McGowan v. Clayton

Citations: 679 So. 2d 1136; 1996 Ala. Civ. App. LEXIS 184; 1996 WL 121114Docket: 2941171

Court: Court of Civil Appeals of Alabama; March 14, 1996; Alabama; State Appellate Court

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James McGowan appeals a circuit court ruling denying his right to redeem property under Ala.Code 1975, § 6-5-248. The case originated from a divorce between Patricia Clayton Knight and Keith Knight in 1987, which stipulated Patricia could reside in the marital home until certain conditions were met, after which the property would be sold, and proceeds divided. Keith was responsible for mortgage payments but defaulted, leading to foreclosure by Patricia's father, James Clayton, who purchased the property on June 3, 1992. Patricia claimed she could stay in the home based on Clayton’s assurance, and later purchased it from him on September 29, 1992.

On April 4, 1993, Keith assigned his right to redeem the property to McGowan, who made a demand for a statement of debt for redemption purposes but received no response. McGowan subsequently filed a lawsuit against the Claytons to enforce this right and tendered the necessary funds to the court. The Claytons sought summary judgment, which the court initially denied, but later granted on April 21, 1995. The court ruled that Keith lacked authority to assign his redemption rights without prior court approval and that McGowan's claim was invalid. Additionally, it found that Keith failed to act to protect his redemption rights, leading to their lapse. The trial court upheld its ruling after McGowan sought to amend or vacate the decision. McGowan's appeal includes a motion to strike the Claytons' brief, which was denied, but the court did not consider arguments based on evidence outside the record.

Under Alabama law, to succeed in a motion for summary judgment, the movant must demonstrate the absence of any genuine issue of material fact and entitlement to judgment as a matter of law. The nonmovant must then present 'substantial evidence' to establish a genuine issue of material fact. 'Substantial evidence' is defined as evidence that allows fair-minded individuals to reasonably infer the fact in question. Doubts about material facts should favor the nonmoving party.

In a specific case, the trial court ruled that Keith could not assign his statutory right of redemption after foreclosure without court permission. However, the trial court retained jurisdiction over the legal title and property interests of Keith and Patricia, including the equity of redemption, prior to foreclosure. The distinction between equity of redemption—which exists before foreclosure and is an interest in property—and the statutory right of redemption—which arises post-foreclosure as a personal privilege—was emphasized. After the foreclosure sale, legal title transferred to the buyer, extinguishing the equity of redemption and allowing Keith's statutory right to arise.

It was concluded that the trial court erred in its ruling regarding Keith's ability to assign his right of redemption without permission. However, it was determined that Keith forfeited his statutory right to redeem by failing to comply with the legal requirements after a demand for possession was made. While the law permits a mortgagor to assign their statutory right of redemption, it requires them to first secure that right, which Keith did not do. Therefore, his attempt to assign the right to McGowan was ineffective. Compliance with specific statutory steps outlined in 6-5-251(a) was necessary for the validity of such an assignment.

Failure to comply with the statutory provisions regarding possession results in forfeiture of the right of redemption for the debtor or anyone in possession. In this case, James Clayton foreclosed on a property and served a written demand for possession to Keith and Patricia, who did not relinquish possession as mandated. Patricia testified that Clayton assured her he would manage the situation. Consequently, Keith's failure to surrender possession led to the forfeiture of his statutory right to redeem the property, rendering his assignment to McGowan ineffective.

To maintain his right of redemption post-foreclosure, Keith was obligated to remove Patricia, his cotenant, from the property. The precedent established in Farley v. Nagle indicates that a debtor must take steps to oust a cotenant to preserve redemption rights, regardless of whether they are in actual possession. Keith's divorce judgment, which allowed Patricia to reside in the home temporarily, did not constitute an expulsion that would make her possession hostile or adverse to him. Moreover, Clayton's permission for Patricia to remain in the home did not negate Keith's obligation to demand her departure.

While McGowan contends that the statutory provisions only apply to those in actual possession, the cited cases do not support this claim. Ultimately, as Keith did not make a demand for Patricia to leave, he legally forfeited his right to redeem the property.

In Cox, the debtor executed two mortgages on his property and defaulted on both, leading to foreclosures. The first mortgage was foreclosed, and the property was purchased by the debtor's mother. Upon defaulting on the second mortgage, the second mortgagee foreclosed and also acquired the property. The mother received a demand for possession from the second mortgagee and requested the tenant on the land to vacate. The supreme court determined that the tenant's delay in surrendering possession did not forfeit the mother's statutory right of redemption, as she had promptly made the request and was not responsible for the tenant's tardiness. In the current case, Keith did not demand possession from Patricia. Previous cases (Gooden and Rudder) involved debtors not in actual possession and lacking a written demand to vacate, leading to the court's conclusion that their redemption rights remained intact. However, it is acknowledged that Keith received a written demand for possession from Clayton. The evidence does not present a genuine issue of material fact, resulting in the affirmation of the Claytons' summary judgment.