Aetna Life Insurance Co. v. Jordan ( 1992 )

No. 92-008
IN THE SUPREME COURT OF THE STATE OF MONTANA
AETNA LIFE INSURANCE COMPANY,
Plaintiff and Respondent,
LAWRENCE EDWARD JORDAN; LAWRENCE EMMETT JORDAN, a/k/a
Larry Jordan, a/k/a Larry E. Jordan; HELEN K. JORDAN,
a/k/a Helen Jordan,
Defendants and Appellants,
and
FIRST NATIONAL BANK OF HYSHAM; The partnership of MARV
HUISMAN, LES BROECK and DOUG STRANGELAND; CHUCK
KANANEN; and CENTRAL ELECTRIC SERVICE,
Defendants.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Fergus,
The Honorable Peter L. Rapkoch, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Craig D. Martinson, Attorney at Law, Billings,
Montana
For Respondent:
John G. Crist, Dorsey & Whitney, Billings, Montana
For Defendants:
James A. Patten, Patten Law Firm, Billings, Montana
Michael B. Anderson, Holland & Hart, Billings,
Montana
Timothy J. OIHare, Attorney at Law, Lewistown,
Montana
James L. Stogsdill, Attorney at Law, Lewistown,
Submitted on Briefs: June 4, 1992
Justice R. C. McDonough delivered the Opinion of the Court.
Lawrence Edward Jordan, Lawrence Emmett Jordan and Helen K.
Jordan appeal from an order of the Tenth Judicial District, Fergus
County, in favor of Aetna Life Insurance Company. We affirm and
remand.
The issues presented on appeal are:
I. Whether the District Court erred in granting summary
judgment in favor of Aetna, without a hearing;
2. Whether the District Court erred in granting Lawrence
Emmett Jordan and Helen K. Jordan occupancy of the house during the
redemption period and in granting Aetna Life Insurance Company the
income from the rented mortgaged premises during the redemption
period: and
3. Whether the District Court erred in granting Aetna Life
Insurance company the CRP payments from the mortgaged premises
during the redemption period when Jordans, subsequent to the
mortgage, assigned their interest to a third party.
On December 15, 1983, Lawrence Emmett Jordan and Helen K.
Jordan, husband and wife , and Lawrence Edward Jordan (Jordans)
executed a promissory note in the principal sum of $1,400,000,
payable to Aetna Life Insurance Company (Aetna). The note was
secured by a mortgage covering certain real property in Fergus
County, Montana. Jordans executed a Mortgage Deed Security
Agreement, and finance statement. The documents were recorded and
filed with the Fergus County Clerk and Recorder on December 16,
1983.
The Jordans defaulted on the payment required under the Note
and Mortgage. On July 3, 1985, Aetna brought an action to
foreclose the Note and Mortgage against the Jordans. On June 30,
1987, the Jordans filed bankruptcy under Chapter 11, which stayed
the foreclosure proceedings. A plan of reorganization was approved
on April 3, 1989. The Jordans defaulted on the plan. Aetna
amended their foreclosure complaint on November 3 , 1990, Aetna
filed a motion for summary judgment on May 24, 1991. On August 7,
1991, Aetna filed its motion requesting the order granting summary
judgment. The District Court ruled in favor of Aetna. This appeal
followed.
I
Whether the District Court erred in granting summary judgment
in favor of Aetna, without a hearing.
The District Court granted Aetnavs motion for summary
judgment, entering judgment on August 13, 1991, two months after
Aetnals motions and briefs were filed. The District Court was
advised that the Jordans did not intend to file a response. Under
Rule 2 ( b ) of the Uniform District Court Rules, failure to provide
an answer brief within ten days is deemed an admission that the
motion is well taken. The District Court relied on Rule 2 (b). The
Jordan's contend that under Rule 56 (c), M.R. Civ.P., a hearing must
be held with a 10 day notice to the opposing party.
Rule 5 6 ( c ) , M.R.Civ.P., provides in part:
The motion shall be served at least 10 days before the
time fixed for the hearing. The adverse party prior to
the day of hearing may serve opposing affidavits ..
.
Jordans rely on Cole v. Flathead County (1989), 236 Mont. 412, 771
P.2d 97, for the proposition that an oral argument is required for
summary judgment unless it is specifically waived by all parties.
In Cole we held that the procedure to be followed on motions
for summary judgment must conform to the provisions of Rule 5 6 ,
M.R.Civ.P. Cole at 417, 771 P.2d at 100. In our discussion of the
interplay between Rule 5 6 , M.R.Civ.P., and Rule 2, Montana Uniform
District Court Rules, we said:
[Tlhe essential question for the District Court in
deciding a motion for summary judgment either for the
plaintiff or for the defendant is whether there exists a
genuine issue of material fact. That inquiry does not
admit of decision merely on a technical point, such as
whether briefs have been filed on time.
In the case before us, the District Court reviewed Aetnars
motion and memorandum together with the supporting affidavits. The
District Court found that the motion was properly supported by
appropriate factual evidence, and that Aetna was entitled to
summary judgment foreclosing the note and mortgage as a matter of
law.
However, Jordans argue that a hearing is required under Rule
5 6 , M.R.Civ.P. We stated in Cole that "under Rule 56 (c), a hearing
is contemplated from which the district court will consider not so
much legal arguments, but rather whether there exists genuine
issues of material fact." We went on to say that "a district court
may not, by rule or otherwise, preclude a party from requesting
oral argument, nor deny such a request when made by a party
opposing the motion unless the motion for summary judgment is
denied." Cole at 418, 771 P.2d at 101.
After the granting of the order of summary judgment the
Jordans retained a different attorney. The new attorney filed
several motions with the District Court and requested a hearing.
A hearing was held before the District Court on November 1, 1991 on
Jordans' motion for a new trial or in the alternative to alter or
amend judgment and motion to stay proceedings.
During the hearing, the court stated that the Jordans did not
raise any factual matters relevant to the issuance of the summary
judgment, and Jordans admitted in their brief in support of such
motions there was no fact questions of whether or not Jordans were
in default on the terms of their note and mortgage. Questions of
fact raised by Jordans in the hearing only related to post judgment
proceedings or amendments to the judgment, such as the use of the
property, rights to rents and profits fromthe property, government
payments, and valuation of the property for deficiency purposes.
Thus, the court believed that a hearing on raising genuine issues
of material fact relative to the motion for summary judgment, was
waived, and in its order of November 15, 1991 denying such motions,
reinstated the August 13, 1991 order granting summary judgment.
We conclude that the District Court was correct in reinstating
the order of summary judgment to Aetna. W e affirm the District
Court on this issue.
Whether the District Court erred in granting Lawrence Emmett
Jordan and Helen K. Jordan occupancy of the house during the
redemption period, and in granting Aetna Life Insurance Company the
income from the rented mortgaged premises during the redemption
period.
The District Court concluded that the purchaser at the auction
would be entitled to immediate possession of the balance of the
mortgaged property from and after the date of sale, but that the
Jordans would be entitled to possession of the residence. During
the November 1, 1991 hearing, Lawrence Edward Jordan testified that
his parents, Lawrence Emmett Jordan and Helen K. Jordan, currently
resided on the foreclosed property. He testified they had lived on
the property for 45 years. He also testified that the ranch had
been one unit since the 1930's. Section 71-1-229, MCA, provides:
The purchaser of lands at mortgage foreclosure is
not entitled to the possession thereof as against the
execution debtor during the period of redemption allowed
by law while the execution debtor personally occupies the
land as a home for himself and his family It is
unlawful to insert in any mortgage of real estate any
provision intended to constitute a waiver by the owner of
real estate personally occupying land as a home for
himself and family of the provision of this section or
any provision intended to give the mortgagee possession
of the land or premises prior to foreclosure upon default
of tax, principal, or interest payments. The intention
hereof is to insure to such owner the possession of his
land prior to foreclosure and during the year of
redemption.
In Federal Land Bank v. Snider (1991), 247 Mont . 508, 517, 808
P.2d 475, 481, we held that the execution debtor who personally
occupied the premises as a home was not required to pay rent or
income to the purchaser during the redemption period. In Snider,
the execution debtors held possession of some 3000 acres of land.
The Bank argued that the Sniders were only entitled to possession
of the portion of the property occupied as a home and the rest of
the ranch should be separated out for purposes of possession. We
held in Snider that when determining possession of foreclosed
property during the redemption period, there is no basis for
dividing lands that the execution debtor personally occupies.
Snider held that execution debtors are entitled to
personally possess the entire premises and the execution debtor
need not pay rent or income to the purchaser during the redemption
period. Thus, the Jordans are entitled to possession and are not
required to pay rent or income to Aetna for the portion of the
property that is not under lease to a third party. See also
Interstate Credit Production Association v. DeSaye (1991), 250
Mont. 320, 820 P.2d 1285. We affirm the District Court's
determination that Jordans would be entitled to possession of the
residence.
On May 23, 1990, the Jordans leased a portion of their land to
Jess and Jenny Knerrs. This lease was not before the District
Court. Aetna filed a motion to supplement record before the
Supreme Court, attaching the Knerrs' lease. We note that under
Interstate Production Credit Association v. DeSaye (1991), 250
Mont. 320, 810 P.2d 1285, the Jordans are not entitled to income if
a third party is in possession of the land. We remand to the
District Court for a hearing on the Knerrs' lease to determine the
extent of Jordans' actual possession and determination of the
rights of the parties.
Whether the District Court erred in granting Aetna the CRP
payments covering the mortgaged premises during the redemption
period when Jordans, subsequent to the mortgage, assigned their
interest to a third party.
The District Court foreclosed all of Jordans' right, title and
interest in and to "various grazing rights, government crop
allotments, government subsidies or payments-in-kind compensation
pertaining to the property." Previously a portion of the Jordans'
property had been placed in CRP under contract with the federal
government. The federal government was originally to make payments
to the Jordans through ASCS.
The mortgage between Aetna and the Jordans grants Aetna the
first security interest in CRP payments because they are government
crop allotments, subsidies or payments-in-kind compensation. Under
the facts as presented here, we affirm the District Court's
foreclosure of Jordan's rights, title and interest in these
payments in favor of Aetna.
For the reasons set forth above, we affirm the judgment of the
District Court, and remand to the District Court for fact finding
and determination of the rights of the parties as to the Knerrsl
lease.
Justice
We Concur: