Clawson v. Moesser

ELLETT, Justice:

The Moessers appeal from an adverse summary judgment holding that respondents, hereafter referred to as Clawson, had a superior title to certain real estate.

The facts are a bit complex but not in dispute.

Spaulding and Mid-Continent Construction Company entered into a trust deed agreement with Walker Bank & Trust Company on September 8, 1966, wherein Walker Bank was beneficiary. Thereafter Clawson obtained a judgment against Spaulding and Mid-Continent, and on April 10, 1969, at the execution sale Clawson bid the property in for $800.00, and no redemption was ever made by Spaulding or Mid-Continent. On October 16, 1969, a sheriff’s deed was issued to Clawson. This deed is the basis of plaintiffs’ claim to the land.1

Prior to the delivery of the sheriff’s deed to Clawson, Walker Bank began a suit to treat the trust deed as a mortgage and to foreclose the same. A lis pendens was duly filed by Walker Bank on July 25, *781969. The defendants in that suit were Spaulding, Mid-Continent, and Clawson. On October 25, 1969, Clawson stipulated that “the plaintiffs trust deed has priority over any right, title, or interest of said defendants in said property and the interest of the defendants was acquired subsequent to the filing of said instrument by the plaintiff.”

This stipulation was not necessary, as it is obvious -that the trust deed had priority over the deed of Clawson obtained at the execution sale on the Clawson judgment. When the Clawsons purchased at the execution sale, they got only the rights of Spaulding and Mid-Continent and took subject to the superior trust deed of Walker Bank.

Walker Bank foreclosed its trust deed-mortgage and got a personal judgment in excess of $70,000.00 against Spaulding and Mid-Continent. The sheriff pursuant to foreclosure sold the realty to McArthur for $6,900.00, and the court after deducting costs and interest from the proceeds applied the sum of $5,726.68 towards satisfaction of the judgment, leaving a personal judgment of some $65,000.00 against Spaulding and Mid-Continent.

Within the time allowed by law Spauld-ing redeemed the land and thereby became the owner of the realty. The mortgage was exhausted, and no further proceeding under it was possible. However, the deficiency judgment of Walker Bank would attach to any realty which either Spaulding or Mid-Continent might have at the time or might thereafter acquire within the eight-year statute of limitation.2

It cannot be disputed that Mc-Arthur would have a superior title to that of Clawson for the reason that Clawson originally took subject to the superior trust deed to Walker Bank, and Clawson’s interests were terminated by the judgment of foreclosure.

When Spaulding redeemed and paid McArthur, he gave no vitality to Clawson’s defunct claim.

That Spaulding had a sufficient interest in the property after his rights were terminated by the execution sale to Clawson to redeem from the foreclosure is settled by the better-reasoned cases of the various states.

The case of Chautauqua Co. Bank v. Risley, 19 N.Y. 369, 373, dealt with a case of a judgment debtor who had parted with his title. The court speaking of his right to redeem said: “The right is secured to him as the judgment debtor, by the terms of the statute, notwithstanding he may have parted with all his interest in the land.”

Other cases holding that a judgment debtor can redeem from judgment sales although he parted with title prior to sale are Yoakum v. Bower, 51 Cal. 539 and Harvey v. Spaulding, 16 Iowa 397, 85 Am. Dec. 526.

There can be no difference in the interest of one who loses his land to a judgment creditor on execution and one who voluntarily parts with his title by deed. It is certainly true that judgment debtors without title to the land sold on execution have an equitable interest in the land in that they are entitled to have the land sold and the proceeds thereof applied to reduce their indebtedness, and a personal judgment can be rendered against them only for the deficiency after deducting the proceeds of sale.3

Section 78-37-6, U.C.A.1953, provides that redemptions under mortgage foreclosure sales are permitted as in cases of redemption from execution sales; and Rule 69(f)(1), U.R.C.P., provides:

Who May Redeem. Property sold subject to redemption, or any part sold separately, may be redeemed by the following persons or their successors in interest: (1) The judgment debtor; (2) a creditor having a lien by judgment or mortgage on the property sold, or on some share or part thereof, subsequent to that on which the property was sold.

*79It is, therefore, clear that in this case Spaulding, being the judgment debtor, could redeem from the foreclosure sale, and having done so, and the Clawsons not attempting to redeem from him, he had the title to the land. Thereafter Walker Bank caused execution to issue on the land owned by Spaulding, and at execution sale the Moessers purchased the land for $4,100. Neither Spaulding nor Clawson redeemed from the Moessers, and Moessers now have the title to the land.

The judgment of the district court is reversed, and the case is remanded with directions to enter judgment for appellants. Costs are awarded to the appellants.

HENRIOD, C. J., and TUCKETT and MAUGHAN, JJ, concur.

. Clawson thereafter deeded the Olsens and the Chamberlains a one-third interest each in and to the property.

. Secs. 78-12-1, 78-12-22, U.C.A.1953.

. Section 78-37-2, U.C.A.1953.