Ross v. Rogers

• Decision Date: 12 June 2009
• Docket Number: 2080248.
• Citation: 25 So.3d 1160
• Parties: Howard S. ROSS v. Jerry ROGERS and Robbie Rogers.
• Court: Alabama Court of Civil Appeals

25 So.3d 1160

Howard S. ROSS v. Jerry ROGERS and Robbie Rogers.

2080248.

Court of Civil Appeals of Alabama.

June 12, 2009.

Patrick A. Jones, Huntsville, for appellant.

Robert W. Hanson, Albertville, for appellees.

THOMPSON, Presiding Judge.

Howard S. Ross appeals from the judgment of the Marshall Circuit Court denying his attempt to redeem certain real property that Jerry Rogers and Robbie Rogers had purchased at a foreclosure sale. For the reasons stated herein, we reverse and remand.

In 2000, Ross sold a tract of property located in Madison County ("the Madison County property") to Geoffrey Pierce and Cherie Pierce. The sales price was approximately $100,000. To cover this price, the Pierces made a down payment to Ross of $1,000, assumed an existing mortgage loan on the property for which Ross was responsible, and executed two promissory notes in favor of Ross.¹ One of the notes, for an amount not disclosed in the record, was secured by a second mortgage on the Madison County property. The other note, for the amount of $17,000, was secured by a second mortgage on property located in Marshall County that the Pierces owned ("the Marshall County property"). The $17,000 note provided that no interest would accrue on the note and no payments would be made on the note until the Pierces sold or conveyed the Marshall County property or defaulted on the note secured by the Madison County property, at which time the $17,000 note would become due and payable. The $17,000 note included a hand-written provision that stated: "The payoff of this mortgage shall be used to reduce the balance of the mortgage of the property in Madison County of even date by $17,000." The mortgage on the Marshall County property securing the $17,000 note was junior to a preexisting mortgage on that property.

In 2001, after the Pierces failed to make payments to Ross on the Madison County property, Ross foreclosed on the mortgage covering that property. At the foreclosure sale, which Ross conducted on August 14, 2001, Ross purchased the Madison County property for $100 and the reassumption of the first mortgage loan on the Madison County property. There was no evidence presented at trial regarding the value of the Madison County property at the time of the foreclosure sale, although there was testimony that the Pierces, while they had lived in the house on the Madison County property, had done substantial damage to the house. Ross did not foreclose on the mortgage on the Marshall County property securing the $17,000 promissory note at that time. In 2005, Ross sold the Madison County property for $115,000.

In 2004, Provident Bank, which owned the first mortgage on the Marshall County property, foreclosed on that mortgage. On June 28, 2004, the Rogerses purchased that property at the foreclosure sale for $19,901. Shortly thereafter, they purchased the Pierces' right to redeem that property and began making repairs and improvements to the property.

On April 11, 2005, Ross indicated in a letter to the Rogerses that, by virtue of his junior mortgage on the Marshall County property, he intended to redeem that property.² Pursuant to § 6-5-252, Ala.Code 1975, he requested a statement from the Rogerses listing the amount they had paid for the property and any lawful charges they claimed regarding the property.³ The Rogerses responded by providing a statement of the purchase price and what they contended were the legal charges relating to the property, which, together, totaled $39,168.55. In a letter dated June 10, 2005, Ross responded that he wished to verify the statement of charges the Rogerses had submitted, requested that they provide receipts verifying the charges, and appointed a referee to determine the proper value of the charges pursuant to § 6-5-254, Ala.Code 1975.⁴

On June 27, 2005, Ross filed an action against the Rogerses alleging, among other things, that he could not reasonably determine the amount necessary to redeem the Marshall County property. He sought a judgment from the trial court excusing him for failure to tender the amount necessary to redeem the property, preserving his right to redeem the property, determining the amount necessary to redeem the property, and granting any further appropriate relief. After the Rogerses failed to file an answer to Ross's complaint, the trial court entered a default judgment against them on March 15, 2006. That judgment provided that Ross was entitled to redeem the property, set the amount necessary to redeem the property at $22,581, and ordered the Rogerses to execute a quitclaim deed conveying the property to Ross. Ross thereafter interpleaded the $22,581 into the court, alleging that the Rogerses had failed to execute a quitclaim deed for the property as required by the default judgment.

On July 13, 2006, the Rogerses filed a motion to set aside the default judgment pursuant to Rule 60(b)(1), Ala. R. Civ. P., which the trial court granted. On May 19, 2008, the trial court held a bench trial. At the beginning of the trial, the Rogerses moved to amend their answer⁵ by adding what they indicated was an affirmative defense that the $17,000 promissory note executed by the Pierces in favor of Ross and secured by the mortgage on the Marshall County property had been extinguished when Ross purchased the Madison County property at the foreclosure sale on August 14, 2001. Ross objected to the amendment. The trial court construed the proposed amendment to the answer as one asserting the defense of payment and the defense of failure of consideration. The trial court held that the former defense could be asserted under a general denial rather than as an affirmative defense and that, therefore, amendment of the answer was not necessary to assert that defense. The trial court held that the latter defense constituted an affirmative defense, and it allowed the Rogerses to amend their answer to add that defense.

During the bench trial, Ross testified that the Pierces did not make any payments on the $17,000 promissory note. He stated that he could not remember the exact price for which he had sold the Madison County property to the Pierces but that it was around $100,000. He testified that the Pierces had planned to sell the Marshall County property before purchasing the Madison County property and that they were supposed to pay Ross $17,000 from the proceeds of that sale as part of the purchase price of the Madison County property. The Pierces were unable to sell the Marshall County property, however, and, as a result, they were unable to pay Ross the agreed $17,000 at the time of their purchase of the Madison County property. Ross testified that, in lieu of the $17,000 down payment, he agreed to take a $17,000 promissory note secured by the Marshall County property, with the note not becoming due until the Pierces sold or otherwise conveyed the Marshall County property.

Ross testified that he did not foreclose on the mortgage on the Marshall County property at the time that he foreclosed on the mortgage on the Madison County property because, Ross started, in order to convince the Pierces to leave the Madison County property after foreclosure, he had told the Pierces that, if they would return to the Marshall County property, he would not foreclose on his mortgage on that property for as long as they continued living there. Ross testified that, at the time he foreclosed on his mortgage on the Madison County property, the first mortgage on that property, which he reassumed upon purchasing the Madison County property at the foreclosure sale, had a balance of approximately $60,000. Ross testified that he no longer had the promissory note that was secured by the Madison County property and that he could not recall the value of that note. He still had possession of the $17,000 promissory note secured by the Marshall County property, however, and it was entered into evidence as an exhibit.

Other witnesses testified at the bench trial as well, but none of their testimony contradicted the portions of Ross's testimony set forth above.

On July 14, 2008, the trial court entered a judgment that, in addition to making findings of fact, read:

"After careful consideration of the evidence the Court finds that [Ross] has failed to convince the Court that he is entitled to the relief sought in two respects:

"A. If [Ross]'s complaint is construed to be a complaint brought pursuant to Alabama Code Section 6-5-255, Section 6-5-256 requires the Court to settle and adjust the equities of the parties.⁶ It appears the Rogerses would have a superior right of redemption obtained from the Pierces and there was insufficient evidence at trial to balance the equities between the parties.

"B. Ross has failed to convince the Court there was any balance due on his Madison County second mortgage foreclosed by him on August 14, 2001, and thus any remaining indebtedness on the mortgage which is the subject of this action. Any ambiguities in the documents dated September 1, 2000, are to be construed against Ross who drafted the documents.

"C. [Ross] having failed to satisfy this Court he is entitled to the relief sought, said request is DENIED and he is entitled to a return by the Clerk to him of the $22,541.00 paid into Court."

Following the denial of his postjudgment motion, Ross filed a timely notice of appeal to the supreme court, which transferred the appeal to this court pursuant to § 12-2-7, Ala.Code 1975.

In Robinson v. Evans, 959 So.2d 634, 637 (Ala.2006), our supreme court stated the following with regard to the appropriate standard of review of a judgment following a bench trial:

"The evidence in this case was presented to the trial judge in a bench trial. `"When a judge in a nonjury case hears oral testimony, a judgment based on findings of fact based on that testimony will be presumed correct and will not be disturbed on appeal except for a plain and palpable error."' Smith v. Muchia, 854 So.2d 85, 92 (Ala.20...