Court Opinion

ID: 883035
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:02:00.594002+00
Date Added: 2024-06-11T09:07:49.068848
License: Public Domain

No.    92-473

          IN THE SUPREME COURT OF THE STATE OF MONTANA
                                  1993

MONTANA RANCH PROPERTIES, INC.,
a Montana corporation,
          Plaintiff and Appellant,

DONALD EASTEP, JOHN DOES 1 THROUGH
10, AND OTHER PERSONS CLAIMING
ANY INTEREST IN CERTAIN LANDS
IDENTIFIED IN THIS COMPLAINT,
          Defendants and Respondents.

APPEAL FROM:   District Court of the Sixth Judicial District,
               In and for the County of Park,
               The Honorablc Byron I .
                                    , Robb, Judge =residing.

COUNSEL OF RECORD:
          For Appellant:
               Karl Knuchel, Attorney at Law, Livingston, Montana
          For Respondent:
               Kenneth D. Tolliver and Jeffrey A. Hunnes, Wright,
               Tolliver & Guthals, P.C., Billings, Montana

                            Submitted on Briefs:    January 22, 1993
                                         Decided:   February 18, 1993
Chief Justice J. A. Turnage delivered the Opinion of the Court.
     The District Court for the Sixth Judicial District, Park
County, decided this quiet title action in favor of defendant
Donald Eastep.   Plaintiff Montana Ranch Properties, Inc., appeals.
We affirm.
     The issue is whether the court erred in concluding that Donald
Eastep held the redemptive rights to certain real property in Park
County, Montana.
     On February 22, 1990, J. Rance Smith filed a petition for
bankruptcy under Chapter 7 of the United States Bankruptcy Code.
At that time, he was the owner of real property in Park County,
Montana, upon which Frances and Marion Moreland held a mortgage.
The day after Smith filed his bankruptcy petition, the Morelands
filed, in the    "4-t-4-t
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foreclose their mortgage.
     Pursuant to 11 U.S.C.     §   362, the foreclosure action was stayed

pending the bankruptcy proceeding. On August 27, 1991, however, at
the Morelands' request, the Bankruptcy Court entered an order
lifting the stay as to the Park County property.                  The order stated:
     IT IS ORDERED vacating [sic] the stay against lien
     enforcement of Frances and Marion Moreland respecting the
     above-described property.
The Morelands pursued their foreclosure action in District Court
and on December 17, 1991, obtained a decree establishing a total
judgment of   $147,756.26    and   ordering sale of   the mortgaged
property.
     On December 19, 1991, the bankruptcy trustee gave notice to
all creditors and interested parties of his intent to sell Smith's
redemption rights in the Park County property.        He sold those
rights to defendant Eastep for $1,000 on January 17, 1992.
     The sheriff's sale      following foreclosure took place     on
February 11, 1992.       High bidder at the sale was Montana Ranch
Properties, Inc., the plaintiff in this case.     Montana Ranch then
obtained a quitclaim deed from J. Rance Smith dated February 24,
1992, to set up a claim to the redemption rights.
     On March 10, 1992, Eastep tendered $186,879.76 to the sheriff
of Park County to exercise the redemptive rights he had acquired

     Did the District Court err in concluding that Donald Eastep
held the redemptive rights to the Park County property?
     Summary judgment is proper when the pleadings, depositions,
answers to interrogatories, admissions, and any affidavits on file
show that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law.
Rule 56(c), M.R.Civ.P.     Here, the arguments made by Montana Ranch
are legal, not factual.      Federal statutes and cases control as to
the bankruptcy matters involved.
     Montana Ranch claims that the trustee had no power to sell the
right of redemption prior to the foreclosure sale. It asserts that
the right did not exist prior to the foreclosure sale and therefore
was not part of the bankruptcy estate under 11 U.S.C. 9 541.
     Federal case law disproves this claim of Montana Ranch:
     [Tihe courts have consistently said that options or
     contingent interests are property of the bankruptcy
     estate under section 541. "The term 'property1has been
     construed most generously and an interest is not outside
     its reach because it is novel or contingent or enjoyment
     must be postponed." Segal v. Rochelle, 382 U.S. 375,
     379, 86 S.Ct. 511, 515, 15 L.Ed.2d 428 (1966)[.]

     We hold that a pre-foreclosure right to redeem is a
     property right under section 541i.1
In re Bialac (9th Cir. 1983)' 712 F.2d 426, 431.
     A trustee in bankruptcy has the power to sell property of the
estate.   11 U.S.C.   $j 363(b).   We conclude that the trustee had the
power to sell the redemption rights prior to the foreclosure sale.
    Montana Ranch also asserts that when the Bankruptcy Court
lifted the automatic stay as to the Park County property, the
bankruptcy trustee effectively abandoned the property.         Montana
Ranch claims this resulted in a revesting of title to the Park
County property in J. Rance Smith.
     A lifting of a bankruptcy stay and abandonment of property by
the bankruptcy estate are distinctly different.             Relief from the
automatic stay is governed by I1 U . S . C .     §   362.   Abandonment of
property from a bankruptcy estate is governed by 11 U . S . C .        554.

For the protection of creditors, abandonment during the period of
administration can only occur following notice, hearing, and order
of the bankruptcy court.       11 U . S . C .   554.    Montana Ranch has
presented no evidence that such proceedings took place.            Contrary
to the contentions of Montana Ranch, the order lifting the auto-
matic stay as to the Morelands' lien on the Park County property
contains no language divesting the bankruptcy estate of                 its
interest in the property.        We conclude that Montana Ranch has
failed to establish that the bankruptcy trustee abandoned the
redemption rights to the Park County property.
     Montana Ranch has not shown that the bankruptcy trustee's sale
to Eastep of the right of redemption of the Park County property
was in any way invalid.    We therefore affirm the summary judgment
quieting title in Eastep.
We concur:
                                        February 18, 1993

                                  CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

Karl Knuchel
Attorney at Law
P.O. Box 953
Livingston, MT 59047

Kemeth D. To!!iver & Jeffrey A. Kunnes
Wright, Tolliver & Guthals, P.C.
P.O. Box 1977
Billings, MT 59103

                                                    ED SMITH
                                                    CLERK OF THE SUPREME COURT
                                                    STATE,QF M0hiTAX.A.