Sooner Federal Sav. & Loan Ass'n v. Smoot

• Decision Date: 04 April 1995
• Docket Number: No. 75937,75937
• Citation: Sooner Federal Sav. & Loan Ass'n v. Smoot, 894 P.2d 1082, 1995 OK 31 (Okla. 1995)
• Parties: SOONER FEDERAL SAVINGS & LOAN ASSOCIATION, a corporation, Plaintiff, v. Bill W. SMOOT and Dowana L. Smoot, husband and wife, Defendants, and Peoples Savings & Investments, Inc., Appellee, and Harvey Lee, Guardian for Charles E. Harding, Appellant.
• Court: Oklahoma Supreme Court

Page 1082

894 P.2d 1082

1995 OK 31

SOONER FEDERAL SAVINGS & LOAN ASSOCIATION, a corporation, Plaintiff, v. Bill W. SMOOT and Dowana L. Smoot, husband and wife, Defendants and Peoples Savings & Investments, Inc., Appellee and Harvey Lee, Guardian for Charles E. Harding, Appellant.

No. 75937.

Supreme Court of Oklahoma.

April 4, 1995.

Certiorari to the Court of Appeals, Division 1 Appeal from the District Court of Oklahoma County, State of Oklahoma; Bana Blasdel, Trial Judge.

Guardian for an adjudicated incompetent, sought to vacate as void an agreed judgment entered in a foreclosure action. The agreed judgment was based on a settlement agreement between the guardian and an alleged second mortgagee that had the approval of the judge handling the guardianship. Among other things, the agreed judgment agreed to the validity of the second mortgage as a lien upon real property eventually determined to be owned by the incompetent even though the debt secured by the mortgage was not that of the ward. The trial judge denied the motion to vacate and the Court of Appeals affirmed. HELD: The settlement, approval order of the guardianship judge and the agreed judgment are all void as beyond the authority or power of guardians and trial courts as provided in 58 O.S. 1991, § 385, which puts strict limits upon the authority of guardians and trial courts in relation to placing mortgages upon the real property of adjudicated incompetents. Further, the guardian, on behalf of his ward, is not barred by laches or estoppel from attacking the agreed judgment.

CERTIORARI PREVIOUSLY GRANTED; COURT OF APPEALS' OPINION VACATED; DISTRICT COURT'S JUDGMENTS REVERSED.

Robert W. Raftery, Larry Glenn Ball, Erin M. Van Laanen, Spradling, Alpern, Friot, Gum & Scoggins, Oklahoma City, for appellee.

Monty L. Bratcher, Monty L. Bratcher, P.C., Edmond, for appellant.

LAVENDER, Justice.

We decide whether the trial court erred when she refused to set aside a sheriff's sale and vacate as void an agreed judgment in a foreclosure action which, in part, validated a mortgage as a lien upon the real property of an adjudicated incompetent. We hold the trial court erred because on its face the agreed judgment is void because it was beyond the authority or power of the court to enter as spelled out in 58 O.S.1991, § 385, which strictly limits the authority of guardians and trial courts in placing mortgages upon the real property of adjudicated incompetents. ¹ We also decide that neither laches or estoppel bars a collateral attack on the involved agreed judgment.

PART I. FACTS AND PROCEDURAL HISTORY.

Charles E. Harding (Harding, incompetent or ward) wanted to borrow some money. After rejection by other financial institutions, Harding applied to First Mortgage Company. His application was turned down, but Bill Smoot, an employee of First Mortgage, offered to buy Harding's residence. Harding signed a warranty deed to his property in favor of Smoot and his wife, Dowana. In return for the warranty deed Smoot paid off Harding's $10,000 home mortgage, allegedly deeded Harding mineral rights in undeveloped real estate, and gave Harding $20,000. Sooner Federal Savings & Loan Association v. Smoot, 735 P.2d 555, 556 (Okla.1987). The residence was located in Nichols Hills, Oklahoma and was appraised at $235,000. Id. Harding was allowed to remain in his home and pay monthly rent to Smoot according to a lease agreement Smoot prepared. Id. at 557.

After obtaining the warranty deed the Smoots borrowed money from two financial institutions, securing the debts with two mortgages on the property--one to Sooner Federal Savings & Loan Association (first mortgage) and the other to appellee, Peoples Savings & Investments, Inc. (second mortgage). ² The Smoots defaulted and Sooner brought a foreclosure action. Harding was joined in the action, as well as Peoples. At some time after the transaction with Smoot, appellant Harvey Lee, was appointed guardian for Harding due to his incompetency and Lee acted as guardian for Harding in the instant litigation.

The main issue in the foreclosure action became whether or not Harding was competent when he deeded the property to the Smoots and, therefore, understood that he was actually deeding away the property. Essentially, if Harding was incompetent the deed would be nullified and the mortgages would be invalid. A trial was set on this issue.

On the day set for trial Lee, as guardian, entered into a settlement agreement with Peoples which, among other things, recognized the validity of the second mortgage in the amount of $58,000.00 regardless of the outcome of the trial between Harding and Sooner. The settlement also agreed Peoples was entitled to judgment on its note and mortgage in the amount of $58,000.00 and that it was entitled to foreclose the mortgage and sell the property. The settlement also provided Peoples would not participate in the trial, that the trial judge would be informed Harding and Peoples had settled and that issues concerning the validity and extent of People's second mortgage would no longer be an issue for the trial court. It further provided Peoples would not execute and commence sale proceedings on the property for six months. We also note the settlement provided that the guardian agreed to undertake to sell the property within the six month period following the settlement. The settlement was approved by the judge handling the guardianship matter and it was reduced to an agreed judgment by the trial judge presiding over the foreclosure. ³

Although ordering the property sold if the debt was not satisfied, the agreed judgment provided that Peoples could not execute on the judgment (i.e. have the property sold at Sheriff's sale) until six months after a final decision regarding the validity of the Sooner mortgage. Although not expressly so stated in the agreed judgment, this six month period was apparently an extension of the six month period contained in the settlement agreement which allowed the guardian to sell the property. Like the settlement agreement, the agreed judgment recognized the validity of the second mortgage in the amount of $58,000.00 and also set out a finding that People's mortgage constitutes a valid lien upon the real property. ⁴ The agreed judgment also provides that the personal debt of the Smoots had been discharged in bankruptcy and that the agreed judgment in favor of Peoples was in rem only, i.e. against the property. As can be seen from this rendition of both the settlement and agreed judgment, both of these documents validated Peoples' mortgage as a lien upon the real property regardless of whether or not Harding was ultimately determined to be the owner of the property and in spite of the fact that all appear to agree the debt secured by the mortgage was not that of Harding, but that of the Smoots.

The trial went forward without Peoples. The trial judge ruled in favor of Harding and held the deed to the Smoots void because of Harding's incompetency. ⁵ Sooner's mortgage was, thus, determined not to be a valid lien on the property. This judgment was affirmed by this court on appeal in Sooner Federal, supra. Peoples took no part in the appeal.

Peoples sought to execute on the agreed judgment when Lee did not sell the property within six months after our decision in Sooner Federal. The property was sold to Peoples at Sheriff's sale. Lee, on behalf of Harding, then mounted a collateral attack on the agreed judgment, moving to set aside the Sheriff's sale and vacate the agreed judgment arguing it was void. ⁶ One theory advanced by Lee was that the agreed judgment (based as it was on the approved settlement agreement) was void as beyond the judicial power of the trial court to render the particular judgment because the agreed judgment was nothing less than a validation of the mortgage and was expressly prohibited by 58 O.S.1991, § 385. In essence, Lee argued § 385 acts to bar the authority of trial courts from approving the placement of a mortgage on the real property of an adjudicated incompetent unless the debt sought to be secured by the mortgage is already a valid legal lien on the property or might become a valid legal lien against the property by operation of law. The trial judge denied the motion to set aside the Sheriff's sale and to vacate the agreed judgment, as well as a motion for new trial filed by Lee, and she confirmed the sale to Peoples. Lee appealed and the Court of Appeals affirmed. We previously granted certiorari. ⁷

PART II. THE GUARDIANSHIP JUDGE LACKED AUTHORITY TO APPROVE THE SETTLEMENT AND THE FORECLOSURE JUDGE LACKED AUTHORITY TO ENTER THE AGREED JUDGMENT.

A judgment is void when it affirmatively appears from an inspection of the judgment roll that any one of the three jurisdictional elements are absent: 1) jurisdiction over the person; 2) jurisdiction over the subject matter; or 3) jurisdictional power to render the particular judgment. Winona Oil Co. v. Barnes, 83 Okla. 248, 200 P. 981, 985 (1921). A void judgment may be vacated at any time on a motion of a party or person affected thereby when the fatal defect appears on the face of the judgment roll. 12 O.S.1981, § 1038, now 12 O.S.Supp.1993, § 1038; Matter of Delaney, 617 P.2d 886, 889 (Okla.1980). There is no dispute here as to whether the judge handling Harding's guardianship had personal or subject matter jurisdiction over the guardianship proceeding(s). She did. There is also no dispute as to whether the judge handling the foreclosure action had personal jurisdiction over the parties or subject matter jurisdiction over the foreclosure suit. He did. The question is whether these courts had the jurisdictional power to render the particular order or judgment rendered by them--in the case of the guardianship judge, the order approving the settlement; in the case of the foreclosure judge, the agreed judgment based on the settlement.

The Court of Appeals, relying principally on Carter Oil...