Smith v. Schweigert
| Decision Date | 10 January 1990 |
| Docket Number | No. 88-544,88-544 |
| Citation | 241 Mont. 54,785 P.2d 195,47 St.Rep. 77 |
| Parties | Evelyn SMITH, f/k/a Evelyn Looney, Plaintiff and Appellant, v. Robert SCHWEIGERT, Defendant and Respondent. |
| Court | Montana Supreme Court |
Richard DeJana, Kalispell, for plaintiff and appellant.
James C. Bartlett, Hash, O'Brien & Bartlett, Kalispell, for defendant and respondent.
Evelyn Smith (Evelyn) appeals from an order of the Eleventh Judicial District granting summary judgment to respondent, Robert Schweigert (Schweigert). We reverse and remand.
Schweigert raises numerous issues for review, including timeliness of the appeal, mootness and the validity of the contract for deed. These arguments are without merit; accordingly we decline to address them. Therefore the sole issue on appeal is:
Whether Schweigert is barred, through the doctrine of collateral estoppel, from reopening a previous judgment of the District Court which determined that a lending agreement evidenced by a warranty deed and contract for deed was an equitable mortgage.
Dan and Evelyn Looney, husband and wife, were the owners as joint tenants, of a certain piece of land. On May 1, 1981, Schweigert and Dan Looney entered into a Memorandum of Intent. The purpose of this memo was to evidence an intent on the part of Dan Looney and Schweigert to enter into a Contract for Deed covering the land. Apparently Schweigert had constructed a building on such property owned by Looneys, and as a result Looneys owed him money. The pertinent portions of the memorandum of intent are as follows:
. . . . .
3. That this agreement is entered into by both parties freely and voluntarily, with the understanding that it is intended to facilitate the completion of the financing arrangement with the bank, and further, it is understood and agreed that this agreement may be specifically enforced by either party in the event of controversy.
In order to secure the debt, the Looneys conveyed the property by warranty deed to Schweigert. The Contract for Deed was entered into with Schweigert as seller and the Looneys as buyers. Upon payment of the money owed as per contract for deed Schweigert would convey the property back to the Looneys. In case of failure on the part of the Looneys to comply with the contract, a quitclaim deed was placed in escrow to be delivered to Schweigert upon such default and proper notice. The Contract for Deed was executed and signed by both husband and wife on May 6, 1981. In 1982, the Looneys were divorced. The property settlement agreement divided the property into two parcels. According to the agreement, Evelyn retained the portion of property upon which the family home was situated and Dan Looney received the portion upon which his business was located. The agreement also provided that Dan would pay the contract for deed debt.
Dan Looney defaulted on his payments. Schweigert gave notice of default to the Looneys and exercised his rights under the contract, and obtained and recorded the quitclaim deed covering the property held in escrow with the County Clerk and Recorder on June 28, 1985. Dan Looney alone filed a lawsuit against Schweigert on July 8, 1985. In the lawsuit, he maintained that because the warranty deed and Contract for Deed were executed to secure a debt, an equitable mortgage resulted. Consequently, he asserted that Schweigert would have to foreclose on the property as a mortgage and as a result he, Looney, would be entitled to a one-year right of redemption. For reference, see § 71-1-107, MCA, which provides as follows:
Transfers of interest. (1) Every transfer of an interest in property, other than in trust, made only as a security for the performance of another act is to be deemed a mortgage, except when in the case of personal property it is accompanied by actual change of possession, in which case it is deemed a pledge.
(2) The fact that a transfer was made subject to defeasance on a condition may, for the purpose of showing such transfer to be a mortgage, be proved (except as against a subsequent purchaser or encumbrancer for value and without notice), though the fact does not appear by the terms of the instrument.
In order to expedite the matter, Schweigert moved for summary judgment consenting to Looney's equitable mortgage assertion and asked the court to have the sheriff sell the property and to grant Looney a one-year right of redemption from the sheriff's sale. The judgment was entered and the sale took place. Schweigert bid in full the amount of the debt or contract purchase price then due, and Looney did not redeem within the one-year time period. On March 31, 1988, a Sheriff's Deed was issued in favor of Schweigert.
In the meantime on May 13, 1986, Evelyn filed a document entitled "Notice of Failure to Foreclose" which stated that the Decree of Foreclosure had no effect on her rights to the real property, because she was not named as a party in the foreclosure action. According to her theory, the foreclosure action only affected her ex-husband's interest. Since her right had not been validly foreclosed, she was still entitled to her interest in the property. Based upon this theory, she filed a complaint against Schweigert, seeking partition of her interest in the land.
Schweigert answered the complaint and maintained that her interest had been extinguished when he exercised his rights under the Contract for Deed. He asserted that when he foreclosed on Looney's interest, he treated it as a mortgage only to prevent delay and litigation. Therefore, that action had no effect upon Evelyn's interest, which had previously been extinguished. He counterclaimed and sought to have Evelyn removed from the property.
These facts and arguments were presented in motions for summary judgment to the trial court. The trial court found in favor of Schweigert and ordered Evelyn to vacate the property. This appeal followed.
Evelyn argues that Schweigert is barred from foreclosing on her interest in the property. She maintains that when Schweigert elected to foreclose as a mortgage and bid...
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