Birdie Cobb Patterson a/k/a Sandra C. Patterson v. F. J. Serafini, individually and in his capacity as Public Trustee for the City and County of Denver, Key Realty Company, a Colorado corporation, Advance Mortgage Corporation, a Coloradо corporation, and Russell D. Berget and Sharon K. Berget
No. 26467
Supreme Court of Colorado
December 23, 1974
Opinion modified and as modified rehearing denied March 10, 1975
532 P.2d 965
The judgment is affirmed.
MR. JUSTICE DAY, MR. JUSTICE GROVES and MR. JUSTICE LEE concur.
Max P. Zall, City Attorney, Herman Atencio, Assistant, for defendant-appellee F. J. Serafini.
Grant, Shafroth, Toll and McHendrie, Charles H. Haines, Jr., Ronald C. Butz, for defеndants-appellees Advance Mortgage Corporation and Russell D. Berget and Sharon K. Berget.
En Banc.
MR. JUSTICE GROVES delivered the opinion of the Court.
The Boston Federal Savings & Loan Association (Boston Federal) held a deed of trust embracing a residence, which had been executed to the public trustee as security for a loan. The plaintiff purchased the property, agreeing to pay the deed of trust. Later the Boston Federal declared the note, with an unpaid balance of $11,675.86, to be in default and filed written demand for sаle with the public trustee. In the meantime the defendant Key Realty Company (Key Realty) had become an assignee of a judgment against the plaintiff in an amount in excess of $10,000. Transcript of this judgment was placed of record, but there hаs not been a levy thereunder. Following the recording of the transcript of judgment, the plaintiff caused a homestead exemption to be entered of record with respect to the residence.
The public trustee advertised the property for sale under provision of the deed of trust and as provided by statute. At the sale the property was sold for $15,050, being an excess of $3,374.14 above the trust deed indebtedness. The plaintiff then brought this action, asking that the sale be declared void and that the public trustee be temporarily enjoined from issuing a deed. She also requested that the excess of $3,374.14 be paid to her. The court denied the temporary injunction. The plaintiff has not filed a notice of lis pendens.
Thе plaintiff did not redeem within the statutory six-month redemption period and, immediately after expiration of that period, Key Realty, as assignee of the judgment, redeemed the property for $15,601.50. The public trustee then issued a deed to Kеy Realty.
Key Realty sold the property to the appellees Berget for $24,000 and the appellee Advance Mortgage Corporation made a loan to the Bеrgets secured by a deed of trust on the property. The Bergets and Advance Mortgage Corporation were not parties in the trial court and, after the case was here on appeal and on their motion, we ordered that they be made appellees.
The plaintiff‘s appeal was to the Court of Appeals, from which we accepted jurisdiction because of the constitutional questions raised.
The plaintiff contends that the public trustеe‘s sale was void because:
- The statutory process of foreclosure violates due process as it does not provide the land owner with any notice or opportunity to be heard as to the propriety of the fоreclosure or the foreclosure procedure;
- The notice of foreclosure sale as provided in
C.R.S. 1963, 118-3-13 does not comply with due process as it does not inform the land owner of the right to a hearing to contest the foreclosure; - The opportunity of a land owner whose property is being foreclosed by the public trustee to file an independent suit to enjoin the sale does not constitute a constitutionally valid “opportunity for a hearing.”
The trial court ruled against the plaintiff as to the constitutional questions. It further ordered that, under
I.
Our homestead statute reads:
“Every householder in the state of Colorado, being the head of a family, shall be entitled to a homestead not exceeding in value the
sum of five thousand dollars, exempt from execution and attachment, arising from any debt, contract or civil obligation, entered into or incurred after the effective date of this section.” C.R.S. 1963, 77-3-1 .
Except as to the amount of dollars, this statute has remained unchanged since it was approvеd on January 10, 1868. R.S. p. 385, § 57.
The amendments of
“(6) If, at a foreclоsure sale by a public trustee, the property is struck and sold for an amount in excess of the expenses of sale and moneys due the beneficiary or legal holder of the indebtedness, the excess moneys shall be paid into the hаnds of the county treasurer to be held in escrow by him until the end of all redemption periods as provided in sections
118-9-2 and118-9-3 .“(7) Upon the expiration of all redemption periods as provided in sections
118-9-2 and118-9-3 , if notice of intent to redeem has been duly filed, and if no redemption is made as provided in said sections, the excess moneys shall be paid to the junior lienors in the order of their priority and then to the owner of record as of the day of the foreclosure sale. The public trustee may request proof in the form of an affidavit establishing the amount due on any junior lienor.* * * *
“(4) When a lienor redeems property from a foreclosure sale, escrow funds, not to exceed the amount due on such lien, shall be paid to the last person or institution redeeming said property. Moneys in excess of such lien shall be paid to the owner of record as of the day of the foreclosure sale.”
In 1894 this Court held, in Weare v. Johnson, 20 Colo. 363, 38 P. 374, that real estate, which had not beеn subjected specifically to a judgment lien by levy before a homestead was placed thereon, was exempt from execution. To the same effect is the leading case in this jurisdiction on this subject. Sterling National Bank v. Francis, 78 Colo. 204, 240 P. 945 (1925). Other Colorado authoritiеs are cited in the latter opinion.
II.
In addition to the prayer for payment of the excess, the only relief requested by the plaintiff in her complaint was to have the public trustee‘s sale declared void because of unconstitutional reasons and to temporarily and preliminarily enjoin the public trustee from issuing a deed. Absent a filing of notice of lis pendens of this action prior to the issuance of the deed, the issues relating to the validity of the trustee‘s sale became moot after the court denied the temporary injunction. We, therefore, decline to rule upon the constitutional questions.
There are two further reasons for our failure to approach these questions. First, the plaintiff has asked us to rule that she is entitled to the excess money, and we have so ruled. It is inconsistent for her to claim that the sale was void, since her right to the exсess is predicated upon a valid sale. Second, we should not be considering the constitutional questions with Boston Federal not before us as a party. It is an indispensable party in any proceedings to declare the sale undеr its foreclosure to be void.
The judgment is reversed and the cause remanded to the district court with directions to enter judgment in favor of the plaintiff and against Key Realty for $2,374.14, plus interest and costs as may be proper, and to dismiss the cоmplaint insofar as it relates to the constitutional questions.
MR. JUSTICE LEE and MR. JUSTICE HODGES dissent.
MR. JUSTICE ERICKSON does not participate.
MR. JUSTICE LEE dissenting:
On petition for rehearing, I respectfully dissent to that portion of the majority opinion which awards the excess escrow funds to the plaintiff.
In my view, the plaintiff in failing to redeem frоm the foreclo-
”Redemption annuls sale, when - recording of certificate. — If redemption be made by the owner of the premises, it shall annul the sale and leave the premises subject to all liens, which would have existed if no sаle had been made, except the lien of the foreclosed mortgage, which shall be discharged by the sale. * * * If redemption be made by a lienor, his certificate of redemption, duly recorded, operates as an assignmеnt to him of the estate and interest acquired by the purchaser at the sale, subject, however, to the rights of persons who may be entitled subsequently to redeem.”
Plaintiff‘s title to the premises would then have been free of the lien of the foreclosed deed of trust, but subject to the other liens which would have existed if no foreclosure sale had been made, i.e., the lien of Key Realty. Of course, in this circumstance, had she redeemed, her homestead interest would have priority over the lien of Key Realty under the ruling in Sterling Bank v. Francis, 78 Colo. 204, 240 P. 945.
Not having chosen to redeem, plaintiff‘s title and homestead interest, which was inferior to the lien of the Boston Federal deed of trust, was foreclosed by the sale. When Key Realty, admittedly a lienor junior to the plaintiff‘s homestead interest, redeemed from the sale, by virtue of the provisions of
In my view, Sterling Bank v. Francis, supra, is inapposite under the circumstances of this case. While it was initially true under Sterling Bank v. Francis, supra, that plaintiff‘s homestead rights were suрerior to Key Realty‘s judgment lien before fore-
“When a lienor redeems property from a foreclosure sale, escrow funds, not to exceed the amount due on such lien, shall be paid to the last person or institution redeeming said property. Moneys in excess of such lien shаll be paid to the owner of record as of the day of the foreclosure sale.” (Emphasis added.)
This section is pertinent to the disposition of the excess under the present facts. It requires that the excess funds in the hands of the county treasurer be paid to Key Realty, the last person or institution redeeming, but not to exceed the amount due on the lien of Key Realty, which was in excess of ten thousand dollars. The excess in the hands of the treasurer amounted to оnly $2,374.14, after the payment of $1,000 to plaintiff upon her vacating the premises. By this statute, the excess should have been paid to Key Realty inasmuch as it was less than the amount owing Key Realty on its lien.
I would therefore affirm the trial court‘s judgment in awarding the excess funds to Key Realty.
I am authorized to say that MR. JUSTICE HODGES joins in this dissent.