Court Opinion

ID: 881532
Source: CourtListenerOpinion
Date Created: 2013-06-05 00:44:28.046591+00
Date Added: 2024-06-11T09:07:40.504071
License: Public Domain

No.    89-629

                           IN THE SUPREME COURT OF THE STATE OF MONTANA

CITIZENS STATE BANK, a Montana
banking corporation,
                       Plaintiff and Respondent,

JOHN R. RYAN and ROBERTA
C. RYAN, husband and wife,
                       Defendants and Appellants,
           and
BUTLER R. EITEL, AMERICAN LAND
AND TITLE COMPANY, MONTANA BOARD
OF HOUSING, DONALD F. TUNNELL and
EVELYN I. TUNNELL, FARMERS STATE
BANK and LARRY PERRSON, Trustee,
                       Defendants and Respondents.

APPEAL FROM:                   District Court of the Fourth Judicial District,
                               In and for the County of Ravalli,
                               The Honorable John S. Henson, Judge presiding.

COUNSEL OF RECORD:

                       For Appellant:
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     csl          ,   .)    Terry A. Wallace, Attorney at Law, Missoula, Montana
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     ,-  I             For Respondent Farmers State Bank:
                               George H. Corn, Bell, Corn   &   Bell, Hamilton, Montana
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      3       -       '.                     Submitted on Briefs:       April 19, 1990
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                                                            Decided: June 7, 1990
Filed:

                                             f   Clerk
Justice Diane G. Barz delivered the Opinion of the Court.

     Defendants John R.   and Roberta C. Ryan appeal from the
decision of the District Court of the Fourth Judicial District,
Ravalli County, granting Farmers State Bank's motion for possession
of the real property in question pursuant to 5 27-1-431, MCA.    We
affirm.
     In March, 1981, Farmers State Bank loaned John R. and Roberta
C. Ryan fifty-three thousand dollars      ($53,000) for the real
property located on the West 210 feet of Lot four, Black Lane
Estates, Ravalli County, Montana, also known as 167 Black Lane,
Corvallis, Montana.   This loan was secured by a trust indenture
dated March 26, 1981 and was duly recorded in Book 113, page 210
at the Clerk and Recorder Office in Ravalli County.       This trust
indenture and the underlying promissory note was then purchased by
and assigned to the Montana Board of Housing.     On September 28,
1988, the successor trustee, John H. Grant, was appointed.
     In December, 1982, Citizens State Bank loaned the Ryans twenty
thousand dollars ($20,000).   The promissory note was secured by a
trust indenture executed on December 1, 1982 between the Ryans and
Citizens State Bank for the real property described as Lot four,
Black Lane Estates, Ravalli County, Montana.   This trust indenture
was also duly recorded at the Clerk and Recorder Office in Ravalli
County in Book 115, page 612.
     The Ryans   subsequently defaulted on both      of   the trust
indentures held by the Montana Board of Housing and by the Citizens
State Bank.    On August 27, 1987, Citizens State Bank filed a
complaint in the District Court of the Fourth Judicial District,
Ravalli County, seeking to recover on the promissory notes and to
foreclose the trust indenture and mortgage on Lot four, Black Lane
Estates, Ravalli County. citizens State Bank also sought to assert
the superiority of its claim as to the other defendants, including
Farmers State Bank.
     On September 23, 1987, Citizens State Bank stipulated that the
interests of the successor of Farmers State Bank as beneficiary and
the American Land Title Company (a/k/a First American Title Company
of Montana) as trustee was prior in interest to the interest of
Citizens State Bank as it applied to the West 210 feet of Lot four,
Black Lane Estates, Ravalli County. Citizens State Bank therefore
stipulated that any foreclosure decree entered in regards to the
real property in question should reflect that the sale is subject
to the interest of the American Land Title Company as trustee and
the successor of Farmers State Bank as beneficiary.    In light of
the Farmers State Bank assigning its interest in the trust
indenture to the Montana 'Board of Housing, Citizens State Bank
further stipulated on March 8, 1988 that any foreclosure decree in
the real property in question should reflect that the sale is
subject to the successor of the Montana Board of Housing as
beneficiary.
     The Ryans filed an answer on April 8, 1988, claiming that
Roberta Ryan had no interest in the property involved in the suit.
On September 2 9 ,              1988, t h e Montana Board of Housing e x e c u t e d a

n o t i c e o f t r u s t e e s a l e o f t h e R y a n ' s r e a l p r o p e r t y l o c a t e d on t h e

West 210 f e e t of             Lot f o u r , Black Lane E s t a t e s , R a v a l l i County,

Montana.            The      notice       stated        that      the      default         for     which       the

f o r e c l o s u r e was made was f o r t h e nonpayment of t h e amounts due
p u r s u a n t t o t h e t r u s t i n d e n t u r e d a t e d March 2 6 ,               1981.        John H .
G r a n t , t h e s u c c e s s o r t r u s t e e , f i l e d a f f i d a v i t s of m a i l i n g , p o s t i n g ,
and p u b l i c a t i o n a s r e q u i r e d by          71-1-315,        MCA.       The r e a l p r o p e r t y

was o f f e r e d f o r s a l e on February 2 1 , 1989 a t 1 0 : O O a.m. i n s i d e t h e

f r o n t d o o r o f t h e R a v a l l i County Courthouse, Hamilton, Montana.

The Montana Board o f Housing was t h e h i g h e s t and b e s t b i d d e r and

became t h e p u r c h a s e r of t h e s a i d p r o p e r t y a t t h e s a l e .              A trustee's

deed conveying t h e r e a l p r o p e r t y t o t h e Montana Board of Housing
was e x e c u t e d on March 3 , 1989 and f i l e d w i t h t h e C l e r k and Recorder

O f f i c e , R a v a l l i County on March 8 ,                  1989.        On May 1 2 , 1989, t h e

Montana Board of Housing conveyed t o Farmers S t a t e Bank t h e r e a l

p r o p e r t y l o c a t e d a t t h e West 210 f e e t of Lot f o u r ,                         Black Lane

E s t a t e s , R a v a l l i County.

        I n t h e s p r i n g of          1989, t h e D i s t r i c t Court s e t a p r e t r i a l

conference f o r t h e case.                 On J u n e 6 , 1989, Farmers S t a t e Bank f i l e d

a n o t i c e and motion               f o r judgment           f o r possession             for the real

p r o p e r t y l o c a t e d a t t h e West 2 1 0 f e e t of Lot f o u r ,                      Black Lane

Estates,         Ravalli         County.            Farmers         State        Bank      also       filed       a

supporting b r i e f .          The m a t t e r was s e t f o r h e a r i n g on J u n e 1 4 , 1989.
The Ryans were p e r s o n a l l y s e r v e d t h e n o t i c e , motion and b r i e f on
June 8, 1989. On June 9, 1989, the Ryans personally filed a motion
to dismiss the complaint and an answer to Farmers State Bank's
motion for judgment for possession of real property.            The Ryans
also argued that Farmers State Bank failed to give them proper
notice of their motion        for judgment for possession        of real
property. At the close of the June 14, 1989 hearing, the court set
a briefing schedule and both the Ryans and Farmers State Bank filed
briefs and responses.
     On August 16, 1989, the court issued its Opinion, Order and
Judgment stating that pursuant to 5 27-1-431, MCA, and the statutes
regarding Small Tract Financing, 5 5 71-1-301 through -321, MCA,
that the Ryans were in wrongful possession of the West 210 feet of
Lot four, Black Lane Estates, Ravalli County and therefore granted
Farmers State Bank's motion for judgment for possession of real
property.
     The sole issue raised on appeal is whether the District Court
erred in granting Farmers State Bank's motion for possession of
real property pursuant to 5 27-1-431, MCA.
     In 1963, the Montana legislature enacted the Small Tract
Financing Act of Montana.      The law in effect at the time the Ryans
and Farmers State Bank executed the March 26, 1981 trust indenture
stated that f'[t]ransfers in trust of any interest in real property
of an area not exceeding 15 acres may be made to secure the
performance of an obligation of a grantor        . . .   to a beneficiary
. . .   I'   Section 71-1-304 (1), MCA (1979).   The Act also provided
that after a grantor breaches his obligation that a power of sale
is then conferred upon the trustee.       Section 71-1-304(2), MCA
(1979).
     As the District Court duly noted, John R. Ryan and Roberta C.
Ryan granted a trust indenture to Farmers State Bank as beneficiary
and American Land Title Company as trustee.    This trust indenture
was then properly recorded in the Clerk and Recorder Office,
Ravalli County, on March 27, 1981.        Farmers State Bank then
transferred its interest to the Montana Board of Housing as
successor beneficiary and John H. Grant became successor trustee.
After the Ryans breached their obligation to pay monies due as
evidenced by the underlying promissory note, John H. Grant sold the
real property as allowed under 5 5 71-1-304 (3) and 71-1-313, MCA.
Grant properly followed the procedures as set out in 5 71-1-315,
MCA, regarding notice, posting and publication.
     The Ryans had a right to pay the successor beneficiary the
sums then due under the trust indenture, together with other
statutorily required payments in order to cure the existing
default.   Section 71-1-312, MCA.   The Ryans, however, did not make
the required payments and were therefore required to surrender
possession to the purchaser on the tenth day following the sale,
and without right of redemption after the sale. Section 71-1-319,
MCA; First State Bank of Forsyth v. Chunkapura (1987), 226 Mont.
54, 734 P.2d 1203.

     The District Court granted Farmers State Bank's motion for
possession of real property pursuant to 5 27-1-431, MCA.       Section
27-1-431, MCA, states that
            A person entitled to specific real property,
            by reason either of a perfected title or of a
            claim to title which ought to be perfected,
            may recover the same in the manner prescribed
            by this code, either by a judgment for its
            possession to be executed by the sheriff or by
            a judgment requiring the other party to per-
            fect the title and to deliver possession of
            the property.
In light of the above, the District Court properly granted Farmers
State Bank's motion.
     The Ryans' arguments on appeal are without merit.       The Ryans
first argue that Farmers State Bank did not have a claim against
them and therefore that there was no judgment for either the
plaintiff or the defendant in this case.     Quite contrary to what
the Ryans argue, the District Court's August 16, 1989 iudclment
clearly stated that Farmers State Bank was entitled to possession
of the West 210 feet of Lot four, Black Lane Estates, Ravalli
County and that the Ryans were in wrongful possession of that
property.    Also, contrary to what the Ryans argue, Farmers State
Bank was not required to make a claim against the Ryans via a
complaint, counterclaim, third-party complaint or cross-claim.
Under the present set of facts, Farmers State Bank's motion for
judgment for possession of the real property in question was
properly presented and the District Court properly issued its
judgment.
    The Ryans also argue that they did not have proper notice of
the June   14,   1989   hearing. The record demonstrates that the Ryans
were served with notice of hearing on June            8,   1989,   and filed
documents with the court demonstrating the same on June              9,   1989.

The court then allowed briefing of the matter before it issued its
August 16,   1989   judgment.    The Ryans' argument that they did not
have proper notice of the June 14,       1989   hearing is without merit.
     Affirmed.

                                                           Justice
We concur:        +
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