Court Opinion

ID: 3988509
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:44:34.692922+00
Date Added: 2024-06-11T14:18:25.752623
License: Public Domain

I concur.
Mr. Justice Turner concludes that the intervention of bankruptcy proceedings stayed the period of redemption of the plaintiff in respect to the foreclosure by the bank. *Page 319 
Mr. Justice Wade concludes otherwise but arrives at the same result by holding that the "redemption" by the bankruptcy court from the bank by the exercise of defendant's right of redemption restored the status of both plaintiff and defendant in respect to the property as it was before foreclosure of the bank; thatat that time defendant had parted with all his right, title and interest to plaintiff and plaintiff's right of redemption had of course not yet run against the bank because the foreclosure had not taken place. I shall later advert to this conception.
For reasons hereafter stated I think the running of the period of redemption of plaintiff in respect to the bank was stayed by the intervention of the bankruptcy proceedings. For that reason and for the further reason that I think defendant did some things in regard to the bankruptcy proceeding only consistent with his recognition of plaintiff as a creditor, I agree with the opinion of Mr. Justice Turner. I might well leave my concurrence at this point were it not for the fact that I want to make my position clear as to some holdings of the bankruptcy court which in this collateral proceeding we must accept as correct for the purpose of this suit but which I think should still remain open for decision of this court when they come before us for original cognizance.
While 11 U.S.C.A. § 203, sub. n provides that the filing of a relief petition by the farmer shall subject the "farmer and all his property * * * including * * * the right or the equity of redemption * * *," I think the question might arise as to what was the property of the defendant in this case. The sale to the plaintiff at execution had divested the defendant of all his right, title and interest in the property. When the period of redemption in respect to that sale had run it passed to the plaintiff absolutely, subject to the lien of the bank. See Sec. 104-37-29, U.C.A. 1943. Sec. 104-37-30, U.C.A. 1943, provides that "property sold subject to redemption * * * may be redeemed * * * by * * * the judgment debtor, or his successor in interest * * *." (Italics added.) On reading *Page 320 
the section I would have thought that where property was sold on execution sale subject to a prior lien and subject to an equity of redemption if the equity of redemption were not exercised within the six months against the purchaser, the judgment debtor would have nothing left and that right of redemption would not spring into existence in his favor when the prior lienor foreclosed against the successor in interest, i.e., the purchaser at the execution sale. In short, that the phrase "judgment debtor, or his successor in interest" meant to give the right of redemption to the judgment debtor until his successor in interest took his place.
I am not convinced that the holding in Layton v. Thayne, 10 Cir., 133 F.2d 287, 289 which says, "it is conceded that under the laws of Utah appellant [Layton] has a right of redemption," is correct. It may have been conceded for that case. True, Layton did become a judgment debtor of Davis County Bank, the first mortgagee when that bank obtained a judgment against him on foreclosure after he had parted with all his right, title and interest in the property to Thayne, the second mortgagee in the foreclosure proceeding of the latter and had failed to redeem from the foreclosure proceeding. But I still think the question is open in this jurisdiction whether Sec. 104-37-30 was intended to apply to that situation. Some of my reasons for this doubt will appear from what is hereafter said. Why it should have been conceded in the Federal Court that in Utah a mortgagor who was completely dissevered from his property by the foreclosure sale of second mortgagee or judgment creditor and lapse of period for redemption as to that mortgagee has a right of redemption as against a first mortgagee who later forecloses is shrouded in mystery. We have never so held in this state. California held in an early case under a statute like ours that when the mortgagorconveyed his interest to another he could still redeem as execution defendant from a purchaser at an execution sale. This was on the ground that the judgment debtor may have covenanted with his successor in interest to effect a redemption from the sale *Page 321 
or for other reasons might have an interest in effecting a redemption from execution sale despite the fact that he had sold the property. Those are all the reasons which are given. It seems highly improbable that the legislature meant to retain in the judgment debtor a right to redeem because he may have convenanted with his grantee to redeem. The Oregon Court in Higgs v.McDuffie, 81 Or. 256 at page 263, 157 P. 794, holds that there is no judgment debtor until judgment and that hence there can be no successor in interest to the judgment debtor until after
foreclosure, and consequently "successor in interest" as used in the redemptioner statute reading in this respect as ours, means one who succeeds to the judgment debtor's right to redeem since such right rises by statute in the judgment debtor only after "a sale upon a decree including a personal judgment against a defendant." Under this definition of successor in interest only one to whom Bullen conveyed his right of redemption could be a successor in interest. Under this conception the right of redemption, purely a creature of statute (the equity of redemption as it was known in the common law having been extinguished by foreclosure) was a property right and could be conveyed. The grantee of such right was the successor in interest. Under such conception the judgment debtor or his successor in interest could not both have the right of redemption, the judgment debtor having parted with it. It should be noted that the Oregon statutes on foreclosure and redemption varied somewhat from ours in 1916 when the McDuffie case was decided.
I have set out the substance of the above cases to emphasize reasons for desiring to reserve the question of whether the judgment debtor and his successor in interest, whomsoever that term may embrace, possess a right to redeem. Of course, until we speak, the Bankruptcy Court must follow the holdings of the Circuit Court of Appeal as found in the Thayne case. And we are bound by the holding in this collateral proceeding. But a holding of the Federal Court construing our statute would, of course, not be binding on us if the question came to us as a matter originally *Page 322 
cognizable in our state courts. It is in that regard that I am reserving opinion. This court cannot be foreclosed on that question by the decisions in the Federal Courts. I concede, however, that there is considerable merit to the thought that regardless of the term "successor in interest" Bullen would again become a judgment debtor as to the bank in its foreclosure proceedings and that by virtue of that event Sec. 104-37-30, U.C.A. 1943, again became applicable. For the purposes of the matters before us, however, I must assume that the Bankruptcy Court was correct in holding that when the First National Bank of Logan foreclosed, Bullen again became a judgment debtor and under Sec. 104-37-30, U.C.A. 1943, had a right of redemption. I must also accept as the law that such right of redemption, whether a property right or a privilege, was an interest subject to the bankruptcy court. This has been definitely decided in Wragg v.Federal Land Bank of New Orleans, 317 U.S. 325, 63 S. Ct. 273,87 L. Ed. 300. And, perhaps, as stated by Mr. Justice Wade, we should assume that what the bankruptcy court did in order to develop a fund of $28,273 from a sale of property out of which the bank was paid its indebtedness, amounted to an exercise of this right of redemption regardless of what actually transpired. But I do not think it necessary to so assume because all we need know is that a fund of $28,273 stood in place of the property and the interest of Bullen and the Thatcher Corporation are as to that fund as they were to the property whether by stipulation among them and the bank or by the holding of the bankruptcy court.
At all events I do not think that we are in position to question the rulings or actions of the bankruptcy court. Since its decision or actions have not been appealed we must assume them to be correct. But the fact that the bank filed a petition to have the property in question discharged from the jurisdiction of the bankruptcy court which petition was on motion of the defendant, denied, leads one to speculate as to whether the Bankruptcy Court did not actually reach out and take in the real estate itself in bankruptcy *Page 323 
administration rather than exercise defendant's right of redemption to obtain the property. Be that as it may, it appears that all parties were satisfied with the sale of that property for $28,273 and that the bank has been paid off in full and that the fund stands in place of the property in the bankruptcy court. And whether we accept the solution of Mr. Justice Turner or Mr. Justice Wade, the plaintiff elected to treat himself as a creditor which indeed the defendant treated him as being, by so listing him.
Mr. Justice Wade holds that under Sec. 104-37-32, U.C.A. 1943, a redemption by the judgment debtor not only restores to the judgment debtor his former estate (in this case nothing because it had all passed to the plaintiff) but placed the plaintiff in the same position it was before the bank's foreclosure sale. In other words, that even though right of redemption of the Thatcher Corporation in respect to the bank had lapsed, the words in Sec. 104-37-32 reading "the effect of the sale is terminated" has the effect of putting plaintiff in the position it would have been in had a sale been made and hence the effect of plaintiff allowing the period of redemption to lapse in respect to the bank was also cancelled because all the effects of the sale were terminated and such was one of the effects of the sale. Such reasoning is necessary to produce the result reached by Mr. Justice Wade. I am not prepared to say that the language of Sec. 104-37-32 reading "If the [judgment] debtor redeems, the effect of the sale is terminated and he is restored to his estate" (Italics added) applies to any other than the judgment debtor. If it does not we have the curious spectacle of a judgment debtor redeeming in which case the title was fed into the plaintiff which had succeeded to all his right, title and interest only in turn to be fed into the Bank because it in turn succeeded to all the right, title and interest of the plaintiff whose period of redemption in respect to the bank, was according to the theory of Mr. Justice Wade, terminated. But the bank is paid and is evidently content in getting its debt and relinquishes its title to the bankruptcy court. Where, then, under this theory, does the money go? Logically *Page 324 
to pay Bullen's creditors and after they are paid the remainder to Bullen. But Bullen claims that plaintiff is not a creditor because his claim is satisfied, which might, under the theory of Mr. Justice Wade, be a good reason for the bankruptcy court requiring him to have the satisfaction of judgment set aside.
Moreover, what I conceive to be the results of the logic of Mr. Justice Wade's position, unless he is correct in concluding that the redemption by the judgment debtor terminates all the effect of the bank's foreclosure sale as to plaintiff, influences me to lean toward the view that if a mortgagor who has parted with all his right, title and interest has a right to resort to the bankruptcy court on the theory that a right of redemption springs up in his favor in case a prior lienholder forecloses against his successor in interest and joins him as defendant and gives him the status of a judgment debtor, the intervention of bankruptcy stays all the periods of redemption — in this case that of the plaintiff as respects the bank. Otherwise, the plaintiff would be required to redeem while the property was in bankruptcy as in this case in order to protect himself against loss.
But the plaintiff could not take a chance, even under the most favorable view of the theory of Mr. Justice Wade, that there would be a redemption by the bankruptcy court. Indeed one wonders why the bankruptcy court should exercise such right of redemption if its effect would enure only to the advantage of the judgment debtor's successor in interest, in this case the plaintiff. If the mortgagor resorted to the bankruptcy court and that court failed to redeem while the period of redemption of his successor in interest was running against the first mortgagee, the successor would run the risk of the bankruptcy court failing to exercise the mortgagor's right of redemption. He would therefore under the theory of Mr. Justice Wade be required to redeem in order to protect himself before the running of his period of redemption, provided the court did not in that time exercise the mortgagor's right. *Page 325 
In conclusion I should note that it would appear that if the bankruptcy court considered the plaintiff a creditor it should have permitted him to recoup his indebtedness without compelling him to resort to an action to set aside the satisfaction of judgment. If the satisfaction is set aside so it can go back to the bankruptcy court with a showing of an unsatisfied judgment it would be compelled on payment to again satisfy the judgment. It would appear that the conclusion of the bankruptcy court that plaintiff was a creditor would not depend on whether it had or had not a satisfied judgment but on facts independent of that satisfaction.
For the reasons stated above and with the reservation noted I concur in the opinion of Mr. Justice Turner.
McDONOUGH, J., concurs with the views expressed in the opinion of Mr. Chief Justice WOLFE.