was issued, which indicated by sheriff's return that the property was purchased on April 28 by Sally Engert, an appellant herein. On April 29, 1988, Mary Lou Ambrose filed a motion to deny confirmation of the sale and to permit her to redeem the property. Pursuant to R.C. 2329.33, a debtor may redeem the property in question at any time prior to confirmation of the sale. On May 10, 1988, the bank moved to confirm the sale. The trial court continued the confirmation hearing, finding that "the defendants are in a position to redeem the property prior to the confirmation of sale * * *." On May 31, 1988, the trial court set aside the sale of the property to appellants Robert and Sally Engert, finding that the property had been redeemed and all liens had been satisfied. In a second judgment entry filed that same day, the court denied the motion to confirm the sale, vacated the sheriff's sale, and ordered that the appellants' deposit be returned to them with interest. The appellants appealed both decisions to the court of appeals.

The court of appeals determined that the appellants were neither parties to the action, nor had they filed a motion to intervene in the trial court. In addition, the appellate court held that appellants had no interest in the property prior to confirmation and that their failure to intervene as parties divested them of their capacity to appeal the decision of the trial court. Accordingly, the court dismissed the appeal.

This cause is now before this court pursuant to the allowance of a motion to certify the record.

Brent L. English, Cleveland, for appellants.

ALICE ROBIE RESNICK, Justice.

The issue presented in this case is whether purchasers at a foreclosure sale have a vested interest in property prior to confirmation of the sale by the trial court, so as to establish standing in order to appeal a denial of confirmation.

Appellants argue that as purchasers at a judicial sale, they have the right to judicial review from the denial of confirmation. In support, appellants cite early case law which indicates that purchasers at foreclosure sales do have some type of interest in the proceedings prior to confirmation. ² The often-cited case for this proposition, to which appellants direct this court's attention, is Reed v. Radigan (1884), 42 Ohio St. 292. Therein, the court stated: " * * * 'The power of the court is limited to a confirmation or vacation of the sale, as to which they are to exercise sound legal discretion, and in which all parties--the plaintiff, the defendant, and the purchaser--may be heard.' * * * " Id. at 294. However, the holding in Reed does not stand for the assertion that purchasers have a vested interest in the property prior to confirmation of the foreclosure sale. Rather, after a thorough review of Reed we find that its holding actually provides for the opposite conclusion. Indeed, it becomes apparent that purchasers have no rights until the sale is confirmed. Reed clearly states that "[i]t will be found upon an examination of the authorities, that in states where confirmation is required, the purchaser obtains no vested rights until after the sale is confirmed, and if the confirmation (which depends upon the sound discretion of the court,) is refused, the rights of the purchaser fall to the ground. * * * " Id.

R.C. Chapter 2329 governs the procedures for executing against property. This court discussed those procedures in Union Bank Co. v. Brumbaugh (1982), 69 Ohio St.2d 202, 208, 23 O.O.3d 219, 222-223, 431 N.E.2d 1020, 1025, wherein we stated:

" * * * The statutory scheme for foreclosure proceedings is designed to protect the interest of the mortgagor. * * * R.C. 2329.17 provides that when execution is levied upon lands, the officer who makes the levy must call an inquest of three disinterested freeholders who are residents of the county where the lands taken are situated. The appraisers must swear to impartially appraise the property and then return an estimate of the real value of the property. Thereafter, the officer must give public notice of the time and place of sale for at least 30 days before the sale by advertisement in a newspaper published in and of general circulation in the county. R.C. 2329.26. The land cannot be sold for less than two thirds of the appraised value. R.C. 2329.20. There is no statutory dictate that a hearing be held at this time. If the court, after examining the proceedings taken by the officers, finds the sale was made in conformance with R.C. 2329.01 to 2329.61, inclusive, it shall confirm the sale. R.C. 2329.31. Where the trial court abuses its discretion in confirming the sale, a reviewing court will reverse that decision. See Laub v. Warren Guar. Title & Mtg. Co. (1936), 54 Ohio App. 457, 468 ; Lake Shore Saw Mill & Lumber Co. v. Cleveland Realization Co. (1919), 11 Ohio App. 387, 388." (Emphasis added.)

Confirmation of foreclosure sales regarding real property is governed by R.C. 2329.31, which provides as follows:

"Upon the return of any writ of execution for the satisfaction of which lands and tenements have been sold, on careful examination of the proceedings of the officer making the sale, if the court of common pleas finds that the sale was made, in all respects, in conformity with sections 2329.01[563 N.E.2d 1390] to 2329.61, inclusive, of the Revised Code, it shall direct the clerk of the court of common pleas to make an entry on the journal that the court is satisfied of the legality of such sale, and that the officer make to the purchaser a deed for the lands and tenements."

While the statute speaks in mandatory terms, it has long been recognized that the trial court has discretion to grant or deny confirmation: "Whether a judicial sale should be confirmed or set aside is within the sound discretion of the trial court." Michigan Mortgage Corp. v. Oakley (1980), 68 Ohio App.2d 83, 22 O.O.3d 76, 426 N.E.2d 1195, at paragraph two fo the syllabus. See, also, Reed v. Radigan, supra, at 294.

Therefore, we hold that purchasers at a foreclosure sale have no vested interest in the property prior to confirmation of the sale by the trial court. As a result, the purchasers have no standing to appeal if the trial court subsequently denies confirmation. ³ Our ruling is consistent with the primary purpose and goal of a foreclosure sale: to protect the interests of the mortgagor-debtor, Union Bank Co. v. Brumbaugh, supra, 69 Ohio St.2d at 208, 23 O.O.3d at 222, 431 N.E.2d at 1025, and at the same time ensure that secured creditors will receive payment for unpaid debts. An obvious corollary of this concept is the desire to obtain the maximum amount of money from the sale. Lastly, the general policy of the law is to give judicial sales a certain degree of finality. See Michigan Mortgage Corp. v. Oakley, supra, 68 Ohio App.2d at 84, 22 O.O.3d at 77, 426 N.E.2d at 1196.

In the present case, the property was appraised at $108,000 and conditionally purchased by appellants for $80,000. One of the mortgagors, Mary Lou Ambrose, timely asserted her right to redeem the property. ⁴ Moreover, the trial court found that she had arranged a private sale that would satisfy the debts owed to all the lienholders, and to that end established a schedule for the payment of proceeds from the sale to the lienholders. If this court were to allow purchasers to appeal the denial of confirmation, we would be subverting the primary purpose of R.C. Chapter 2329. In other words, permitting purchasers to appeal the denial of confirmation would elevate their position above that of debtors and creditors--who are the very parties that R.C. Chapter 2329 seeks to protect. It would be illogical to grant to purchasers, who have no vested interest in the property prior to confirmation, the power to nullify a sale that is more advantageous to the debtor and creditors.

For all the foregoing reasons, we affirm the decision of the court of appeals dismissing the appeal.

Judgment affirmed.

SWEENEY, HOLMES, DOUGLAS and WRIGHT, JJ., concur.

MOYER, C.J., and HERBERT R. BROWN, J., dissent.

HERBERT R. BROWN, Justice., dissenting.

I must dissent from the majority's conclusion that appellants have no standing, as purchasers, to appeal from an order denying confirmation of a foreclosure sale.

It is true, as the majority notes that purchasers have no "vested interest" in the realty until the sale is confirmed. See Reed v. Radigan (1884), 42 Ohio St. 292, 294. However, the majority takes the unexplained leap from this assertion to the conclusion that the purchasers at a foreclosure sale "have no rights until the sale is confirmed" (emphasis added) and thus no standing to appeal.

If, indeed the purchaser has no rights, there would be no purpose to giving the purchaser an opportunity to be heard prior...