Sant v. Stephens
| Decision Date | 11 April 1988 |
| Docket Number | No. 85SA463,85SA463 |
| Citation | 753 P.2d 752 |
| Parties | John W. SANT, Plaintiff-Appellee, v. Ella STEPHENS, Public Trustee for Garfield County, State of Colorado, Defendant, and Edmund W. Roginski and Elisabeth D. Getzen, Defendants-Appellants. |
| Court | Colorado Supreme Court |
Tilly and Graves, P.C., David D. Schlachter, Denver, for plaintiff-appellee.
Goluba & Goluba, Nicholas W. Goluba, Jr., Glenwood Springs, for defendants-appellants.
In accordance with C.A.R. 21.1, the United States Court of Appeals for the Tenth Circuit has certified to the Supreme Court of Colorado two questions of law pertaining to a pending federal case:
(1) Does a lien created by the City of Glenwood Springs Municipal Code § 22-2 for unpaid utility services have rights of redemption under C.R.S. § 38-39-103?
(2) Does the failure of a junior lienholder to exercise redemptive rights under C.R.S. § 38-39-103 at a public sale foreclosing on an undivided one-half interest in the property extinguish that lienholder's redemptive rights in subsequent foreclosure sales of the entire property?
This court has agreed to answer both interrogatories, and now answers "yes" to the first question and "no" to the second.
Resolution of these questions requires careful consideration of the factual context in which they arose. J. James Patterson and Elizabeth S. Patterson were the owners of certain real property in Glenwood Springs, Colorado. This case involves three liens that attached to the property during the time it was owned by the Pattersons. The senior lien was a first deed of trust given by the Pattersons to the public trustee for the use of Horace Mann Life Insurance Company (Horace Mann). This instrument was recorded 1 on December 15, 1976. On March 4, 1982, J. James Patterson gave a second deed of trust on his undivided one-half interest in the property to the public trustee for the use of Valley Bank & Trust, which was recorded on March 17, 1982. The third relevant lien was created when the City of Glenwood Springs recorded a notice of lien against the entire property on February 2, 1983. This lien was for unpaid utility assessments in the amount of $176.07, and it arose pursuant to section 22-2 of the Glenwood Springs Municipal Code.
The Pattersons were unable to meet the obligations secured by the deeds of trust, and the holders of the first and second deeds of trust commenced separate foreclosure proceedings. On May 4, 1983, a public trustee's sale was conducted based upon the deed of trust held by Valley Bank & Trust on J. James Patterson's undivided one-half interest. The plaintiff, John W. Sant, bid $19,260.00 and was issued a certificate of purchase for the undivided one-half interest by the public trustee. A second public trustee's sale was held two days later on May 6, 1983, based upon the Horace Mann deed of trust on all interests in the property. Sant bid $26,369.00 and was issued a second certificate of purchase, covering the entire property.
On May 26, 1983, the City of Glenwood Springs assigned its lien to Edmund W. Roginski and Elisabeth D. Roginski. 2 This assignment was recorded on July 20, 1983. On that same date, the last day of the period allowed by statute for the owners of the property to redeem from the Horace Mann foreclosure sale, the Roginskis filed a notice of intent to redeem the property from that foreclosure sale. The owners did not redeem, and no other lienor filed a notice of intent to redeem. On July 21, the Roginskis tendered $26,917.13 to the public trustee in order to exercise their right of redemption from the Horace Mann foreclosure sale as holders of a junior lien. The public trustee accepted this payment and on July 21 issued to the Roginskis a certificate of redemption and a public trustee's deed for all interests in the property. The Roginskis then took possession of the property.
Neither the Roginskis nor any other junior lienors had filed a notice of intent to redeem or had exercised their rights of redemption in the Valley Bank & Trust foreclosure proceeding, and on July 27, 1983, the public trustee issued to Sant a public trustee's deed to J. James Patterson's undivided one-half interest.
Sant then requested that the public trustee issue a public trustee's deed to the entire property based on his May 6, 1983, certificate of purchase arising from the Horace Mann lien foreclosure. When the public trustee refused, Sant brought a diversity of citizenship action in the United States District Court, pursuant to 28 U.S.C. § 1332 (1982), naming as defendants the Roginskis and Ella Stephens, the public trustee of Garfield County. Sant challenged the Roginskis' redemption of the property and asked that Stephens be required to vacate the certificate of redemption and the public trustee's deed issued to the Roginskis and issue a public trustee's deed in Sant's favor based on the Horace Mann lien foreclosure. He also sought payment of his attorney fees, compensation for the rental value of the property during the time that the Roginskis occupied it, and punitive damages for clouding the title. The Roginskis filed an answer raising several affirmative defenses and asserting several counterclaims, including a claim to quiet title to the property. The Roginskis and Sant then moved separately for partial summary judgment to resolve the issues concerning their respective ownership rights in the property.
The United States District Court held a hearing on the motions and issued its order on December 16, 1983. Sant v. Stephens, 580 F.Supp. 1003 (D.Colo.1983). The court determined that the utility lien was valid and held that the Roginskis' failure to redeem their interest from the Valley Bank & Trust foreclosure sale cut off their right to redeem from the Horace Mann sale. The district court ordered the public trustee to vacate the certificate of redemption and public trustee's deed issued to the Roginskis and to issue a public trustee's deed on all interests in the property in favor of Sant. The district court denied the Roginskis' motion to alter or amend the judgment, and they appealed. 3 The United States Court of Appeals for the Tenth Circuit determined that the decisions of the Colorado Supreme Court provided no controlling precedent on the issues presented by this case and certified two questions of Colorado law to this court.
In order to answer the questions presented by this case, it is essential to understand the statutory provisions relating to rights of redemption. Article 39 of Title 38 of the Colorado Revised Statutes sets out the procedures governing redemption of real property from a sale under foreclosure or execution. When such a sale of lands is held, the purchaser of the property receives a certificate of purchase containing a statement that the purchaser will be entitled to a deed for the property at the expiration of all redemption periods if no redemption is made. § 38-39-115, 16A C.R.S. (1982). The owner of the property or "any person who might be liable upon a deficiency" has seventy-five days from the date of sale to redeem by paying the sum for which the property was sold plus interest from the date of sale and any taxes or other charges, § 38-39-102, 16A C.R.S. (1982), and such a redemption annuls the sale, § 38-39-105, 16A C.R.S. (1982).
If no redemption is made by the owner within this seventy-five day period, those holding encumbrances or liens on the property are given an opportunity to redeem. In order to exercise this right, the lienor or encumbrancer must have filed a notice of intent to redeem within the seventy-five day redemption period of section 38-39-102. § 38-39-103(1), (2), 16A C.R.S. (1982). Section 38-39-103(1) describes the redemption process for lienors:
If no redemption is made within the redemption period provided for in section 38-39-102, the encumbrancer or lienor having the senior lien, according to the records of the county clerk and recorder's office of the county where the real estate is situate, on the sold premises or some part thereof subsequent to the lien upon which such sale was held may redeem within ten days after the expiration of the above redemption period by paying the amount required by section 38-39-102, and each subsequent encumbrancer and lienor in succession shall have and be allowed a five-day period to redeem, according to the priority of his lien, and may redeem within the five-day period allotted to him by paying all redemption amounts theretofore paid with interest and the amount of all such liens with interest prior to his own held by such persons as are evidenced in the manner required in this section or, if no encumbrancer or lienor prior to himself has redeemed, by paying the amount required in section 38-39-102.
A redeeming lienor is issued a certificate of redemption which, when duly recorded, "operates as an assignment to him of the estate and interest acquired by the purchaser at the sale, subject, however, to the rights of persons who may be entitled subsequently to redeem." § 38-39-105. After all redemption periods have expired, a deed "to the land and tenements sold" is issued to the holder of the certificate of purchase or to the lienor who last redeemed. § 38-39-110, 16A C.R.S. (1982). Section 38-39-110 provides in pertinent part:
Upon the issuance and delivery of such deed, but not until then, title shall vest in the grantee and such title shall be free and clear of all liens and encumbrances recorded or filed subsequent to the recording or filing of the lien on which the sale referred to in this section was based.
In construing these statutory provisions, it is important to remember that the right to redeem from an execution or foreclosure sale is "to be exercised in strict compliance with statutory terms" and "depends entirely upon the provisions of the statute creating the right." Johnson v. Smith, 675 P.2d 307, 310 (Colo.1984). As this court observed more than half a century...
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