Smith v. Federal Land Bank of Louisville, 1-384A77
| Decision Date | 15 January 1985 |
| Docket Number | No. 1-384A77,1-384A77 |
| Citation | 472 N.E.2d 1298 |
| Parties | Jerald Lee SMITH et al. v. FEDERAL LAND BANK OF LOUISVILLE, et al. |
| Court | Indiana Appellate Court |
R. Scott Hayes, Scotten & Hinshaw, New Castle, for appellants.
David R. Day, Bose, McKinney & Evans, Indianapolis, H. Terrill Harvey, Millikan, Hodson & Harvey, New Castle, for appellee, First Indiana Federal Savings Bank.
Wesley D. Schrock, Shearer & Schrock, Anderson, for appellee, Florence Diana Wisehart.
Jerald Lee and Hazel R. Smith (Smith), former owners of foreclosed property, appeal the overruling of their motion to reconsider the trial court's order setting aside a sheriff's sale on the ground of confusion and directing resale of the real property.
We affirm.
On September 20, 1983, the Federal Land Bank of Louisville (FLB) obtained an amended order granting summary judgment which provided a judgment against the Smiths and in favor of FLB in the amount of $136,892.74 plus interest and a further judgment in favor of Florence Diana Wisehart (Wisehart) in the sum of $188,000.00 plus interest. The judgment provided that the lien of the mortgage held by FLB was first and prior to all other liens and that the lien of Wisehart was second and subsequent to that lien.
Wisehart had assigned her interest in the second mortgage to the Pendleton Savings and Loan Association (now First Indiana, as the result of a merger) in an agreement At the sheriff's sale on October 26, 1983, First Indiana, apparently believing it was the owner of all of Wisehart's interest in the assigned mortgage, bid in the full amount of the FLB mortgage and the assigned mortgage, $340,436.21. First Indiana tendered cash equaling the costs of the sale and the amount of the FLB's mortgage but it claimed credit for the remainder of its bid against the amount of its assigned mortgage. The Sheriff of Henry County, who conducted the sale, concurred with First Indiana's interpretation of the judgment--each thought that First Indiana was the sole owner of Wisehart's interest in the mortgage.
dated January 18, 1980. The trial court recognized this agreement in its order, stating that Wisehart had assigned "all of her right, title and interest" in the mortgage to First Indiana. However, "despite this apparent full assignment", the judgment later provided that the lien created in favor of First Indiana as a result of the assignment was superior to Wisehart's lien and therefore her lien was a third lien. First Indiana's brief, pg. 5. Finally, the judgment ordered the sheriff to sell the real estate at a foreclosure sale and distribute the proceeds as set forth in the judgment.
Wisehart, on the other hand, did not agree with this interpretation. On October 28, 1983, she filed a "Petition to Enforce Foreclosure Bid and For Order Directing Disbursement of Proceeds". Wisehart argued that First Indiana's assigned interest in Wisehart's second mortgage stemmed from a prior agreement disconnected with the instant one, dated January 18, 1980 wherein Wisehart granted First Indiana a first mortgage in other real estate as collateral for a first mortgage loan and as further collateral, "Wisehart granted [First Indiana] an assignment of this second mortgage to the extent of Wisehart's debt to [First Indiana] ". (R. 53) (our emphasis). On May 20, 1983, the petition continued, First Indiana was granted a foreclosure decree against Wisehart in the amount of $121,534.82 plus interest; subsequently, at the foreclosure sale, First Indiana bid in $75,000.00 on the property, leaving a deficit of $46,534.82 due and owing from Wisehart. Id. Thus, Wisehart argues, since First Indiana only paid $146,001.98 to the Henry County Sheriff for disbursement to FLB, and since First Indiana's lien against the Smiths is only to the extent of Wisehart's remaining debt ($46,534.82), then Wisehart is entitled to the payment of $147,899.41. 1 In other words, Wisehart requested that First Indiana be given credit only in the amount of the debt owed by Wisehart to First Indiana, asking the court to require First Indiana to pay the balance of the bid over to the Sheriff and, presumably, then, over to Wisehart.
A copy of Wisehart's petition was served upon all counsel, including counsel for the Smiths. The trial court set a hearing on the petition for November 22, 1983 and notice of this hearing was sent to counsel for the Smiths.
On November 21, 1983, First Indiana filed its response to Wisehart's petition. This response was served upon all counsel by mail on November 18th. There is no claim that counsel for the Smiths did not receive this response prior to the hearing held by the court on November 22, 1983. The response raised a number of defenses to Wisehart's position; it also suggested, on pages 11 and 12, that as an alternative to granting Wisehart's petition, the court consider vacating the sale on the ground of mistake and order the property resold by the sheriff.
The hearing was held on November 22, 1983, but only counsel for Wisehart and First Indiana were present. These counsel advised the court that they were in agreement with respect to setting aside the sheriff's sale. An order to this effect was tendered to the court and was signed by The court found that there was "confusion concerning the bidding procedures to be followed at the Sheriff's sale on Oct. 26, 1983", and that due to such confusion, it was appropriate for the court to set aside the bid submitted by First Indiana at the sale and to vacate the sale and the deed of the Henry County Sheriff conveying the real estate to First Indiana. The order stated that First Indiana should be permitted to bid, at the resale of the property, the sum of $196,808.12, such sum representing the amount of FLB's lien plus the deficiency due and owing 2 from Wisehart to First Indiana. Thereafter, Wisehart was free to enforce the balance of her judgment to her benefit.
the court on December 6, 1983, with copies served upon all counsel.
Three weeks later, Smiths filed a motion to reconsider the order to vacate the sheriff's sale. A hearing was held on January 25, 1984. The trial court overruled the motion to set aside the order, finding, in pertinent part, the following:
"At the time the hearing on November 22, 1983, defendants Smith had every right to appear and participate in the proceedings and voice any objection they might have in regard to the proposal of Florence Wisehart and First Indiana Federal Savings Bank to set aside the Sheriff's sale. However, the defendants did not elect to participate in that hearing after being served with pleadings regarding same.
The court found in its order setting aside the Sheriff's sale, that confusion existed at the time of the Sheriff's sale which warranted that sale inequitable.
The order setting aside the sale, constituted an exercise of equitable jurisdiction by this court to rectify what would otherwise have been an inequitable result.
This court finds that pursuant to the provisions of I.C. 34-1-39-14, the court did have jurisdiction to entertain further proceedings after the sale of the real estate.
* * *
* * *
Defendants Smith acknowledge the fact that they 'did owe money', but in this court's estimation, seek to obtain technical advantage from the confusion existing at the time of the Sheriff's sale in an attempt to argue that their obligations are now extinguished.
Defendants Smith fail to show that their position has been changed to their detriment as a result of the sale of October 26, 1983." 3
Smiths present the following issues for our review:
I. Whether the court erred in ignoring the statutory procedure which governs collection of the purchase price by the sheriff at a foreclosure sale, if said price is not immediately paid in full.
II. Whether the court erred in setting aside the sheriff's sale held October 26, 1983, without request having been made by any party in the form of motion or petition and without notice to Smiths.
III. Whether the court erred in finding there was confusion at the sheriff's sale held October 26, 1983 without having heard any evidence on the subject.
The trial judge found, in his order overruling Smiths' petition to reconsider, that he had jurisdiction to entertain further proceedings after the sheriff's sale pursuant to IND.CODE 34-1-39-14, 4 which governs the failure of a purchaser to pay for property. Smiths' position is that IND.CODE 32-8-16-5 is applicable instead. This statute states in relevant part:
For its part, First Indiana attempts to differentiate the instant case from the situations contemplated by the above statutes; that is, the statutes were drafted in case a bidder fails or refuses to pay the amount of his bid. Here, argues First Indiana, the sheriff allowed First Indiana to credit the full amount of the assigned mortgage against its bid, a different matter entirely.
While, superficially at least, this distinction appears to hold some merit, we prefer to rest our determination on First Indiana's alternative argument: the trial court possessed equitable jurisdiction to vacate the sheriff's sale.
In Indiana, "there is no...
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