Court Opinion

ID: 9793307
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:45:54.808444+00
Date Added: 2024-06-11T08:04:26.244186
License: Public Domain

RABINOWITZ, Justice,
concurring.
I agree with the court that the CBS sale was invalid and should be set aside. However, I disagree with the proposition that the CBS sale was defective because the ANB sale stood as a valid legal transfer of title and foreclosed CBS’ interest under the second deed of trust until it was set aside, leaving nothing for CBS to foreclose upon. In my view, this conclusion misinterprets the logical implications of the void/voidable distinction. The effect of the principle that “irregularities in a deed of trust sale render it voidable, not void” is to legitimate such *824sales until a court declares them invalid. However, once such a declaration is made, I think the sale must be deemed void ab initio. The void/voidable distinction does not dictate that a decision such as that announced in Hagberg v. Alaska National Bank, 585 P.2d 559, 562 (Alaska 1978), be applied prospectively which is, in effect, the court’s ruling today.1
I reach the conclusion that the effect of Hagberg was to put the parties in exactly the position they would have occupied had the ANB sale never taken place.2 From this it follows that it is incorrect to conclude that “CBS never had a title to validate.” Assuming that the ANB sale never took place, CBS had the right to foreclose pursuant to its second deed of trust. Under AS 34.20.090(a), CBS would have taken title subject to ANB’s prior interest, but this result is not tantamount to a conclusion that CBS took “no title at all.” It seems to me logical to conclude that once a transfer has been set aside, it is deemed void ab initio for all purposes.
My conclusion that the CBS sale should be invalidated rests upon considerations similar to those underlying our decision in Hagberg. Burnett was effectively denied the opportunity to exercise his right to redeem the property under AS 34.20.070(b) prior to the CBS sale. Although Burnett had notice of the CBS sale, it would have been senseless for him to have attempted to cure any default on the debt to CBS after the ANB sale, since the latter (if valid) would have eliminated any obligation on his part to CBS.3 AS 34.20.090(a). Thus, it is not surprising that after the ANB sale he chose not to exercise his statutory right to remove the second encumbrance. It would be unfair to conclude that he should have predicted the result in Hagberg and exercised his right to redeem the second deed of trust prior to the CBS sale. As a practical matter, Burnett was therefore denied his statutory redemption rights prior to the CBS sale. For this reason, I concur in the court’s holding that the CBS foreclosure should be invalidated.

.Research has failed to uncover support for the court’s conclusion that a “voidable” sale remains valid for some purposes after it is set aside. Compare the majority’s conclusion with Leonard v. Bank of America National Trust and Savings Ass’n, 16 Cal.App.2d 341, 60 P.2d 325 (1936) (action by mortgagor to set aside foreclosure sale would only be entertained if plaintiff offered to redeem the land since he who seeks equity must do equity, and thus sale was treated as “voidable” rather than “void”); Copsey v. Sacramento Bank, 133 Cal. 659, 66 P. 7 (1901) (sale at which mortgagee purchased is voidable only by mortgagor who retains the right to pay debt and redeem the land); Peterson v. Kansas City Life Ins. Co., 339 Mo. 700, 98 S.W.2d 770 (1936) (improper execution of power of sale renders sale voidable in equity, not void in law; mortgagor must sue in equity to have sale set aside); Hrovat v. Bingham, 341 S.W.2d 365 (Mo.App.1960) (if mortgagee has power to sell and there is legitimate attempt to act within scope of authority, sale is not void if power of sale improperly exercised; mortgagor may appeal to have sale set aside by court of equity, despite passage of legal title, if irregularities warrant relief — thus, sale is “voidable”).

. See J. Osborne, Mortgages § 341 (2d ed. 1970) (“[w]hen [an] invalid sale is completed the mortgagor may sue in equity to set the sale aside and restore the situation as it was before the sale”); 2 L. Jones on Mortgages § 1681 (6th ed 1904) (“[w]hen a sale is set aside by order of court the title of the purchaser is vacated and the mortgage is restored to the same position it occupied before the proceedings were commenced”).

. It was Wester, Burnett’s predecessor in interest, who was personally liable to CBS.