Title: Federal Land Bank of Omaha v. Miller

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Federal Land Bank of Omaha v. Miller1986 WY 216730 P.2d 122Case Number: 86-90Decided: 12/18/1986Supreme Court of Wyoming
THE FEDERAL LAND BANK OF 
OMAHA, A 
CORPORATION, APPELLANT (PLAINTIFF),

v.

JEANNE C. MILLER, 
APPELLEE (DEFENDANT), TERI KAY CARROLL, WYOMING PRODUCTION CREDIT ASSOCIATION, A 
WYOMING CORPORATION, HOWARD T. CARROLL AND JEAN S. CARROLL 
(DEFENDANTS).

Appeal from the District 
Court, AlbanyCounty, Arthur T. Hanscum, 
J.

Richard E. 
Miller of Skiles and Associates, Laramie, and 
Laurice M. Margheim (argued), of Margheim & Erickson, Alliance, Neb., for appellant.

Eric M. Alden of 
Jones, Jones, Vines & Hunkins, Wheatland, for appellee.

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT 
and MACY, JJ.

CARDINE, 
Justice.

[¶1.]     This appeal involves a 
question of priority of mortgages covering the same real property. Appellant 
Federal Land Bank of Omaha appeals the trial court's determination 
that its mortgage was superior up to the amount of $360,000.00 and no 
more.

[¶2.]     We dismiss the 
appeal.

[¶3.]     On December 16, 1977, 
Teri Carroll purchased ranch property of Jeanne C. Miller for a total purchase 
price of $500,000.00. At closing, Teri Carroll executed a promissory note in the 
amount of $160,000.00 payable to Jeanne C. Miller, secured by a mortgage upon 
the ranch, and executed a promissory note in the amount of $360,000.00 payable 
to the Federal Land Bank of Omaha (hereinafter Bank) which was also secured by a 
mortgage on the ranch. Out of the $360,000.00 Bank loan, $340,000.00 was paid to 
Jeanne C. Miller upon the purchase of the ranch. A condition of the Bank's 
approving its loan to Teri Carroll was that Jeanne C. Miller agree to 
subordinate her mortgage to the mortgage given the Bank. Jeanne C. Miller 
executed the subordination agreement, and both mortgages were simultaneously and 
properly filed with the county clerk.

[¶4.]     Subsequently, the 
buyer, Teri Carroll, defaulted on both loans, and a dispute arose between the 
Bank and Jeanne C. Miller as to the amount by which the Bank's mortgage took 
priority over the mortgage of Jeanne C. Miller. The Bank contended that its 
mortgage was superior to the Miller mortgage in the total amount of the buyer's 
indebtedness to the Bank, i.e., $360,000.00 plus accumulated interest, taxes, 
costs and fees. In its final judgment entered February 14, 1986, the court 
declared that the Bank's mortgage would take priority up to $360,000.00; that 
the mortgage of Jeanne C. Miller was a valid mortgage in the principal amount of 
$160,000.00, subject only to the Bank's mortgage in the amount of $360,000.00; 
and that the mortgaged property might be sold in foreclosure. The Bank filed its 
notice of appeal to this court on March 3, 1986.

[¶5.]     While the appeal was 
pending, the Bank continued foreclosure proceedings toward the sale of the ranch 
pursuant to the judgment and § 1-18-111, W.S. 1977.1 On April 21, 1986, the appellee, 
Jeanne C. Miller, moved this court for an order staying the foreclosure sale 
until final determination of the appeal. The motion was 
denied.

[¶6.]     During oral argument of 
this appeal, both parties acknowledged that the Bank had purchased the ranch 
property at a public foreclosure sale by entering the highest bid, $360,000.00, 
and, pursuant to § 1-18-102, W.S. 1977, received a purchaser's certificate for 
the ranch.2 After the foreclosure sale, the 
appellee moved this court for dismissal of the appeal due to mootness. Briefs 
and affidavits were filed. This court declined to dismiss the 
appeal.

[¶7.]     The issues brought by 
the appellant, Federal Land Bank of Omaha, for review in this appeal 
are:

1. Whether the decree of 
the trial court is final and appealable.

2. Whether the language 
in the mortgage held by Jeanne C. Miller making that mortgage junior to the 
mortgage held by the Federal Land Bank of Omaha subordinates the Miller mortgage 
to all sums found due the Bank under their note and mortgage including 
principal, interest, advances, attorney's fees and all other costs incurred by 
the Bank in protecting its interest in the property.

FINAL AND APPEALABLE 
JUDGMENT

[¶8.]     The appellant, Federal 
Land Bank of Omaha, contends that the trial court's final 
judgment, issued on February 14, 1986, is a final and appealable judgment in all 
respects under Rule 1.05, W.R.A.P. We agree.

[¶9.]     We dismissed a previous 
appeal of this case because the appeal was not taken from a final order 
adjudicating the claims of all parties and because the lower court failed to 
express the determination that there was no just reason for delay as required by 
Rule 54(b), W.R.C.P. The trial court subsequently issued a revised judgment and 
final order, and we now find that all claims as to all parties have been finally 
adjudicated, that this case meets all jurisdictional requirements, and is 
properly before this court at this time.

LIMITED PRIORITY OF THE 
MORTGAGE

[¶10.]  The Bank contends that the mortgage held 
by Jeanne C. Miller is a second mortgage and that its mortgage is a first 
mortgage superior in priority as to all amounts of money due, including 
principal, interest, advances, attorney's fees and all other costs incurred. It 
claims that the trial court erred in determining that the Bank's mortgage was 
first in priority over the Miller mortgage up to the amount of $360,000.00 and 
no more. The appellee, Jeanne C. Miller, concedes the $360,000.00 priority, but 
takes issue with the Bank's assertion of additional 
priority.

[¶11.]  After the final judgment regarding the 
priority of the mortgages was entered by the trial court on February 14, 1986, 
the appellant-bank foreclosed its mortgage and thereafter bid in the mortgaged 
property at the foreclosure sale in the amount of $360,000.00. Being the highest 
bidder, the Bank received a certificate of purchase which might ripen into title 
and ownership of the ranch but was subject to redemption, first to 
mortgagor-buyer Carroll and next by the junior lienholder Miller by payment of 
the amount of the Bank's bid, $360,000.00, plus expenses under the applicable 
Wyoming 
statutes. These statutes provide in relevant part:

[¶12.]  Section 1-18-103, W.S. 1977, Cum.Supp. 
1986:

"(a) Except as provided 
with respect to agricultural real estate, it is lawful for any person, his 
heirs, executors, administrators, assigns or guarantors whose real property has 
been sold by virtue of an execution, decree of foreclosure, or foreclosure by 
advertisement and sale within three (3) months from the date of sale, to redeem 
the real estate by paying * * * the amount of the purchase price or the amount 
given or bid * * *. On payment of this amount the sale and certificate granted 
are void.

"(b) In the case of any 
mortgage upon * * * agricultural real 
estate * * * the period within which the owner, his heirs, executors, 
administrators, assigns or guarantors may redeem the premises sold is twelve 
(12) months from the date of the sale." (Emphasis added.)

[¶13.]  Section 1-18-104, W.S. 
1977:

"(a) If no redemption is 
made within the redemption period provided in W.S. 1-18-103, any judgment 
creditor of the person whose real estate has been sold, or any grantee or 
mortgagee of the real estate or person holding a lien on the real estate sold is 
entitled to redeem the same on or before the thirtieth day after the expiration 
of the applicable redemption period provided in W.S. 1-18-103, by complying with 
subsections (b) and (c) of this section.

"(b) The redemptioner 
shall pay to the purchaser or to the officer conducting the sale, the amount bid 
with interest at ten percent (10%) per annum from the date of sale, and the 
amount of any assessments or taxes and the amount due on any prior lien which 
the purchaser may have paid after the purchase, with interest. If the purchaser 
also has a lien prior to that of the redemptioner, the redemptioner shall also 
pay the amount of the lien with interest."

By purchasing 
the property at public sale, the Bank acquired the right to either receive the 
redemption price of $360,000.00 plus interest and costs, or become the sole 
owner of the property upon expiration of the statutory redemption 
period.

[¶14.]  Principles of equity, as well as the 
applicable rules of law, dictate that the appellant-bank be precluded from 
asserting its claim on appeal that its mortgage has priority over the Miller 
mortgage in the amount exceeding $360,000.00, the amount of the bid, and at the 
same time accept the benefits of foreclosure which give the Bank the right of 
receiving the redemption price or becoming the sole owner of the 
property.

[¶15.]  The appellant-bank foreclosed on their 
mortgage, forced a foreclosure sale, purchased the collateral property at the 
foreclosure sale by entering the highest bid, and accepted the statutory 
redemption scheme benefits as enumerated in §§ 1-18-102 and 1-18-104 through 
1-18-108, W.S. 1977, and 1-18-103, W.S. 1977, Cum.Supp. 1986, all by asserting 
the validity of the trial court's judgment. However the appellant-bank by this 
appeal also asserts the judgment's invalidity in an effort to obtain additional 
monetary priority. It is a well-recognized general rule of law that one who 
accepts the benefits of a judgment cannot thereafter attack it by appeal. 
McDaniel v. Jones, 235 Kan. 93, 679 P.2d 682 
(1984); Rosen v. Rae, 132 Ariz. 509, 647 P.2d 640 
(1982).

[¶16.]  Additionally, if the courts were to allow 
one to appeal the determination of respective interests of priority after a 
foreclosure and public sale, it might have a chilling effect upon potential 
bidders at the sale and put all others having an interest in the property at a 
decided disadvantage.

"The purpose of fixing 
the amounts and the priority of interests is said to be that the parties may bid 
intelligently to protect their interests. The part adjudging the liens is 
therefore not separable from that decreeing the sale. One who proceeds with the 
sale, or takes an active part in it as by bidding in the property, cannot appeal 
for error in determining the respective interests in the proceeds." Annot., 169 
A.L.R. 985, 1039 (1947) (citing Souders v. Leatherbury, 97 W. Va. 31, 125 S.E. 236 (1924) and National Bank of Summers 
of Hinton v. Barton, 109 W. Va. 648, 155 S.E. 907 
(1930)).

[¶17.]  As stated in Trapp v. Off, 194 Ill. 287, 
62 N.E. 615 (1901), and Reichelt v. Seal, 76 Iowa 275, 41 N.W. 16 (1888), where 
the appellant or petitioner is shown to have bought in the property at sale, the 
buying in of the property constitutes a waiver of the right to appeal unless 
circumstances of necessity exist which are deemed sufficient to negate the 
waiver.

[¶18.]  In the case of Souders v. Leatherbury, 97 
W. Va. 31, 125 S.E. 236 (1924), Souders successfully claimed priority for his judgment lien as 
against a trust deed to a bank. Subsequently the bank bid in the property and 
then appealed the priority judgment of the court. The court 
said:

"After the sale is thus 
made, to change the order of the liens without setting aside the whole decree of 
confirmation would manifestly deprive Souders of a substantial right to protect 
his lien by making the property sell for a higher price, and give to the 
purchaser the corresponding benefit of eliminating him as a competitive bidder." 
Ibid. at 239.

[¶19.]  In National Bank of Summers of Hinton v. 
Barton, 109 W. Va. 648, 155 S.E. 907 (1930), the appellant 
sought reversal of a decree under which the court ruled that the appellee's lien 
took preference over the appellant's deed of trust note. However, as in this 
case, the appellant also exercised his right and bought in the property pursuant 
to the court's decree. In that case the court stated:

"[W]hen the property went 
to sale, the plaintiff had a right to rely upon the priority which had been 
adjudicated by the decree and to govern its action accordingly with reference to 
bidding on the property at the sale. To change that order of priority subsequent 
to the sale of the property, with the necessary result that the plaintiff would 
be deprived of any possible opportunity of protecting itself in the bidding, 
would be manifestly unfair and unjust. Appellant's purchase of the property 
under the decree of sale would therefore seriously impair the rights of his 
adversaries in the event of a reversal. The inconsistencies in this position are 
manifest. It is a general rule that a party may not appeal from a decree under 
which he enjoys benefits which are inconsistent with the appeal. McKain v. 
Mullen, 65 W. Va. 558, 64 S.E. 829, 29 L.R.A. 
(N.S.) 1; Bright v. Mollohan, 75 W. Va. 116, 83 S.E. 298; Eakin v. Eakin, 83 W. Va. 512, 98 S.E. 608; Souders v. Leatherbury, 97 W. Va. 31, 125 S.E. 236. 3 Corpus Juris, 679." 
Id. 155 S.E. 
at 908.

[¶20.]  Finally, we note that "[t]he mortgagee 
may buy the land at the [judicial sale] and thus acquire the title, but he 
acquires it as a purchaser, and not as mortgagee." State Bank of Lehi v. 
Woolsey, Utah, 565 P.2d 413, 416 
(1977).

"Under the prevailing 
rule, a foreclosure and sale of mortgaged premises for a part of the mortgage 
debt exhausts the lien, and the purchaser takes the property entirely discharged 
from the mortgage unless the decree of sale is so drawn as to preserve the 
lien." 55 Am.Jur.2d Mortgages § 797.

The purchaser's 
certificate received by the Bank provides for no such preservation of any lien. 
Therefore, the Bank no longer retains a lien or mortgage from which it may 
question positions of priority.

[¶21.]  As stated by the court in Souders v. 
Leatherbury, supra, we believe that the appellant-bank's right of appeal would 
not have been lost if it had stayed the sale pending appeal. But here the Bank, 
resisting a motion to stay, insisted upon proceeding with sale at foreclosure 
and bid in the ranch for less than it claims on appeal to be its lien. The Bank 
cannot accept the benefits of foreclosure, that of receiving the amount of its 
bid in redemption or becoming the sole owner of the property, and at the same 
time assert additional priority at the appellate level.

[¶22.]  For the reasons stated, the appeal is 
dismissed.

FOOTNOTES

1 Section 1-18-111, W.S. 
1977, states in relevant part:

"When a mortgage is 
foreclosed a sale of the premises shall be ordered. The decree directing the 
sale is sufficient warrant for the sheriff or other officer to proceed to 
advertise and conduct the sale."

2 Section 1-18-102, W.S. 
1977, states in relevant part:

"When real property is 
sold by virtue of * * * decree of foreclosure * * * the sheriff or other 
officer, instead of executing a deed to the premises sold, shall give to the 
purchaser of the lands a certificate in writing describing the property 
purchased and the sum paid therefor * * *. The certificate shall state that the 
purchaser is entitled to a deed for the property at the expiration of the period 
of redemption, unless the property is redeemed prior to that date as provided by 
law."