Sooner Federal Sav. and Loan Ass'n v. Oklahoma Cent. Credit Union, 65823

CourtSupreme Court of Oklahoma
Citation790 P.2d 526
PartiesSOONER FEDERAL SAVINGS AND LOAN ASSOCIATION, a corporation, Plaintiff-Appellee, v. OKLAHOMA CENTRAL CREDIT UNION, a corporation, Defendant-Appellee, and Mickey Leslie, Defendant-Appellant, and Charles E. Bailey, Doris R. Bailey, Hoshall E. Thomas, Oleta I. Thomas, Board of County Commissioners of Tulsa County, Oklahoma, and John F. Cantrell, County Treasurer of Tulsa County, Oklahoma, Defendants.
Docket NumberNo. 65823,65823
Decision Date07 November 1989

Page 526

790 P.2d 526
1989 OK 170
OKLAHOMA CENTRAL CREDIT UNION, a corporation, Defendant-Appellee,
Mickey Leslie, Defendant-Appellant,
Charles E. Bailey, Doris R. Bailey, Hoshall E. Thomas, Oleta
I. Thomas, Board of County Commissioners of Tulsa County,
Oklahoma, and John F. Cantrell, County Treasurer of Tulsa
County, Oklahoma, Defendants.
No. 65823.
Supreme Court of Oklahoma.
Nov. 7, 1989.
As Corrected Nov. 13, 1989.
Rehearing Denied May 8, 1990.

Thomas H. Trower, Houston and Klein, Inc., Tulsa, for plaintiff-appellee.

Thomas M. Bingham, Lang, James & Bingham, Inc., Tulsa, for defendant-appellee.

Ernest A. Bedford, John J. Kocher, Eric W. Spooner, Bedford & Associates, Inc., Tulsa, for defendant-appellant.

OPALA, Vice Chief Justice.

The dispositive issues are: Can the right of redemption be effected after sheriff's sale but before judicial confirmation? Did the record owner have the right to redeem? and if so, Does the redemptive right's gratuitous transfer to the foreclosing mortgage lender give the lender an equity superior to that of the purchaser for value at a regular judicial sale? We answer the first and second questions in the affirmative and the third in the negative.


Hoshall and Oleta Thomas [collectively called Thomas] executed on May 2, 1975 a promissory note to Sooner Federal Savings and Loan Association [Sooner] for the principal sum of $49,500. To secure the note, they executed a real estate mortgage covering the property which is the subject of this appeal. Four months later Thomas conveyed the property to Charles and Doris Bailey [collectively called Bailey]. In conjunction with the transfer of title, Bailey executed a loan transfer and agreed to assume the indebtedness due Sooner.

Bailey stopped making monthly installments on the note in September 1984. Sooner then declared the note in default (with an unpaid balance of $43,127.24) and commenced foreclosure proceedings against Thomas and Bailey on February 15, 1985. Sooner named Oklahoma Central Credit Union [Credit Union] a party defendant because it had acquired title to the property by a February 16, 1984 sheriff's deed. 1 John F. Cantrell, Tulsa County Treasurer [Treasurer], and Board of County Commissioners [Board] were also named defendants because of possible tax liens against the property. Sooner sought a judicial determination that its interest in the property stands superior to that of the defendants.

Page 528

Bailey and Thomas did not enter an appearance, answer or otherwise plead to the petition. The Board filed an answer, disclaiming any interest in the property but seeking recovery of costs expended in the action. The Treasurer also answered, asserting that delinquent ad valorem taxes in the amount of $416 constituted a lien on the property and requesting recovery of costs against Sooner. Credit Union entered an appearance and filed a disclaimer of interest in the real property.

The Trial Court's Foreclosure Decision

The trial court found that (1) Thomas and Bailey 2 owed $43,127.24 on the note and mortgage together with interest, attorney's fees and costs for abstracting, mortgage cancellation insurance, ad valorem taxes and the costs of the action; (2) Sooner held a first and prior lien upon the real estate and premises described in the petition by virtue of its mortgage as security for the indebtedness, including interest, attorney's fees and costs and (3) the Treasurer held a lien on the property in the sum of $416, together with penalties and interest, for personal property taxes levied against Bailey, subject only to Sooner's first mortgage interest.

The trial court did not make a separate finding as to Credit Union's interest; rather it rendered a single judgment in rem for Sooner against Credit Union, Thomas and Bailey. The amount of the adjudicated balance due on the mortgage shown in the journal entry is identical to that found to be due Sooner from Thomas and Bailey. The property was ordered sold at sheriff's sale.

The Sheriff's Sale

A public sale took place July 23, 1985, at which Mickey Leslie [Purchaser] made the highest bid of $10,000. On the same day Credit Union filed a motion to set aside the sheriff's sale, alleging that it had tendered to Sooner "full payment of its judgment" and that the tender had been accepted contingent upon the court's vacation of the sheriff's sale. At the confirmation hearing the trial court found that Credit Union had "effected a redemption of the property" from the obligation owed to Sooner and set the sale aside. 3

The trial court denied the purchaser's new trial motion but ordered the court clerk to reimburse to him the amount paid in on the bid. Sooner was held responsible for expenses in connection with setting aside the sale and was directed to "effectuate the redemption by Credit Union". 4 The purchaser appealed and the Court of Appeals reversed the trial court's postdecree order, holding that the right of redemption stands extinguished by force of law at the time the postdecree sale of property is effected. It remanded the cause with instructions to confirm the sale and to establish legal title in the purchaser.

We granted certiorari and now reverse the trial court's postdecree order.



The purchaser contends the trial court erred in permitting Credit Union to exercise its right of redemption because

Page 529

the redemption was exercised after he sought confirmation of the sale.

According to our statutory law, "[e]very person having an interest in property subject to a lien, has a right to redeem it from the lien, at any time after the claim is due, and before his right of redemption is foreclosed." 5 The redemptive right is not extinguished at the time of sale but rather when the order of sale is confirmed. 6

Generally, the equitable right of redemption belongs to one who has an interest in the premises that would be lost on foreclosure or to one who owns the mortgagor's equity of redemption or any subsisting interest therein by privity of title acquired by purchase, inheritance or otherwise. 7 A borrower or any other person (i.e., subordinate lender, owner) having an interest subject to a lien has a right of redemption that is not extinguished at the time of sale but extends until the order of sale is confirmed. 8 This is so because by statute a judicial sale on foreclosure is neither conclusive nor binding in the sense of transferring legal title to the purchaser until it is effectively confirmed. 9 We acknowledge that there are early post-statehood cases which seem to hold to the contrary. 10 Insofar as these authorities are in discord with today's pronouncement, they are to be viewed as overruled by our more recent decisions. 11

We hold that Credit Union could effect its right of redemption at any time before the sale was confirmed.



Oklahoma's statutory law recognizes and confers a right to redeem as inherent in every mortgage. 12 Any person having an interest in mortgaged real estate may redeem from a mortgage or from a deed absolute on its face 13 which is taken as security for debt. 14

In Oklahoma, where the common-law theory of mortgages stands statutorily abrogated and replaced with an equitable theory, a right to redeem means that upon discharge of the debt within the maximum permissible time, the foreclosed borrower is entitled to have the mortgaged premises released from the lien and his entire estate restored to the extent he would have had if the mortgage transaction had never taken place. 15

We accordingly hold that Credit Union, the purchaser of the property in question at the prior judicial sale, 16 had a right to redeem from Sooner's mortgage.

Page 530





As a subordinate mortgagee, Credit Union had taken title to the property in question subject to Sooner's first mortgage and without assuming it. It hence incurred no personal obligation. One who purchases another person's equity by buying the land subject to a mortgage, does not become personally liable for the mortgage debt. 17 The liability of Credit Union to Sooner was solely in rem. A judgment in rem creates no personal liability but operates only on the property that is the subject of litigation. 18

Personal liability for the mortgage debt in suit was imposable only on Bailey as principal obligor and on Thomas as Bailey's surety. A purchaser who assumes the mortgage obligation becomes the principal debtor, while the original mortgagor then occupies the position of a surety. 19

Sooner's "cancellation" of Credit Union's "mortgage debt" was nothing more than an idle act in an illusory transaction. Credit Union bore no in personam liability on any mortgage to Sooner. It was not amenable to a deficiency judgment. 20 Sooner thus parted with no consideration, suffered no detriment and conferred no benefit upon Credit Union. In short, by its acquisition of Credit Union's redemptive rights Sooner became a nudum pactum transferee. Nudum pactum is a gratuitous promise--one unsupported by any sufficient legal consideration. 21 Credit Union's gratuitous promise failed to give Sooner a position different from that it had occupied as a foreclosing lender.




The equity of a prior purchaser for value must be viewed as superior to that of a foreclosing lender who, like Sooner here, stands as a gratuitous transferee (i.e. one without consideration) from a holder of redemptive rights.

The postsale right to redeem before confirmation is carved out by principles of public policy to afford a foreclosed borrower the best opportunity to revest...

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