Family Federal Savings & Loan Ass'n v. Paradise Ventures, Inc.

589 P.2d 1167, 38 Or. App. 199, 1979 Ore. App. LEXIS 2357

• Court: Court of Appeals of Oregon
• Decided: January 29, 1979
• Docket: No. 36744, CA 9618
• Status: Published

Opinions

BUTTLER, J.

Defendant Healy (receiver) appeals from that portion of a foreclosure decree entered in the circuit court of Lincoln County which decreed that plaintiff has a first and prior lien on the real property which was the subject of the foreclosure suit, and declaring that defendant Healy’s "receiver’s lien” is ninth in priority.

The material facts are not in dispute, and need not be elaborated in detail. Plaintiff was the holder of a first mortgage lien on certain real property in Lincoln Comity owned by defendant Paradise Ventures, Inc. Subsequent to the recording of plaintiff’s mortgage, defendant Healy, as Corporation Commissioner of the State of Oregon, was appointed receiver of the assets of Paradise Ventures, Inc. by the Marion County circuit court. Plaintiff was not a party to the receivership proceedings, and was not served with notice with respect to any aspect of the receivership proceedings. On or about October 25, 1976, defendant Healy, as such receiver, executed a document characterized as "receiver’s lien”¹ under the caption of the court and cause in the receivership proceedings, and thereafter "filed” the instrument in Lincoln County.

Subsequently, plaintiff appeared in the Marion County receivership proceedings for the purpose of obtaining authority to commence foreclosure of its mortgage, which authority was granted. These proceedings followed. The receiver filed an answer to the foreclosure complaint, and while the pleading is not characterized as a countersuit for foreclosure, it is alleged "affirmatively” that the receiver has a valid lien against the real property and that it is superior to plaintiffs mortgage lien. It ends with a prayer for a decree that the "liens described in plaintiff’s Complaint be foreclosed and the real property covered thereby” be sold by the sheriff and the proceeds be applied first to the payment of costs and disbursements of suit and of sale, and any balance remaining be paid into the registry of this court "to be distributed to each claimant who shall make appearance herein, according to this court’s determination, priorities to be accorded to each claimant herein pursuant to the provisions of ORS 88.050.”

At trial, the receiver appeared by counsel. No evidence was adduced to support the validity of his lien, or to establish what expenses may have been made in preserving the subject property, as opposed to other property of Paradise Ventures, Inc. Nor did he make any objection by motion, demurrer, or plea in abatement to the court’s proceeding with a decree foreclosing the mortgage. The receiver’s only contention on appeal is that the Lincoln County court did not have "jurisdiction” to determine the priorities of the various liens held by the parties to the foreclosure proceeding.

There is no contention that the Lincoln County court did not have jurisdiction over the subject of the foreclosure suit or over the parties, including the receiver. Indeed, the receiver appeared generally, and appears to have sought affirmative relief in the proceeding by asking that his lien be determined a first and prior lien. He contends, however, that the only court which may determine the priority of the liens is the receivership court in Marion County.

Whatever may be the merits with respect to the validity of the receiver’s lien or the receiver’s contention that the priorities of the various liens may only be determined in the Marion County court, the receiver submitted himself to the jurisdiction of the Lincoln County court and affirmatively prayed that "this court” (emphasis added) determine priorities "pursuant to the provisions of ORS 88.050.” He expressly concedes that the Lincoln County court had authority to enter a foreclosure decree. The cited section of the code provides, in part, that: "The decree shall specify the order, according to their priority, in which the debts secured by such liens shall be satisfied out of the proceeds of the sale of the property.” (Emphasis added.) A decree which failed to determine the priorities of the various lien claimants would violate the clear mandate of the statute, would frustrate a principal purpose of a foreclosure suit and the process of bidding by lien claimants at the sheriff’s sale.

Additionally, plaintiff was not a party to the receivership proceedings, its only contact therewith having been to obtain the court’s approval to commencing the foreclosure proceeding. It therefore is not bound by the alleged "priority” of the ex parte "receiver’s lien” filed in those proceedings and then in Lincoln County. Marsh v. Arthur C. Marsh Co., 153 Or 134, 55 P2d 1111, 104 ALR 981 (1936).

Affirmed. Costs to respondent.

1 This document, in its entirety, provided:

"Frank J. Healy, the duly constituted, appointed and acting receiver for Paradise Ventures, Inc., a defendant in the above captioned matter, has expended funds for the preservation of assets, cost of administration, and legal and accounting fees, in order to preserve the assets of Paradise Ventures, Inc., significantly its property located in Lincoln County and known as Starfish Cove Motel. The receiver’s expenditures to date October 21, 1976 amount to $9,442.61 and constitute a first priority lien on the Starfish Cove Motel.”