Western Bank of Las Cruces v. Malooly

Decision Date19 April 1995
Docket NumberNo. 15637,15637
Citation1995 NMCA 44,119 N.M. 743,895 P.2d 265
PartiesWESTERN BANK OF LAS CRUCES, Plaintiff, Jose Frietze, Plaintiff-in-Redemption/Appellee, v. Georgette MALOOLY, Defendant/Appellant.
CourtCourt of Appeals of New Mexico

MINZNER, Justice, Sitting by Designation.

This case arises from a mortgage foreclosure action. Appellant Georgette Malooly (Malooly) and Appellee Jose Frietze (Frietze) both held junior liens against the foreclosed property. After foreclosure and sale of the property, Malooly and Frietze both attempted to redeem it pursuant to NMSA 1978, Section 39-5-18 (Repl.Pamp.1991). This appeal raises three issues: (1) whether our redemption statute permits redemption by the assignee of a junior lienholder; (2) whether Malooly has a superior right of redemption over Frietze by virtue of her status as judicial sale purchaser; and (3) whether the trial court erred in computing the dollar amount required for redemption. We affirm on Issues 1 and 2 and remand for a hearing on Issue 3.


The facts of this case are generally undisputed. Mortgagee Western Bank of Las Cruces (Western Bank) filed a foreclosure action against mortgagor La Ventana Building Corporation (La Ventana) and numerous junior lienholders. On Feb. 5, 1993, the trial court entered a "Stipulated Judgment, Partial Default Judgment, Decree of Foreclosure, Order of Sale and Appointment of Special Master." The trial court's order specified that the post-foreclosure redemption period would be one month in lieu of the statutory period of nine months. This shorter redemption period reflected the original mortgage agreement between Western Bank and La Ventana. See Sun Country Sav. Bank v. McDowell, 108 N.M. 528, 533, 775 P.2d 730, 735 (1989).

The special master held a judicial sale of the disputed property on March 11, 1993. Malooly, a junior lienholder who had been named as a defendant in Western Bank's foreclosure suit, submitted the winning bid of $68,442. The trial court confirmed the sale to Malooly on March 25, 1993. On April 9, 1993, fifteen days into the redemption period, Frietze petitioned the trial court to redeem the property from Malooly pursuant to the provisions of Section 39-5-18. Frietze had acquired his lien against the foreclosed property in an assignment from Rawson, Inc., a creditor of the mortgagor corporation. Along with his petition to redeem, Frietze tendered to the court the sum of $69,004.54, which represented Malooly's judicial sale purchase price plus interest at the statutory rate of ten percent for thirty days.

Malooly opposed Frietze's petition and filed her own counter-petition for redemption on May 10, 1993, two weeks after the expiration of the thirty-day statutory redemption period. Malooly then moved to dismiss Frietze's petition, and Frietze moved for summary judgment. The trial court contemporaneously heard the motion to dismiss and the motion for summary judgment and granted summary judgment in favor of Frietze. During the period between her purchase of the property at the judicial sale and the trial court's ruling that Frietze's redemption was valid, Malooly had leased the property and received $2,000 in rental proceeds; the trial court did not make a ruling on which party was entitled to those proceeds. Both parties discuss the rental proceeds issue in their respective briefs. See SCRA 1986, 12-201(C) (Repl.Pamp.1992) (review without cross-appeal).


Malooly argues that, as the assignee of a junior lienholder, Frietze was not entitled to redeem the property. Specifically, she contends that Section 39-5-18 does not allow for the assignment of a junior lienholder's right of redemption.

Section 39-5-18(A) provides that "real estate may be redeemed by the former defendant owner of the real estate, his heirs, personal representatives or assigns or by any junior mortgagee or other junior lienholder." Malooly suggests that the placement of the phrase "or his assigns" after "former defendant owner," but not after "any junior lienholder," evinces a legislative intent to prohibit the assigns of junior lienholders from redeeming.

For the reasons outlined below, we believe that Malooly's reading of the statute is too narrow. First, as Frietze points out, the term "lienholders " is a generic term that refers to anyone who holds the lien. The prevailing rule of statutory construction requires that words of a statute "be given their ordinary, everyday meaning, and in the absence of a clear and express legislative intention to the contrary, the language of the statute is conclusive." State ex rel. Reynolds v. Aamodt, 111 N.M. 4, 5, 800 P.2d 1061, 1062 (1990). Therefore, Frietze was a "lienholder" within the ordinary meaning of the statute, despite obtaining his lien by assignment.

Second, while New Mexico appellate courts have not directly addressed the issue of whether our statute permits redemption by the assignee of a junior lienholder, two Supreme Court opinions suggest that the practicing bar has recognized or assumed the validity of such a redemption. In Leonard Farms v. Carlsbad Riverside Terrace Apartments, Inc., 86 N.M. 241, 242, 522 P.2d 576, 577 (1974), the Supreme Court's summary of the proceedings below stated that "a judgment creditor of Carlsbad assigned its judgment (and therefore its redemption rights) to Clovis National Bank, who in turn assigned the judgment to ... Investor Properties, Inc. (appellee)." See Crown Life Ins. Co. v. Candlewood, Ltd., 112 N.M. 633, 634, 818 P.2d 411, 412 (1991) (redemptioner acquired redemption rights of mortgagor and lienholder through assignment).

Finally, we note that the statutory redemption schemes of other states "generally allow transfer of the right of redemption ... by assignment." 3 Richard R. Powell, Powell on Real Property p 470, at 37-365 (Patrick J. Rohan rev. ed. 1994). Malooly cites to no statute in any state, nor are we aware of one, that permits redemption by a junior lienholder but not by his or her assignee. Indeed, we are unable to discern what legislative purpose such a statutory provision might further. We therefore hold that our redemption statute authorizes a holder-by-assignment of a junior lien to redeem from the judicial sale of foreclosed property.

In her brief-in-chief, Malooly also contends that it is a violation of public policy to allow a mortgagor to redeem foreclosed property through a junior lien assignment. Malooly's assertion presupposes that Frietze is identified with the mortgagor, La Ventana, in the capacity of a shareholder, officer, and director. However, Malooly's brief does not indicate that she raised the issue of Frietze's alleged identity as a mortgagor with the trial court. Nor does her brief indicate that she raised below the specific argument that she now asserts. Our review of the record fails to show that this issue was preserved below, and thus we need not address it on appeal. See Woolwine v. Furr's, Inc., 106 N.M. 492, 496, 745 P.2d 717, 721 (Ct.App.1987) (arguments not presented to the trial court will not be considered on appeal).


Malooly next argues that, even if our statute does permit Frietze to redeem, Frietze lost that right when Malooly, as a junior lienholder, purchased the property at the foreclosure sale. The essence of her argument is that she redeemed the property from herself and that only one redemption is permissible after a foreclosure sale. The contentions of the parties on this issue require us to examine (1) whether, as Frietze contends, Malooly's interests as judicial sale purchaser and junior lienholder merged and thereby destroyed her power to redeem; (2) whether, as Malooly counters, those interests merged and thereby effected a redemption by Malooly from herself; and (3) whether Malooly in fact redeemed from herself.

New Mexico law provides for two methods of redemption:

A. After sale of any real estate pursuant to any such judgment or decree of any court, the real estate may be redeemed by the former defendant owner of the real estate, his heirs, personal representatives or assigns or by any junior mortgagee or other junior lienholder:

(1) by paying to the purchaser, his personal representatives or assigns, at any time within nine months from the date of sale, the amount paid, with interest from the date of purchase at the rate of ten percent a year, together with all taxes, interest and penalties thereon, and all payments made to satisfy in whole or in part any prior lien or mortgage not foreclosed, paid by the purchaser, with interest on such taxes, interest, penalties and payments made on liens or mortgages at the rate of ten percent a year from the date of payment; or

(2) by petitioning the district court in which the judgment or decree of foreclosure was entered for a certificate of redemption and by making a deposit of the amount set forth in Paragraph (1) of this subsection in cash in the office of the clerk of the district court in which the order, judgment or decree under which the sale was made was entered, at any time within nine months from the date of sale.

Section 39-5-18.

A. Merger

The trial court determined that Malooly did not validly exercise her right of redemption and that her right merged into the title conveyed to her by the deed from the special master. We first address the question of merger. Because the issue of whether a junior lienholder's redemption interest merges with the property interest she acquires at a judicial sale is a question of law, we review the trial court's ruling under a de novo standard. See Duncan v. Kerby, 115 N.M. 344, 347-48, 851 P.2d 466, 469-70 (1993).

In New Mexico, the application of the doctrine of merger is not favored unless it is necessary...

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