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Federal Land Bank of Omaha v. Carlson
411 N.W.2d 415
S.D.
1987
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*1 415 MORGAN, indicate, checking appropriate space, MILLER, SABERS and is, not, JJ., “the Defendant or same whether concur.

person who was convicted offenses WUEST, C.J., disqualified. Supplemental in the Information.” as found added.) (Emphasis

The circuit court is infused with broad instructing jury

discretion “[i]t judge’s

sufficient if the instructions to the include the elements of the crime

jury

charged.” Blakey, v. 399 N.W.2d State

317, 320(S.D.1987)(citing People, Cahill v. 29, 38, 673, (1943)).

111 P.2d 673 Colo. 137 only

Reversal is warranted if Defendant is showing circuit court

successful error might proportions jury that “the The FEDERAL LAND BANK OF probably would have returned a different OMAHA, Plaintiff and given.” verdict if instruction had been [his] Respondent, Owl, 748, 751 Grey v. 295 N.W.2d State v. (S.D.1980), remand, appeal 316 after (S.D.1982). N.W.2d 801 See State v. Bitt Carlson, L. Melfred CARLSON and E. ner, 121, 125(S.D.1984); 359 N.W.2d State Carlson, Defendants and 384, Feyereisen, 343 N.W.2d 387 Appellant. Defendant No. 15450. jury We note that the circuit court’s in- structions differ from Defendant’s Supreme Court of South Dakota. form; substantively, they are identical. Additionally, jury instruction one is number 23, Argued March 1987. very similar to the one we reviewed in 26, Aug. Decided 1987. 567,570 Camp, State v. Moves 376 N.W.2d Rehearing 20, 1987. Granted Oct. (S.D.1985). Thus, we are hold unable to that the circuit court abused its discretion prejudiced.

and Defendant was

Regarding forms, the verdict Defend- proposed

ant’s form and the form substantially

used are similar. This Court previously refused be dissuaded arguments centering

counsel’s on mere

“technical” “semantic” differences in Camp,

verdict forms. See Moves 376 case, at 570. In this

N.W.2d the verdict used, although precise

form not as as it been, sufficiently

could have clear to

accomplish the task for which it de-

signed. jury could either find that was, not, per-

Defendant or was the same

son convicted of the two earlier of- DWI specifically

fenses. We word used, informing jury offenses

Defendant must be identified as the identi- 12, person January

cal convicted of DWI

1982 and November respects.

Affirmed all *2 agreement

The subordination contained the following provision: This Subordination is limited to the loaned the Lender to for foregoing purpose, Borrower but shall not exceed Sixty- Two Hundred ($267,000.00). seven Thousand Dollars Kay Melfred and defaulted on the mort- gage and FLB commenced this foreclosure action.

FLB for and granted moved summa- ry judgment by the trial court. The sum- mary judgment granted recovery to FLB against Kay Melfred and in the amount of $399,660.28; determined FLB’s to be a against valid first lien the property subject Agnes to the to a life home”; estate in “family held Agnes’ property interest in the as sell- er under the contract for is subject deed and inferior to the lien of the bank to the extent of amount; granted against and Kay Melfred for the difference between judgment $267,- Heisterkamp, Rapid City, Kenneth for 000; the FLB held that was entitled to bid respondent. plaintiff and $267,000 sale; at the foreclosure Smit, Morman, Keith R. Shepard, Smit and, among things, other directed that the Hughes Wolsky, Sturgis, & for defendant public be sold one at tract auc- appellant. tion. The summary does contain MILLER, (on reassignment). proper- determination the value This is an appeal summary judg- from a ty, although findings of fact state that the ment in a foreclosure action. fair substantially market value is less than We reverse. (see total incumbrances Find- Agnes (Agnes) IX). M. Carlson ings sold her ranch VI and In its memorandum deci- to her son wife, sion, L. Melfred Carlson and his the trial court stated: Kay. She sold the under contract premises value deed, $295,000. for for a After the considering the equity of Defendant made, payment down the balance due unsubrogat- M. Carlson under the $269,000 together with interest at the (sic) portion ed of her is not percent per rate of six annum. The first appraised rather 15, payment was due March subrogation (sic) $267,000. i.e. Therefore, will be the decision of the 4,1982, On March Melfred and Carl- Court Plaintiff sum of (Melfred Kay) this $267,000 foreclosure sale. property to the Federal Land Bank Oma- (FLB) security ha promissory for a appeals granting from the principal summary executed judgment. them the sum of Melfred and Kay $267,000. Agnes appealed. executed have not a subordination 1982, dated February ISSUES subordinated her interest as seller mortgagee contract deed to the appellant FLB. issues as framed are: determined, as thus and if a defi- 1. Did the court’s ciency and conditions of remains after the the terms violate provides mortgagee, assigns, 21-47-15 which or his [for mortgag- entitled to a execution for' such application to the ee]? was ren- the terms 2. Did the trial violate dered. *3 of 21-47-16 and conditions shall provides which [that import goes The of these statutes of the fair and reason- provide proof deeper right than the a deficien recover mortgaged premis- of the able value is, cy judgment. A unwilling full if to bid the es he is naturally, bidding the inevitable result of of the amount debt]? less than the full amount of the its discre- Did the trial court abuse 3. mortgagee debt. The of the to bid at determining that the tion in in all is embodied 21-47-15 which re § parcel sold in one or tract? should be quires of a bid at the fair and submission value, good made in faith. This reasonable DECISION protection in requirement works to the 1 2 so intertwined that Issues and are mortga ferior lienholders as well as the together. treated We have they be Thus, standing gors. Agnes had to raise 21-47-15, -16, previously referred to SDCL issue, though this Melfred and “deficiency judgment -17 stat as the and appeal. did not v. Bra utes.” Miners & Merchants Bank (S.D.1985); Forestry, 374 N.W.2d 123 den significant that 21- It is to note § Brown, 85 Perpetual Nat’l. Ins. Co. mortgagee the imposes 47-16 Life 330, 182 (1970). legis 216 N.W.2d S.D. establish, trial, at the time of duty to policy for the enactment of these lative mortgaged value of the in title of the bill: statutes is indicated premises. In Fed. Sav. & Loan American Unjust An Act to Prevent Enrichment and (S.D. Ass’n, Kass, 800 320 N.W.2d Etc. v. of Real Estate Mort Gain the Holders 1982), “fair and rea equated term Through Thereof gages the Foreclosure say “market value” value” with sonable “ Action. 1939 S.D.Sess.L. ch. highest ing: ‘market value’ is at its property considered best for which mortgagee allows in the use can sold profitable and most be purchase property subject to the mort- willing willing open by a seller to market gage provided at the foreclosure sale “he acting compulsion and buyer, neither under fairly good in and and faith ... bids bids exercising judgment.” reasonable fair and value thereof.” both reasonable (citations omitted). We at 802 320 N.W.2d provides: “any relevant and materi further held that If the holder of such is not evidence, competent if under al willing at such sale to bid the full evidence, prove admissible rules debt, of the it shall be and defi in a foreclosure market value” duty mortgage holder to es- of such ciency judgment action. Id. compe- at the time of the trial tablish Here, only determination made proof tent to the satisfaction of fair and reasonable value court, the trial court the fair and reasonable value decision, the court was in its memorandum premises, decree; appealed. in course is not and cannot be shall determine the same testimony of value of the only if find such fair and the court shall seems appraisal an value to less than the sum was be by the trial totally ignored costs and to have been due on said $267,000 court. The expenses may by such decree (although by the trial court mortgage holder to bid determined authorize such fact) findings of does not omitted from its not less than the fair and reasonable any of Anderson, meet the criteria that have been 61 S.D. 249 N.W. 626 (1933). developed by this court to determine fair fact, In appears and reasonable value. judgment is reversed.

that disregard there was a total of that statutory requirement. Apparently, the MORGAN, J., GERKEN, Circuit trial in court became involved an exercise Judge, concur. marshalling assets overlooked the WUEST, C.J., J., SABERS, question basic of full and true concur part in part. dissent gardless of the liens. GERKEN, Judge, sitting Circuit earlier, As stated evidence HENDERSON, J., disqualified. regarding ap- record an praisal $484,000. The trial court did WUEST, Chief (concurring figure. accept part have to Under dissenting part). *4 genuine record there is an obvious issue of I would affirm. precludes fact material Carlson, mother, sold her

judgment, namely, the reasonable value of son, ranch her to L. Melford Carlson and property. court, the The trial rather than The property his wife. was sold under a adopting any figure, made a calculation of $295,000.00. contract for deed for a own, finding which exercise is a of fact made, After the down payment was the not belong summary judg- does $269,000.00 balance due mother was with ment action. percent per interest at the six rate of an- Agnes argues by allowing the sum- Thereafter, num. the and his wife mary judgment FLB, to stand we allow in mortgaged the to the Federal essence, to portion disenfranchise her aof Land Bank of The mortgage Omaha. given of the balance due on her a promissory contract. She secure argues date by in her executed brief that this amount the son and his wife in $267,000.00 the $76,000, being principal sum of inter- the difference between with her est. mother executed a balance due and subordination the subordinated amount. agreement which subordinated her interest Because this case is remanded the trial as seller in the for Contract Deed to the court we need not address that issue.

mortgage by held the Federal Bank Land Agnes also claims that the signed court Omaha. She never the note or abused its in ordering mortgage discretion the ranch nor did she transfer title fee to be sold as a the son. The tract. The trial interest he and his wife court mortgage had to distinct, equitable concluded the ranch was his was one com interest acquired pact, by the contiguous farm, contract for or deed. ranch tract subordination the which should contained fol- be sold in one unit. The lowing provision: ranch 4,000 consists of approximately acres Harding County, Dakota, located in This South subordination is limited the consists loaned the lender to crop balance between land, land, foregoing purposes, borrower for the pasture improved pasture land, Sixty- shall not exceed Two together improvements Hundred with thereon. ($267,000.00). Seven Thousand Dollars has distinct, been utilized as a compact contiguous farm or ranch. When on son defaulted Land Federal Bank When foreclosed. gives pow- 21-47-13 Judgment entered, bal- er and discretion to determine the manner $385,502.00 ance was with interest accrued of sale of mortgaged property. We con- through May 1986. The due to clude that the trial court did not abuse its Deed, mother her Contract properly discretion and directed that interest, $343,000.00. mortgaged premises here be sold a sin- gle parcel or tract of land. provides: Furman mortgage upon past In the of a have referred to SDCL any

In 21-47-16, 21-47-15, 21-47-17, as action, his mortgagee, estate real act, legisla- and their legal representatives, assigns, or their purpose unjust is “to prevent tive enrich- any part premises, may purchase gain by ment and holders of Real Estate thereof, provid- such foreclosure Mortgages through thereby the foreclosure faith, fairly good and in ing he bid 146, S.L.1939; action.” See Chapter there- value bids the Miners & Merchants Bank v. Braden For- of. (S.D.1985); Perpet- estry, 374 N.W.2d 123 provides: ual National Insurance Co. v. Life holder of If the Brown, 182 N.W.2d 216 full sale to willing at such the court When entered debt, holding the Federal Bank could Land mortgage holder to es- duty of such ($267,- the amount compe- at the time the trial tablish 000.00), provided it further the Federal of the mort- tent and reasonable value deficiency Land Bank could recover a de- gaged premises, and the count shall A the son and his wife. decree; in its and if the termine the same imposition personal is an liabil- shall find such fair and unpaid upon mortgagor ities for an bal- than due on said to be less obligation of a secured after fore- ance expenses of mortgage, with costs and yield failed to closure of *5 sale, by such may decree authorize Miners & the full the debt. mortgage holder not less such to bid Bank, supra. The mortgagors, Merchants as than the fair and reasonable value wife, the decision appealed and never son determined, and if thus court. the son and his of the trial Since after the foreclosure mains appealed, do not review their never wife assigns, his enti- mortgagee, or Mother, however, rights in the case. to a for such defi- tled execution provisions the of claims the violated only upon application the court ciency to by finding and 21-47-16 in the rendered. which was premis- of the fair and reasonable value the $267,000.00, subrogated maxi- the es to be permitted Federal Land The court the rights. mum affect her Bank to bid the amount of the subordina- tion, i.e., $267,000.00. gave the The judgment, time of the owed At the reasoning in following memorandum $385,502.00, and under the Land Bank the opinion adopted part was of the as a the provisions of subordination $267,000.00 decision. is entitled to the first the bank property. of the The mother from the sale premises The reasonable value of the $343,000.00 for the to next is entitled Defendant, considering equity her accrued due on contract with balance Carlson, unsubrogat- Agnes M. under the paid, is After the mother interest. portion of her is not the ed is to the balance due Federal Bank entitled appraised but the amount rather which, deducting after on the i.e., $267,000.00. subrogation, There- $267,000.00 by the moth- subordination fore, it will be decision of the Court $118,502.00. Anything er, to left amounts $267,- may Plaintiff mortga- as go the son wife to and would course, 000.00 at foreclosure sale. Of however, ap- property, was gors. raise Defendant Carlson $484,- appraiser at by the Carlsons’ praised $267,000.00 of the amount said bid 000.00, property the court found the inure to the of Plaintiff. bid shall benefit total encum- less than the worth was could also Defendant Carlson brances. redemption convey redemp- her make fair statutory in this found the during after sale The court case tory premises was period. value of the redemptory $267,000.00 (the subrogated amount) standing challenge since to the deficiency judg- property mother owned the fee of the ment Melford and Carlson. her pursuant Although to Contract for Deed and a standing she has challenge “family” reserved in the her, life estate home. court’s respect finding clearly I court’s believe the should be useless do so in view of her considering the title erroneous fee failure to on the the sale or mother in the and the Carlson’s redeem it from the sale. appraisal. The own estate Federal majority opinion holds that the re- Bank had to was the Land sell subordinat- quirement to bid fair and reasonable value $267,000.00 val- ed interest. There was no protection to the “works of inferior lien- deducting left ue after the subordinated well mortgagors.” holders as au- No $267,000.00 $343,- sum sum thority is cited for this statement. This is 000.00 All the owed mother. son and simply incredible view of the fact that wife could his owned and po- the inferior lienholder subordinated her equitable they acquired from interest sition to FLB and not vice versa. pursuant the mother to the Contract majority opinion reversing the intended equitable Deed. This interest default purpose and obvious effect the sub- subject to strict a real agreement. ordination provisions estate contract under majority holding If the extended to ch. 21-50. logical conclusion, provide it would unprec- opinion I majority concur with the protection edented to all inferior lienhold-

trial court did not abuse its discretion ers, including judgment creditors, all me- ordering ranch sold as a tract. lienholders, chanic and materialman subsequent other lienholders. These stat- SABERS, part (concurring utes were never intended to do that. dissenting part). designed -16 are The trial court was correct in determin- prevent mortgage (or an inferior ing mortgaged premises that the be should lienholder) obtaining from a deficiency *6 in a sold tract or unit under SDCL judgment against the debtor without 21-47-13. However, mortgage holder gard to the fair value of the deficiency judgment entitled to a property. Miners & Merchants Bank under SDCL 21-47-16 unless the court Inc., Forestry Services, Braden finds the fair and reasonable value of the N.W.2d 123 These statutes premises is less than the due sum on the prevent should noncomplying likewise a mortgage. mortgage obtaining holder from deficien- evidence of value in this record cy judgment against an inferior lienholder appraisal by appraiser is an Carlson’s signed who has also debt. $484,000. By bidding less than that sum However, these statutes should not be 21-47-16, compliance without with SDCL protect extended to the inferior lienholder destroyed right holder against herself when no one is at- against deficiency judgment Melford and tempting get Kay Carlson. As between If her. she thinks the has holder, FLB, and the subordinated contract a fair and reasonable value above the bid seller, Agnes, mortgage for deed she must bid it or redeem it. was entitled to pleased bid whatever it Miners, supra. prior jeopardizing posi- without secured equally tion. free bid what- pleased. she

ever

Although the deficiency judgment was error,

clear Melford and Carlson have

no challenge they it here because appeal. Likewise,

did not no

Case Details

Case Name: Federal Land Bank of Omaha v. Carlson
Court Name: South Dakota Supreme Court
Date Published: Oct 20, 1987
Citation: 411 N.W.2d 415
Docket Number: 15450
Court Abbreviation: S.D.
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