Portland Mortg. Co. v. Creditors Protective Ass'n

• Decision Date: 04 November 1953
• Citation: 199 Or. 432,262 P.2d 918
• Parties: PORTLAND MORTGAGE CO. v. CREDITORS PROTECTIVE ASS'N.
• Court: Oregon Supreme Court

Page 918

262 P.2d 918

199 Or. 432

PORTLAND MORTGAGE CO. v. CREDITORS PROTECTIVE ASS'N.

Supreme Court of Oregon.

Argued and Submitted Sept. 30, 1953.

Decided Nov. 4, 1953.

Theodore S. Bloom, Portland, Lenske, Spiegel, Spiegel, Martindale & Bloom, Portland, on the brief, for appellant.

Denton G. Burdick, Jr., Portland, Cake, Jaureguy & Tooze, Portland, on the brief, for respondent.

Before LATOURETTE, C. J., and LUSK, BRAND and PERRY, JJ.

BRAND, Justice.

This is an appeal by the Creditors Protective Association from an order denying a motion made by it for an order requiring the sheriff of Multnomah County to accept an offer of redemption made by it for the real property described in these proceedings.

The Portland Mortgage Company, a corporation, held a first mortgage upon the real property involved in this case. Katherine M. and Byron L. Randol were the mortgagors. The appellant Creditors Protective Association, a corporation, obtained a judgment against the Randols, which became a lien against said property, subsequent in time and inferior to the lien of the plaintiff's mortgage. The judgment was entered on 21 March 1950. On 24 March 1950 the plaintiff brought suit to foreclose its mortgage, but did not join the judgment lienholder as a party. The mortgage was foreclosed by decree on 25 May 1950 and the plaintiff purchased the property at the foreclosure sale for $6,214.72, being the amount of the mortgage plus costs. On 3 July 1950 the sheriff executed and delivered to the plaintiff a certificate of sale to the property. The sale was confirmed on 20 July 1950. On 17 August 1950 the plaintiff filed a suit in equity against the defendant Creditors Protective Association, the judgment lienholder. The complaint alleged that the judgment lien of the defendant, which had not been foreclosed in the original suit, constituted a cloud upon the plaintiff's title, and that it was subsequent in time and inferior to the interest of the plaintiff as purchaser at the mortgage foreclosure sale, except for the statutory right of redemption possessed by the defendant as a judgment lien creditor. The complaint prayed for the entry of an interlocutory judgment and decree requiring that the defendant redeem from the sheriff's sale to the plaintiff 'within such time as the court shall deem reasonable in the manner and mode provided by statute for the redemption by a lien creditor from a sale of real property on execution, and in the event of the failure of the defendants so to redeem said property, that a final judgment and decree be entered herein forever barring * * *' the claim of the defendant in or to the real property.

On 16 July 1951, more than a year after the sale of the mortgaged property to the plaintiff, and pursuant to the foreclosure decree, the sheriff executed and delivered to the plaintiff a deed conveying the premises. On 20 August 1951 the circuit court entered an interlocutory decree reciting the entry of a default against the defendant and providing that said defendant should have a period of 60 days from the date of the decree within which to redeem the property 'in the manner and mode provided by the statutes of the State of Oregon for redemption by a lien creditor from an execution sale of real property from the Sheriff's sale to plaintiff', and providing further that in the event of failure of the defendant to redeem within the time allowed, a final judgment would be entered, barring and foreclosing the right of the defendant in the property. On 20 September 1951 the defendant judgment lienholder filed with the sheriff of Multnomah County a notice addressed to the plaintiff, its attorneys, the contract purchasers from the plaintiff and the sheriff, by the terms of which the parties mentioned, were notified that the defendant claimed a judgment lien against the property, which was due and unpaid. The notice further provided:

'* * * that pursuant to Chapter 6-1605, O.C.L.A.1940, you are hereby requested to account on or before the expiration of ten days of the receipt of this notice for all rents, issues and profits from the following described property * * * [describing it] and you are further notified of redemption of said property, and that on the 9th day of October, 1951 at 10:00 o'clock A.M., Creditors Protective Association, an Oregon corporation, will apply to the Sheriff of Multnomah County to redeem the above described real property pursuant to Chapter 6-1607, O.C.L.A.1940.'

On 8 October 1951 the plaintiff filed with the sheriff of Multnomah County an accounting which reads in part as follows:

'Pursuant to written notice served upon Portland Mortgage Co., the above named plaintiff, purchaser at execution sale of the real property described in the above suit * * * subject to right of redemption of the property described in the above suit, the said Portland Mortgage Co. and * * * [others] hereby present their verified account of all rents, issues and profits accruing from, and all sums which they claim as a lien upon the property sought to be redeemed * * *.'

Then followed a statement of the account, showing a balance, as the amount necessary to redeem on 9 October 1951, of $7,037.88. It was also stated that interest after the date of October 9, 1951 would accrue at the rate of $1.98 per day.

On 9 October 1951 at the hour of 9:30 a. m., being one-half hour before the time specified by the defendant as the time at which it would 'apply to the sheriff of Multnomah County to redeem * * *' the property, the plaintiff paid to the clerk of Multnomah County the sum of $321.50 which was sufficient to constitute full satisfaction of the judgment of the defendant, and thereupon the clerk satisfied said judgment on the margin of the record. It is stipulated that said funds are still being held by the county clerk. At the hour of 10 o'clock a. m., being the time set in the so-called notice of redemption, the defendant applied to the sheriff to redeem the real property and tendered to the sheriff the sum of $7,037.88, being the amount set out in the accounting as the amount necessary to redeem the property. The plaintiff, through its attorney, then exhibited the receipt of the county clerk for the sum of $321.50, received a satisfaction of the defendant's judgment. The defendant, by its attorney, refused said sum of $321.50. The sheriff denied the application of the defendant to redeem, for the reason that the judgment records showed that the judgment held by the defendant had been satisfied in full prior to the tender of the redemption money by the defendant, basing his decision upon the provisions of O.C.L.A. §§ 6-1602, subsection (2), 6-1607, subsections (1)(b) and (1)(c). The sheriff certified that the defendant was not a lien creditor entitled to redeem.

On 22 October 1951 the defendant filed a motion for an order requiring the sheriff to accept the offer of redemption made by it. That motion was made and filed in the case which the plaintiff had instituted on 17 August 1950 for the purpose of foreclosing the interest of the defendant judgment lienholder, and in which case the defendant had defaulted. The offer was accompanied by an affidavit reciting the facts and stating that the payment of $321.50 to the clerk by the plaintiff was made without the knowledge or consent of defendant. On 12 December 1951 the court denied the motion of the defendant, from which order the defendant appeals. There is a serious question whether the defendant had any standing to seek relief in the case in which he had been adjudged in default. True, he had no wish to be relieved from the decree entered on his default. But he did seek an order from the court requiring the sheriff to accept the redemption money. It may be that the proper procedure would have been to bring mandamus against the sheriff rather than seeking an order in a case in which he had been adjudged in default, but the issue was presented to the court on the merits by both parties and the court decided it on the merits. There is no issue raised in this court concerning the procedure followed. We will therefore consider the case on its merits here.

Only one assignment of error is presented by the defendant for consideration here, namely, that the court erred in denying the motion of the defendant for an order directing the sheriff of Multnomah County to accept the tender of defendant and to allow it to redeem the subject real property. The defendant maintains that the right of a lien creditor to redeem is a valuable and absolute right granted by statute which cannot be abridged or defeated by the purchaser at a mortgage foreclosure sale without the consent of the lien creditor. He relies upon the provisions of O.C.L.A. §§ 6-1602 to 6-1607 inclusive as the basis of the asserted right.

The plaintiff relies upon the provisions of O.C.L.A. § 6-1001, the relevant parts of which read as follows:

'Any person, against whom exists a judgment for the payment of money or who is interested in any property upon which any such judgment is a lien, may pay the amount due on such judgment to the clerk of the court in which such judgment was rendered, and such clerk shall thereupon release and satisfy such judgment upon the records of said court * * *.'

The defendant intimates that a lien creditor is a necessary party to a mortgage foreclosure. This is true only in a limited sense. The statute provides that any person having a lien subsequent to the plaintiff upon the same property shall be made a defendant in a suit to foreclose a mortgage. O.C.L.A. §§ 9-501, 9-502. But it is established that although junior lien claimants are necessary parties if the decree is to affect them, nevertheless the decree of foreclosure is valid as to all parties who are properly joined even though other lienors are not joined. The omitted junior lienholder is in the same position as if no foreclosure had ever taken place, and he has the same rights, no more and no less,...