Court Opinion

ID: 9679393
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:51:51.328593+00
Date Added: 2024-06-11T18:17:13.232259
License: Public Domain

*873OSBORN, Chief Justice,
concurring.
I concur. The case must be reversed because of the failure to submit the reformation issues.
I write further because of my question about the deficiency issue. In Appellee’s brief, counsel says: “Farmers did not contest the sale as void.” My recollection of counsel’s contention on oral argument was that the sale was valid. If the sale is considered valid, and upon retrial no attempt is made to attack the validity of the sale, then Appellee should only receive a credit for the amount of the highest bid at the foreclosure sale. If there is no attack on the validity of the sale, it should be presumed to be valid and there is no burden on the lender to establish that its bid price was fair and reasonable. Where the sale is not attacked, the deficiency, if any, must be established at the time of the foreclosure sale. Neither the lender nor the debtor should be required nor permitted to wait until the property is sold by the lender, whether it be one week or one year later to determine if a deficiency exists or whether the debtor may be entitled to a credit.
The general rule is set forth in the annotation: “Accountability of mortgagee or pledgee for profit made upon resale of the property after purchase thereof at foreclosure or other enforcement sale.” 117 A.L.R. 863 (1938). The annotation says:
The cases are agreed that where no fraud or other irregularity is shown in connection with the foreclosure or the conduct of the foreclosure sale, a mortgagor has no right to compel a mortgagee to account for any profit made by him upon a resale of the premises after purchasing the same at a sale under the foreclosure of his mortgage.
The cases in the annotation note that the lender who purchases at a foreclosure occupies the same position as a third party purchaser. If a third party had been the highest bidder and then sold the property a week later at a $50,000.00 profit, the debtor certainly could not claim that amount as a credit on any deficiency. A purchaser at foreclosure is entitled to sell at a profit if he can do so. Third National Bank in Nashville v. McCord, 688 S.W.2d 446 (Tenn.App.1985), That rule should apply uniformly whether the purchaser be the lender or a third party.
Therefore, I would hold that if Farmers Market does not attack the sale and get findings which support setting aside the foreclosure sale, then the lender has no duty to get findings that the amount of its bid was fair and reasonable, and the credit on the debt will, as a matter of law, be the amount bid at the sale. The rule seems to be clear that to set aside a foreclosure sale, there must be a finding of more than just inadequacy of consideration. There must be evidence of irregularity, though slight, which caused or contributed to cause the property to be sold for a grossly inadequate price. American Savings and Loan Association of Houston v. Mustek, 531 S.W.2d 581 (Tex.1975), Jinkins v. Chambers, 622 S.W.2d 614 (Tex.App. — Tyler 1981, no writ); Donaldson v. Mansel, 615 S.W.2d 799 (Tex.Civ.App. — Houston [1st Dist.] 1980, writ ref’d n.r.e.). If the sale was valid, the amount bid at the foreclosure sale was the proper amount to credit on the borrower’s debt. Maupin v. Chaney, 139 Tex. 426, 163 S.W.2d 380 (1942); Whalen v. Etheridge, 428 S.W.2d 824 (Tex. Civ.App. — San Antonio 1968, writ ref’d n.r. e.).
Obviously, the ultimate disposition of this issue will depend upon the pleadings and the evidence upon a retrial.