Opinion ID: 2042978
Heading Depth: 1
Heading Rank: 7

Heading: Amount of Redemption.

Text: Trial courts have statutory authority to equitably adjust the rights of all the parties in actions for foreclosure of real estate contracts. SDCL 21-50-2. The trial court required that Bendewald make the following payments to redeem a one-fourth interest in the resort: a. $5,400.00 on the Offer and Agreement to Purchase plus 15 percent interest from and after August 1, 1989. This amount represents [Bendewald's] one-half interest in the remaining purchase price of $10,800.00. b. $2,500.00 in attorneys' fees. The balance of the attorneys' fees are not related to the foreclosure action. c. $4,100.00 for the mortgage payments made by Mundhenke plus 15 percent interest from and after July 31, 1989. [Jade] is entitled to claim this compensation due to [his] purchasing of the Mundhenkes' interest. d. $6,200.00 plus interest to satisfy the Brown County Judgments. These Judgments will be a lien against the property should [Bendewald] redeem. SDCL 15-16-7. e. $1,050.00 on the Olson Assignment of Rights plus 15 percent interest from and after April 1, 1988. This amount represents the sum of $3,750.00 paid by Olson as one-half of the original downpayment minus the $2,700.00 which was actually paid by [Bendewald]. f. $190.03 for costs. Costs of preparing the transcripts for the prior proceeding and costs incident to that proceeding are disallowed. Bendewald does not challenge the payment of the principal balance of $10,800 to redeem a one-half interest in the resort. He also does not take exception with the requirement that he pay $190.03 in costs. Bendewald challenges provisions b, c, d, and e, and his arguments will be addressed in that order. Bendewald first contends that the award of $2,500 in attorney fees was exorbitant. It is well established that reasonable attorney fees may be awarded in actions to foreclose on real estate contracts. SDCL 21-50-4 (attorney fees awarded as part of costs); Wolken v. Bunn, 422 N.W.2d 417, 420 (S.D.1988) (same); Dow v. Noble, 380 N.W.2d 359, 360 (S.D.1986) (attorney fees may be included as part of balancing equities). Here, the trial court ordered that attorney fees be paid in order for Bendewald to redeem his interest. When included as part of the equity of redemption, we review the trial court's award of attorney fees under the clearly erroneous standard. Dow, 380 N.W.2d at 360. Jade sought attorney fees of $6,043.67, but the trial court awarded only the portion of the fees related to the foreclosure action. Such an award is consistent with the intent of the law and is not clearly erroneous. Next, Bendewald argues that it was inappropriate to require him to reimburse Jade for $4,100 representing over half the mortgage payments that Mundhenkes paid. As noted above, although Bendewald and Olson agreed to assume the mortgage payments, Mundhenkes were forced to pay $8,200 between October 1988 and July 1989 to avoid foreclosure by the bank. Bendewald's challenge is based on the fact that Mundhenkes made the payments, not Jade, and that Mundhenkes are not a party to this action. In his brief, Bendewald cites Beitelspacher for the proposition that, on foreclosure, the trial court can adjust only the rights of the parties to the real estate contract then being foreclosed, not outside rights. Contrary to this assertion, Beitelspacher did not address this issue. Factually, Bendewald and Olson were obligated to make the mortgage payments between October 1988 and July 1989 for the benefit of Mundhenkes and Smiths. Even though the agreement to make the mortgage payments was not contained in the Agreement to Purchase, it is clear that the assumption of this obligation was part of the consideration paid for the resort and the right to operate it. If Bendewald is not required to reimburse Mundhenkes for these payments, he would be unjustly enriched. He would be permitted to avoid his obligation to make $8,200 of mortgage payments. Jade is entitled to the reimbursement as successor to Mundhenkes' interest. Equity supports the trial court's requirement that Bendewald reimburse Jade for mortgage payments previously made by Mundhenke. Next, in subparagraph d, the trial court ordered Bendewald to satisfy judgments filed against him in Brown County, amounting to $6,200, plus interest. Bendewald argues that the trial court exceeded its authority because the judgments are outside the contract being foreclosed, and the debts are owed to persons who are not involved in this action. In response, Jade argues that the judgments are a proper subject of equitable redemption because they affect the property at issue. If Bendewald redeems his interest in the resort he will become a co-owner along with Jade. Because the judgments against Bendewald would automatically become a lien on the resort by operation of SDCL 15-16-7, Jade's rights in the property would be impaired. It is within the trial court's authority to adjust all of the parties' rights in regard to the property. SDCL 21-50-1. Finally, Bendewald challenges subparagraph e, ordering him to pay $1,050, plus interest, on the Olson Assignment of Rights. He argues that any amount due to his former partner is the proper subject of a suit to which Olson is a partner and the winding up of the partnership is at issue, not here in Jade's foreclosure action. Jade counters that the amount represents the return of Olson's money which Bendewald did not apply toward the downpayment on the Agreement to Purchase, and that as assignee of Olson, Jade is entitled to receive this payment. In light of our conclusion that Olson was without power or right to assign or otherwise convey his interest in the resort, and that the quitclaim deed and assignment are a nullity, there is no basis for the order that Bendewald pay $1,050 on the Olson Assignment of Rights. While Olson, or his successor in interest, may be entitled to reimbursement for Olson's contribution which was diverted, the proper remedy is to seek a judicial winding up where all the rights in regard to the partnership may be adjudicated. Also noted by Bendewald is the trial court's failure to address the improvements that he made to the resort, which he contends have increased the value of the property. The trial court did not make a finding on this issue, which was a matter of dispute between the parties. On redemption a party is generally entitled to a credit for improvements made, but there must be adequate evidence in the record to support such a set off. Here, Bendewald testified that his actual out-of-pocket expenses were in excess of $13,000, and that the amounts of the mechanics' liens were in addition to this figure. The trial court refused to admit into evidence the ledger sheets detailing these expenses because Bendewald failed to produce them or any other documentation regarding these claimed expenses prior to trial. On remand, the trial court is directed to make a finding regarding whether improvements were made which increased the value of the property and, if there is credible evidence regarding the value of such improvements in the record, to reduce the amount of redemption by that amount. In light of our conclusion that Bendewald is entitled to redeem a one-half interest in the resort, and that there can be no amount due on Olson's assignment because it was void, this matter is reversed and remanded for proceedings consistent with this opinion. MILLER, C.J., and WUEST, HENDERSON and SABERS, JJ., concur. AMUNDSON, Justice, not having been a member of the Court at the time this case was considered, did not participate.