Williams, v. Kimes
| Citation | 25 S.W.3d 150 |
| Parties | (Mo.banc 2000) . Anita K. Williams, et al., Respondents, v. Sherman Kimes, et al., Appellants. Case Number: SC82151 Supreme Court of Missouri Handdown Date: 0 |
| Decision Date | 01 August 2000 |
| Court | Missouri Supreme Court |
Appeal From: Circuit Court of Mississippi County, Hon. David C. Mann
Counsel for Appellant: W. Edward Reeves
Counsel for Respondent: J. Michael Payne
Opinion Summary:
The Kimeses purchased property at a bank foreclosure sale in which heirs with a contingent remainder interest did not receive notice. In two previous appeals, this Court held the sale void and ordered that the parties be placed in the position they would be in but for the sale. The circuit court denied the Kimeses' request for recoupment of their purchase money secured by an equitable lien and entered a damage award against the Kimeses. They appeal.
REVERSED AND REMANDED.
Court en banc holds:
(1) (A) The Kimeses are entitled to recoupment of their purchase money secured by an equitable lien on the property. But for the sale, the Kimeses would not have paid for what they thought was fee simple title, nor would the bank's lien passed to the contingent remaindermen been extinguished.
(B) The doctrine of the law of the case precludes review of whether the bank's deed of trust validly imposed a lien on the property because this issue should have been raised, at least, in the second appeal.
(C) The bank's absence as a party is waived. The Kimeses did not request adding the bank, and the Williamses did not appeal denial of their request to add the bank. The bank would merely be required to repay the Kimeses' purchase money and be restored as the lienholder. The Kimeses would have recouped their money, but the Williamses' obligation to satisfy the lien would still exist. The bank has no interest in the real estate that affects this suit.
(2) In placing the parties in their previous positions, use of the land since the sale must be accounted for to avoid inequity, including damages against the Kimeses as compensation for use of the land.
Dissenting Opinion summary
The dissenting author would dismiss the appeal on jurisdictional grounds and hold final judgment in abeyance until the bank is made a party and its rights and duties under the deed of trust are fully litigated. The dissenting opinion states that the bank, as the mortgagee and beneficiary under a deed of trust, is an indispensable party to the litigation in its present posture. This Court has ordered the parties be placed in their respective position before the foreclosure, making the bank a necessary and indispensable party to resolve its lien under the deed of trust and its obligation to refund the sale proceeds and quiet title. Failure to join an indispensable party deprives the trial court, and therefore this Court, of jurisdiction.
Opinion Vote: REVERSED AND REMANDED. Covington, White and Wolff, JJ., and Smart, Sp.J., concur; Holstein, J., dissents in separate opinion filed; Benton, J., concurs in opinion of Holstein, J. Limbaugh, J., not participating.
This is the third occasion we have written on this case. Originating as a quiet title lawsuit, we now hold that the purchasers at a void foreclosure sale are entitled to recoup their purchase money with payment secured by an equitable lien on the property. All other issues are barred either by a failure to preserve those issues for appeal or by the doctrine of the law of the case.
Aubra Robert Wrather's will devised 72 acres to his daughter "Reba Wrather LaFont, and her bodily heirs, in fee simple." While Wrather's estate was being probated, the estate borrowed $97,704.84 from the Farmer's Bank of Portageville ("bank") to pay federal estate taxes. Reba Wrather LaFont and the estate's executor executed a deed of trust covering the 72 acres in favor of the bank. The probate division authorized the bank's encumbrance and, in December 1970, distributed the 72 acres to Reba Wrather LaFont and her bodily heirs subject to the deed of trust.
In 1988, the loan to the estate went into default and the bank foreclosed. At that time, the bank was owed $86,400.00. The executor and LaFont received proper notice of trustee's sale, but the presumptive bodily heirs did not receive such notice. At the 1988 foreclosure sale, the 72 acres was purchased by Sherman D. Kimes, Elaine Kimes, Albert W. Kimes, and Nina Mae Kimes. As a result of the foreclosure sale, the bank released its lien on the property.
In 1990, the Kimeses conveyed the 72 acres to a family trust. In 1993, LaFont died, leaving two surviving children, Anita Kay Williams and James G. LaFont. Reba Wrather LaFont's third child had passed away in 1986, survived by Heather Maria Hobbs and Lesley Suzanne Hobbs. They sold their interest in the land to Anita Kay Williams and W.A. Williams in 1994.
In Williams v. Kimes, 949 S.W.2d 899 (Mo. banc 1997) ("Williams I"), this Court considered whether LaFont's presumptive bodily heirs were "owners" under section 443.325.3(2) such that they were entitled to actual notice of the foreclosure sale. We held that as holders of a contingent remainder with an interest capable of conveyance, they were "owners" under section 443.325.3(2). Id. at 900. The case was remanded with directions to award the land to the Williamses and for proceedings in accordance with section 527.150.2 regarding the parties' other claims for damages, credits, and other relief. Id. at 901.
The circuit court responded to Williams I by awarding possession and fee simple title to the Williamses and concluding that the Williamses were entitled to fair market rental value of $100 per acre, per year, starting from Reba Wrather LaFont's death on October 13, 1993, to when the Williamses went into possession in late August of 1997 (total rent value of $28,800.00). The circuit court further found the Williamses improved the property by grading the land, which increased the value by $13,008.20. The court also found the Williamses would benefit by cotton planted in 1997 prior to the Kimeses leaving the property. The Williamses would realize money from the sale of this cotton in the amount of $2,385.00, after subtracting expenses incurred. Thus, the Williamses' damages in rents was $28,800.00 less the $2,385.00 realized from the cotton sale, off-set against the $13,008.20 resulting in a "net" damage award of $13,406.80 against the Kimeses.
The circuit court "denied [the Kimeses'] request for recoupment of their purchase price and the imposition of an equitable lien in the amount of that purchase price." 996 S.W.2d at 44. This conclusion apparently resulted from language in Williams I that "[t]he Kimeses purchased only LaFont's life estate." Id. at 901.
The Kimeses appealed from that judgment. In Williams v. Kimes, 996 S.W.2d 43 (Mo. banc 1999) ("Williams II"), we considered the effect of invalidity of the sale resulting from the insufficient notice. The Kimeses sole point relied on stated:
The trial court erred in entering judgment in favor of the Williams and against the Kimes on the Kimes' claim for recoupment of their 1988 foreclosure sale purchase price for the subject real estate (together with interest and less a credit for fair rental value of the property) and for the imposition of an equitable lien against the property to secure payment of same because this Court in the initial appeal of this matter invalidated the foreclosure sale as to the Williams' remainder fee interest and parties' to an effective foreclosure sale are entitled to be restored to their status quo ante positions in that the Kimes effectively satisfied an indebtedness of the Williams (and their predecessors in interest) to which the real property would have been subject even if the Williams had received personal notice of the foreclosure sale, and the trial court's failure to allow recoupment of their purchase price by the Kimes resulted in a wind-fall 'gift' of 72-acres of real property to the Williams without payment on their part of either the federal estate tax liability or the bank loan indebtedness associated with the property, which was paid by the Kimes.
The Williamses' argued only that the sale was effective to transfer the life estate interest, but did not extinguish the contingent remainder interests. The Williamses did not argue that the bank's lien on the property was not valid.
We stated that "[f]ailure to provide notice of a foreclosure sale to owners of the foreclosed property is a substantial defect sufficient to render the sale void and prevent the transfer of title in the property." Id. at 45. Because the foreclosure sale was void and no title passed, the parties must be placed in their ex ante positions. Id. at 46. To the extent Williams I implied the Kimeses purchased a life estate, Williams II clarified that they purchased no title at all, as the sale was void.
The circuit court's response to Williams II was to enter substantially the same judgment. The sale was declared void but the Kimeses' request for recoupment of their purchase money secured by an equitable lien was not granted. The circuit court noted that to put the parties back to their ex ante position, the bank needed to be a party to this litigation. The circuit court also entered the same net damage award of $13,406.80 against the Kimeses as it did after Williams I.
The Kimeses appeal from that judgment. Their two points argue: 1) they are entitled to a recoupment of the purchase price secured by an equitable lien on the property, and 2) the post-1988 foreclosure sale activities and events should be disregarded, thus eliminating the "net" damage award of 13, 406.80 entered against them.
Now before us for the third time, this case is largely controlled by the doctrine of the law of the case:
The doctrine of law of the case governs successive appeals involving...
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