NO. 94-061

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

WALTER H. SAVOY,

Plaintiff-Appellant,

CASCADE COUNTY SHERIFF'S DEPT.;

and UNITED STATES OF AMERICA,

by and through the FARMER'S HOME

ADMINISTWTION, its agency,

Defendants-Respondents.

UEC 13 1994

APPEAL FROM: District Court of the Eighth Judicial District,

1n and for the County of Cascade,

The Honorable John McCarvel, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Gary S. Deschenes, Deschenes Law office, Great

Falls, Montana

For Respondent:

George Darragh, Jr., Assistant U.S. Attorney, Great

Falls, Montana; Nancy Cory, Great Falls, Montana

Filed:

Submitted on Briefs: September 15, 1994

Decided: December 13, 1994
Justice Fred J. Weber delivered the Opinion of the Court

This is an appeal from a grant of summary judgment to

defendants in this case by the Eighth Judicial District Court,

Cascade County, Montana. We affirm.

We consider the following issues on appeal:

I . Did the District Court err when it determined that Farmer's

Home Administration had substantially complied with the redemption

statutes found a.t 5 25-13-801, et seq., MCA?

II. Did the District Court err when it determined that Farmer's

Home Administration was a proper party to redeem?

III. Did the District Court err when it determined that the Cascade

County Sheriff's Office had acted appropriately in not presenting

Mr. Savoy with the deed to Tract II?

The real property involved here was the subject of a

foreclosure action brought by the Federal Land Bank of Spokane

against Hugh D. and Rita D. Sands. The foreclosure action involved

three tracts of land, only two of which enter into this action,

Tract I, and Tract II.

A decree of foreclosure was entered on February 28, 1989, by

the Eighth Judicial District Court upon stipulation of the five

junior lienholders and the default of the Sands. The court ordered

a sale of the property on March 23, 1989, and the property was sold

at a Sheriff's Sale. Tract I and Tract II were purchased by Walter

H. Savoy (Savoy) to whom the Sheriff issued a Certificate of Sale

dated May 24, 1989. Savoy paid $3,001 for Tract I and $85,000 for

Tract II.

2
The statutory period for redemption is one year. Thus, any

redemptioner had until May 23, 1990, to redeem the property from

Savoy .

On May 17, 1990, Patrick Sands, a successor-in-interest to

Hugh and Rita Sands provided to Sheriff Barry Michelotti a notice

of redemption for Tract I. The Sheriff's Office issued a sheriff's

certificate of redemption on May 21, 1990, for Tract I at the same

time Patrick Sands issued to Sheriff Michelotti a check in the

amount of $3,180.06.

Also, on or about May 17, 1990, Farmer's Home Administration

(FmHA) sent a copy of a letter to the Sheriff of Cascade County

addressed to Savoy stating that it was redeeming, for $85,000,

Tract II of the :property purchased by Savoy at the March 23, 1989

foreclosure sale. The letter told Savoy to contact Ms. Hensleigh,

the County Supervisor for FmHA, if he had any questions.

Also attached to the letter sent to the Sheriff was a copy of

the decree of foreclosure in favor of Federal Land Bank that

included a list of the lienholders on the property, of which FmHA

is listed as second, third and fifth lienholders having mortgages

on the property. Also attached to the letter sent to the Sheriff

was a check for $90,030.14, of which $85,000 was the purchase price

paid by Savoy and the remainder representing the interest accrued

on this money from the date of sale.

Sometime before June 8, 1990, Savoy contacted the Sheriff's

Office. He had questions about the process of redemption and

Deputy Sheriffs John Strandell and Richard Duncan directed Savoy to

3
§§ 25-13-801, et seq., MCA, and suggested that he obtain legal

counsel.

On June 8, 1990, the Sheriff's Office received a letter from

Savoy's counsel stating that neither of the redemptions of Tract I

and Tract II were appropriate and citing § 25-13-807, MCA, in

support of this proposition. The letter directed the Sheriff to

issue deeds for Tract I and Tract II to Savoy because the Notices

of Redemption are invalid.

On August 17, 1990, Savoy filed a Complaint for Declaratory

Judgment and Petition for Writ of Mandamus. The United States

attempted to have the action removed to federal court, but Judge

Paul Hatfield refused jurisdiction on October 26, 1990. A hearing

was held on December 4, 1990, and the Eighth Judicial District

Court heard oral arguments concerning the writ of mandamus. On

December 20, 1990, the court issued its findings of fact and

conclusions of law, denying Savoy's request for Writ of Mandamus.

Following the December ruling, the court ordered the Sheriff's

Office to issue the deed to FmHA. The Cascade County Sheriff

issued the deed pursuant to this order. Also following the

December ruling, the parties engaged in discovery. FmHA and the

Cascade County Sheriff's Office moved for summary judgment as did

Savoy . A hearing was held on November 29, 1993, and the court

granted summary judgment to FmHA and the Cascade County Sheriff's

Office.

Savoy appeals this grant of summary judgment.

4
Standard of Review

The standard for reviewing a grant of summary judgment is the

same as that used by the district court. Emery v. Federated Foods,

Inc. (l.9931, 262 Mont. 83, 863 P.2d 426. We must determine whether

there is an absence of genuine issues of material fact and whether

the moving party is entitled to judgment as a matter of law.

Minnie v. City of Roundup (1993), 257 Mont. 429, 849 P.2d 212.

I .

Did the District Court err when it determined that Farmer's

Home Administration had substantially complied with the redemption

statutes found a't § 25-13-801, et seq., MCA?

The redemption statutes with which we are directly concerned

in this case are the following:

25-13-806. Notice of redemption, liens, and taxes and

assessments paid. Written notice of redemption must be

given to the sheriff and a duplicate filed with the

county clerk, and if any taxes or assessments are paid by

the redemptioner or if he has or acquired any liens other

than that upon which the redemption was made, notice

thereof must in like manner be given to the sheriff and

filed with the county clerk, and if such notice be not

filed, the property may be redeemed without paying such

tax, assessments, or lien.

215-13-807. Papers redemptioner must produce. A

redemptioner must produce, to the officer or person from

whom he seeks to redeem, and serve with his notice to the

sheriff:

(I) a copy of the docket of the judgment under which

he claims the right to redeem, certified by the clerk of

the court or by the clerk of the district court in the

county where the judgment is docketed; or if he redeem

upon a mortgage or other lien, a note of the record

thereof, certified by the county clerk; or if upon an

attachment, a copy of the affidavit of attachment,

certified by the clerk of the district court;

(2) a copy of any assignment necessary to establish

his claim, .verified by the affidavit of himself or of a

subscribing witness thereto;

(3) an affidavit by himself or his agent showing the

5
amount then actually due upon the lien

25-13-808. To whom redemption money paid. The payment

mentioned in 25-13-802 through 25-13-806 may be made to

the purchaser or redemptioner, as the case may be, or for

him to the officer who made the sale or, in case his term

of office has expired, to his successor in office.

We will first review the pertinent findings of fact and conclusions

of law on the part of the District Court.

Findinus of Fact: On February 28, 1989, a decree of

foreclosure was entered in the case of Interstate Production Credit

Ass'n, plaintiff, v. Hugh Sands, et al., in the District Court. On

May 23, 1989, a sheriff's sale was held and plaintiff Savoy

purchased the property known as Tract I for $3,001 and Tract II for

$85,000, with the property located in Cascade County and with the

property description of each tract set forth in the judgment and

decree of foreclosure.

On May 17, 1990, six days less than one year after the date of

sheriff's sale, the FmHA submitted to the Cascade County Sheriff's

Department a notice of its intention to redeem the property known

as Tract II. The notice was attached to a letter addressed to

Savoy . FmHA also presented to the Sheriff with that letter a

certified copy of the judgment decree in the action brought by

Federal Land Bank as evidence of its right to redeem. Also

enclosed with the notice to the Sheriff was a United States

Treasury check in the amount of $90,030.14, which covered the

original purchase price of $85,000 with interest at six percent for

360 days as mandated by statute. At the same time Tract II was

being redeemed by FmH.A, Tract I was redeemed by an assignee of the

6
original debtor. The notice of redemption provided to the

Sheriff's Office was not filed at the clerk and recorders office

(which did not meet the requirement of 5 25-13-806, MCA, which

requires that notice be filed with the county clerk). Some time

between May 17, 1990 and June 8, 1990, Savoy's counsel went over

the documents in the Sheriff's files. On June 8, 1990, Savoy

through his attorney notified the Sheriff that he was contending

that the redemption notice of FmHA was defective and such letter

indicated plaintiff was protesting the redemption of both Tracts I

and II, pursuant to § 25-13-807, MCA. No explanation of the nature

of plaintiff's objections to the notice of redemption was given.

The District Court findings referred to various motions and

hearings conducted by it, and also to depositions taken by the

parties. Following a hearing in December 1990, the District Court

ordered the Sheriff to issue a sheriff's deed to FmHA and that was

done.

The District Court then adopted various conclusions of law

including the following:

III.

Here, the Cascade County Sheriff's Department

received a certified copy of the judgment and decree of

foreclosure with the notice of intention of Farmers Home

Administration to redeem. In that judgment decree, the

mortgage held by the Farmers Home Administration relative

to Tract II was set forth with sufficient clarity and was

identified appropriately by date and recording

information. The information provided in the judgment

decree was sufficient to allow any person to

appropriately search the records and obtain information

relative to the mortgage. The documents submitted by

Farmers Home Administration provided the sheriff with

adequate evidence of its right to redeem.

7
IV.

Cascade County Sheriff's Department did not receive

an affidavit of an amount due upon the mortgage from the

Farmers Home Administration on May 17, 1990, and at no

time thereafter. This affidavit does not affect Farmers

Home Administration's ability to redeem or propriety as

a redeeming party, but is relevant only if a subsequent

redemption were attempted. Plaintiff had actual

knowledge of Farmers Home Administration redemption.

V.

The notice of redemption was presented six days

prior to the expiration of the redemption period. The

notice provided by plaintiff, by and through his counsel

of record, of his objection to the notice of redemption

came after .the redemption period expired. Further, the

notice of objection was vague, ambiguous and set forth no

specific grounds of objection. There is no evidence that

prior to the redemption period expiring plaintiff made

any effort to determine the amount actually due and owing

to Farmers Home Administration upon its mortgage. It is

plainly apparent that plaintiff's objections demonstrate

a preconceived desire to refuse to accept tender. If

plaintiff had pointed out his objections Farmers Home

Administration would have had time to remedy technical

deficiencies. If one fails to state his objections to a

a tender, he is deemed to have waived them.

VI.

Redemption statutes are remedial in nature and are

to be liberally construed. In the absence of prejudice

to the other parties, substantial compliance with the

redemption statutes is sufficient to effect a redemption.

Plaintiff received the full amount he was entitled to by

the redemption. Plaintiff took no action to effect a

subsequent redemption, if he was a party entitled to, and

therefore has failed to show any prejudice.

The District Court then issued its order granting summary judgment

to FmHA, and the plaintiff Savoy appeals from that.

We agree that the legal conclusion of the District Court was

correct as to the remedial nature of redemption statutes. We hold

that redemption statutes are remedial in nature and are to be

liberally construed and that in the absence of some form of

prejudice to parties involved, substantial compliance with

8
redemption statutes is sufficient to affect a redemption in

connection with mortgage foreclosure. A general statement to that

effect was stated by this Court in Dipple v. Neville, et al.

(1928), 82 Mont. 280, 291, 267 P. 214. In the Utah case of United

States v. Loosley (19761, 551 P.2d 506, the Utah court said the

following in connection with a redemption from a mortgage

foreclosure:

. . The main purpose of a mortgage is to ensure the

payment of the debt for which [it] stands as security;

and foreclosure is allowed when necessary to carry out

that objective. But foreclosure is in the nature of a

forfeiture, which the law does not favor. The proceeding

is one in equity in which principles of equity should be

applied. . .

Consis,tent with the foregoing, rules and statutes

dealing with redemption are regarded as remedial in

character and should be given liberal construction and

application to permit a property owner who can pay his

debts to do so, and thus make his creditor whole, and

save his property. Therefore, if a debtor, acting in

good faith, has substantially complied with the

procedural requirements of the rule in such a manner that

the lender mortgagee is not injured or adversely

affected, and is getting what he is entitled to, the law

will not aid in depriving the mortgagor of his property

for mere falling short of exact compliance with

technicalities.

See also cases cited in Loosely including 55 Am.Jur, Mortgages,

Sec. 867. With the foregoing rule of law as the background, we

will consider the arguments of Savoy.

Savoy objects to the failure of FmHA to present the Sheriff's

Office with a certified copy of its existing mortgage and an

affidavit of the amount owed under that mortgage, both of which are

required to be presented to the Sheriff's Office by the provisions

of § 25-13-807, MCA. Savoy is technically correct in making this

objection. However, the letter from FmHA directed to Savoy, of

9
which a copy was served upon the Sheriff's Office with a copy of

the original Federal Land Bank foreclosure, specifically stated

that FmHA was redeeming Tract II. The decree of foreclosure

furnished contained a list of the lienholders on Tract II, and FmHA

was listed as holding mortgages in the second, third and fifth lien

position. The mortgages were described by specific reference to

the book and page of recording in the office of the clerk and

recorder. Savoy's own affidavit of December 28, 1990, states that

his attorney went to the Sheriff's Office and reviewed the

documents in the Sheriff's file. Thus, Savoy's attorney had the

list of mortgages and their priorities. Savoy is properly

chargeable with that knowledge.

Savoy contends he was prejudiced because no amount was listed

as still owing under the FmHA mortgages. As previously stated, the

letter from FmHA to Savoy gave him the name and telephone number of

a person to call in FmHA if he had any questions. Savoy made no

attempt to determine an amount owing on the mortgages or any other

aspect of information. The only significant reason for Savoy

needing the amount of the mortgage would have been if Savoy had

himself wished to redeem the property. Savoy had 60 days from the

time FmHA redeemed to himself redeem under the provisions of 5 25-

13-803, MCA. The record discloses that Savoy made no attempt of

any tYPe to redeem nor does the record contain any facts

demonstrating that Savoy desired to redeem.

So far as the amount owing to FmHA, we conclude that Savoy had

sufficient notice had he desired to redeem and that he sustained no

10
prejudice as a result of FmHA's failure to file an affidavit of the

amount owing with the Sheriff's Office.

Savoy had adequate knowledge that FmHA was a mortgage holder

on the property he had purchased known as Tract II and that a

substantial amount of money was undoubtedly owing under three

mortgages. Savoy knew that he had 60 days in which to attempt

redemption from FmHA and made no attempt to redeem or to discover

any additional facts. We further point out that FmHA gave notice

of redemption to Savoy six days before the end of its redemption

period and had Savoy notified FmHA that he had questions or desired

additional information of record, FmHA could have furnished the

same. We agree with the conclusion of the District Court that

Savoy received .the full amount to which he was entitled for

redemption purposes and that Savoy took no action to affect a

subsequent redemption and has failed to show any prejudice as a

result of the technical failures of FmHA to comply with the

redemption statutes. We agree with the District Court that there

are no questions of material fact. We affirm the holding of the

District Court that FmHA substantially complied with the redemption

statutes and therefore was entitled to judgment as a matter of law.

We hold the District Court did not err in granting summary judgment

to FmHA.

II.

Did the District Court err when it determined that Farmer's

Home Administration was a proper party to redeem?

Savoy argues that the papers supplied to the Sheriff's Office

11

-
admit that FmHA has no judgment against the property. Further,

Savoy claims that the papers submitted to the Sheriff were

inadequate to prove that FmHA had an open mortgage still existing

on the property. FmHA argues that it is a proper party and the

court so found.

Section 25-13-801, MCA, states:

Who may redeem. (1) Property sold subject to

redemption, as provided by 25-13-710, or any part sold

separately may be redeemed in the manner hereinafter

provided by the following persons or their successors in

interest:

ibi . .a creditor having a lien by judgment, mortgage, or

attachment on the property sold or on some share or part

thereof subsequent to that on which the property is sold.

We have determined that Savoy had adequate notice that FmHA had a

legitimate mortgage on the property he bought at the foreclosure

sale. Therefore, FmHA, being the holder of a mortgage, had the

statutory right to redeem the property from Savoy.

We hold that the District Court did not err in determining

that FmHA was a proper party to redeem Tract II.

III.

Did the District Court err when it determined that the Cascade

County Sheriff's Office had acted appropriately in not presenting

Mr. Savoy with the deed to Tract II?

Savoy argues that the Sheriff's Office should have known that

the redemption was insufficient and should have issued Savoy the

deed immediately upon his request. The Sheriff argues that he had

requests from two different parties for issuance of the final deed

to Tract II of the property and that he had to await the court's

12
decision concerning to whom to issue the deed.

The court determined that the Sheriff's Office acted

appropriately. We conclude that the record indicates that the

Sheriff had no alternative but to await the court's order. The

record also shows that immediately upon issuance of the order FmEiA

received the deed. We hold the District Court did not err when it

determined that the Cascade County Sheriff's Office had acted

appropriately in not presenting Mr. Savoy with the deed to Tract

II.

Affirmed.

We Concur:

Justices

13
Justice Karla M. Gray, concurring in part and dissenting in part.

As far as it goes, I concur in the Court's discussion on issue

III. As to issues I and II, I respectfully dissent. Given the

remedial nature of mortgage redemption statutes, I agree that

substantial compliance should be sufficient to effect a redemption

in a mortgage foreclosure action. I do not agree, however, that

FmHA was in substantial compliance with the redemption statutes at

issue in this case.

The Court's analysis and resolution of issue I focuses almost

totally on what Savoy did or did not do in response to FmHA's

attempt to redeem. That focus is entirely inappropriate; the

issue is whether m substantially complied with statutory

requirements, not whether or how Savoy responded. On that issue,

I strenuously disagree with the Court's analysis and result. I

note in this regard that the Court does not even bother to analyze

the "substantial compliance" question, but goes directly to the

"prejudice" question. I submit that even the Loosley language on

which the Court relies does not validate such an approach, but

clearly requires the "substantial compliance" analysis to precede

any "prejudice" analysis; only where substantial compliance has

been established--as is not the case here, in my view--can a court

proceed to a prejudice analysis. Instead, the court here

approaches the case backwards by using a lack of prejudice to

itself establish substantial compliance.

Insofar as is relevant here, § 25-13-807, MCA, required FmHA

14
to produce to the person from whom redemotion is souqht I) a

certified copy of the judgment or of the docket of the judgment; 2)

a certified note of the record of the mortgage; and 3) an affidavit

showing the amount actually due. The Court concedes that only one

of these requirements was met. It then may have concluded, without

S O stating, that meeting one of three applicable statutory

requirements constitutes "substantial compliance." In doing so,

the Court totally--and inappropriately--vitiates the statutory

requirements. I cannot agree.

Moreover, the Court's focus on Savoy's actions or inactions

also is inappropriate. It results in this Court telling

redemptioners they need not comply with mandatory statutory

provisions, in hopes that a party protesting the redemption will

not meet iudiciallv created and imposed standards. For example,

the Court notes that Savoy's protest did not specify the bases

under 5 25-13-807, MCA, for the protest. The Court conveniently

fails to cite to any authority requiring such a specification of

the bases for a protest; in addition, the Court's conclusion that

the statutory requirements were not met by FmHA-on the face of it-

-hardly lends support to the notion that the failure to specify

bases for the protest is somehow relevant here.

The Court also dwells on a variety of other omissions by

Savoy--none of which is statutorily based--in order to support its

resolution of this issue. It suggests that Savoy had some

obligation to check property records and telephone around in order

to find for himself the information the statute required FmHA to

15
provide to him. The effect is to shift a clear statutory burden

from the redemptioner to the person from whom redemption is sought.

In essence, the Court has either totally rewritten § 25-13-807,

MCA, or has decided to judicially repeal that statute. We are not

free to do either. See 55 l-2-101 and -102, MCA.

For these reasons, and others about which a lengthy recitation

of the multitude of defects in the redemption procedures used here

would serve 1itt:Le purpose other than to give the Court's opinion

more precedential effect, I dissent. I would reverse the District

Court.

Justice James C. Nelson and Justice Terry N. Trieweiler join

in the foregoing concurring and dissenting opinion of Justice Karla

M. Gray.

16
December 13, 1994

CERTIFICATE OF SERVICE

I hereby certify that the folowing ceritied order was sent by United States mail, prepaid, to the

following named:

Gary S. Deschenes, Esq.

Deschenes Law Office

P.O. Box 3502

Great Falls, MT 59403-6112

George Darragh, Jr.

Assistant U.S. Attorney

P.O. Box 3447

Great Falls. MT 59403

Nancy Cory

Attorney at Law

P.O. Box 1746

Great Falls, MT 59403

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA

BY: &-

Deputy u