No. 84-22 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

FIRST NATIONAL BANK IN BOZEMAN, a 

National Banking corporation, 

Plaintiff and Respondent, 

ROBERT K. POWELL and VICTORY 

POWELL, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Landoe, Brown, Planalp, Kommers and Lineberger, 

Bozeman, Montana: Gene I. Brown argued, Bozeman 

For Respondent : 

Berg, Coil, Stokes & Tollefsen, Bozeman, Montana 

Michael C. Coil argued, Bozeman, Montana 

submitted: September 19, 1934 

Decided: October 11, 1984 

Filed: QGi 1 : 984 

Clerk 
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of 

the Court. 

In an action by First National Bank to have Powells vacate 

their family residence pursuant to a foreclosure sale on a 

trust indenture, the Eighteenth Judicial District Court 

entered a judgment in favor of the Bank. Powells appeal. We 

affirm. 

Robert Powell, a real estate appraiser in Bozeman, and 

Victory Powell, the owner of a mortgage firm, Treasure State 

Mortgage, purchased the family residence, involved in this 

appeal, in 1970. 

In August, 1978, Victory Powell invested in commercial 

property on College Street in Bozeman. She financed the 

total purchase price ($69,500) through First National Bank 

(the Bank) in Bozeman. The Bank required security in 

addition to the commercial property for 100% financing. 

Without suggestion from the bank, Mrs. Powell offered her 

personal residence as the additional collateral. The deed of 

trust, subject of this appeal, executed by Mrs. Powell listed 

the commercial lot as Parcel No. 1 and the Powell residence 

as Parcel No. 2. Neither the deed of trust nor the 

accompanying trust indenture designated either parcel as 

primary or secondary security for the debt. However, the 

Powells understood that the College Street property primarily 

secured the commercial investment loan while their personal 

residence provided a secondary security en lieu of the down 

payment. Mrs. Powell was not represented by counsel at the 

closing, nor did she consult with her attorney to review the 

financial documents. 

In the summer of 1979 Mrs. Powell became delinquent on 

monthly loan i-nstallments. In a letter dated June 3, 1980, 

she informed the Bank that she intended to "bring the account 
up to date within the next month or two." With the debt 

remaining in default, Victory Powell made a verbal offer in 

the fall of 1981, to return the deed on the commercial 

property in return for a full release from the Rank on the 

deed of trust dated August 30, 1978. Mrs. Powell testified 

that she never received a written response from the Bank. 

Mrs. Powell attempted to sell the commercial lot for two 

years without success. 

In the meantime, the Powells assigned the rental income 

of $400/month to the Bank to apply against their $700 monthly 

obligation. Despite this assignment, a negative accrual 

status remained on the loan. 

The Bank issued notice of trustee's sale in the 

foreclosure action pursuant to the Montana Small Tract 

Financing Act. On May 12 and 14, 1982 the Bank apprised Mrs. 

Powell of the amount required to satisfy the loan or, in the 

alternative, the required payment to bring the loan current. 

Mrs. Powell would have avoided foreclosure with either 

payment. Two Bank employees testified that Mrs. Powell did 

not respond. 

The trustee's sale was held on July 28, 1982. Victory 

Powell attended the foreclosure sale without representation. 

Several Rank officers and the Bank attorney were present. 

Prior to the sale the agent for the trustee, American 

Land Title, inquired whether the parcels were to be sold 

separately or together. The Bank responded that the parcels 

were to be offered individually. When it was suggested that 

Powell's residence be offered first Victory Powell made no 

objection. Victory Powell did not bid upon her family 

residence. The Bank's bid of $100 was accepted as purchase 

price for the Powell's residence. Bidding on the commercial 

property resulted in purchase by the Bank for $1.00. 
Trustee's deeds to the subject properties dated July 28, 1982 

were issued to the Bank. 

Approximately two and one-half weeks after the 

foreclosure sale, on August 13, 1982 the Bank, through its 

counsel, requested the Powells vacate their home. The Bank 

again served notice upon the Powells on August 27, 1982. 

Powells refused to surrender possession. 

The District Court held that the Bank rightfully sold 

the Powell's family residence at the foreclosure sale and 

ordered the Powells to vacate their home and to pay back rent 

in the amount of $500 per month from September, 1982. 

Powells submit this issue on a-ppeal: 

Did the trial court err in holding that a foreclosure 

sale on a trust indenture primarily secured by commercial 

investment property was lawful when the First National Bank 

in Bozeman ordered the appellants1 personal residence be sold 

first? 

The unambiguous language of the trust indenture grants 

authority to the trustee to determine the order in which 

parcels of real estate securing the indebtedness may be sold. 

Paragraph 19 of the trust indenture provides in pertinent 

part: 

"19. After the lapse of such time as may then be 

required by law following the recordation of said 

notice of default, and notice of sale having been 

given as then required by law, Trustee, without 

demand on Grantor, shall sell said property at the 

time and place fixed by it in said notice of sale, 

either as a whole or in separate parcels, and such 

order as it may determine (but subject to any 

statutory right of Grantor to direct the order in 

which such property, if consisting of several known 

lots or parcels, shall be sold), at public auction 

to the highest bidder for cash in lawful money of 

the United States, payable at time of sale." 

Despite this discretionary language, the trustee's 

authority is not boundless. 55 Am. Jur. 2d, Mortgages, 
section 727 explains restrictions imposed upon the trustee's 

power in foreclosure procedures as follows: 

". . . On the other hand, it has been ruled that 

even where a mortgage or deed of trust vests a 

discretion in the trustee to sell the encumbered 

premises as he thinks best, such discretion is not 

an arbitrary one, but generally is subject to the 

control and direction of the debtor, who may choose 

the mode of offering the property for sale." 

As this is a case of first impression we cite a 

Minnesota Supreme Court's analysis of this issue with 

approval. The Minnesota Court held: 

". . . Where a homestead is subject to a mortgage 

which also covers other lands, the owner is 

entitled, upon seasonable demand, to have the land 

other than the homestead first applied in 

satisfaction of the mortgage." Mulroy v. Sioux 

Falls Trust & Savings Bank of Sioux Falls (1925), 

165 Minn. 295, 206 N.w.~%J 461, 462. 

The determinative factor is a requisite "seasonable 

demand" made by the landowner/mortgagor expressing the 

preferred order of sale. 

Applying these legal principles to the facts of this 

appeal we find no abuse of the trustee's discretion relative 

to the order in which he sold the two parcels securing the 

Powell's defaulted commercial loan. Prior to the auction, 

Mrs. Powell was informed that the trustee proposed to offer 

the Powell's residential property first and the investment 

commercial parcel second. It is undisputed that Mrs. Powell 

made no objection to her home being auctioned first. She 

never suggested a preference that either piece of real estate 

be sold before the other. Even after the bank had purchased 

her home for $100 and her investment property for $1.00 at 

the foreclosure proceeding, Mrs. Powell never complained to 

or objected to the manner or order of the sale. 

It is a proper election of the debtor at the time of the 

sale to demand a specific order in which the separate parcels 

are to be sold. In the instant case, Mrs. Powell failed to 
exercise this right. She made no objection to the trustee's 

proposal that the Powell family residence be sold first. She 

acquiesced in the order of sale and deferred to the 

discretionary authority of the trustee. 

The judgment of the District C 

We concur: 

344s,a/,, 

Chief Justice