Queen City Savings & Loan Ass'n v. Mannhalt

760 P.2d 350, 111 Wash. 2d 503

• Court: Washington Supreme Court
• Decided: September 1, 1988
• Docket: 54486-7
• Status: Published

Opinions

Andersen, J.—

Facts of Case

This is a quiet title action involving the nonjudicial foreclosure of a deed of trust covering real property located in two counties, one parcel of which was designated in the deed of trust as "additional security only".

The material facts are undisputed.

In July 1981, Theodore and Judy Brown and others conveyed an undivided 15 percent interest in a parcel of real property located in Whatcom County to Guenter Mannhalt, who will hereinafter be referred to as "the grantee". The deed was not recorded for some time. In August 1981, Queen City Savings and Loan Association loaned $215,000 to the Browns. As security for the loan, the Browns executed a deed of trust pursuant to the Washington Deeds of Trust Act (RCW 61.24) whereby they conveyed title to the Whatcom County property and also to a parcel of real property located in Snohomish County. The deed of trust named Queen City as beneficiary. Hereafter, Queen City will be referred to as "the beneficiary". At two places in the deed of trust, it was declared that the parcel of Snohomish County property was conveyed "as additional security only".

When the Browns defaulted on repayment of the loan in mid-1982, the trustee commenced nonjudicial foreclosure proceedings. A trustee's sale was set for January 14, 1983 in Snohomish County, then continued by the trustee until February 18, 1983. The trustee sent notice of the foreclosure sale to the grantee Mannhalt because he had a recorded interest in the Snohomish County property. His interest in the Whatcom County property remained unrecorded, however, until February 17, 1983, the day before the foreclosure sale.

At the foreclosure sale held in Snohomish County, both the Whatcom and Snohomish County properties were sold together. The beneficiary, Queen City, was the sole bidder and purchased both properties for $301,487.51, the amount of the outstanding loan plus foreclosure costs. The trustee's deed recites that the conveyance was "made pursuant to the powers, including the power of sale, conferred upon said Trustee".

Later that same year, the beneficiary brought this action against the grantee to quiet title to the Whatcom County property. Both parties moved for summary judgment; the trial court granted the beneficiary's motion and denied the grantee's motion. The grantee appealed to the Court of Appeals, which reversed.¹ The Court of Appeals held that the sale of the Whatcom County property in Snohomish County was improper under a provision of the Deeds of Trust Act, RCW 61.24.040(5), which it interpreted as forbidding the sale of property outside the county in which it is located except in situations where contiguous parcels straddle a county line.² The parcels of property covered by the deed of trust here are not contiguous. We accepted the beneficiary's petition for review. One principal issue appears.³

Issue

Under the place of sale clause of the Deeds of Trust Act (RCW 61.24.040(5)), did the trustee err when it sold both the Whatcom and Snohomish County properties, which secured the deed of trust, at a Snohomish County nonjudicial foreclosure sale?

Decision

Conclusion. The place of sale section of the Deeds of Trust Act (RCW 61.24.040(5)) allows the nonjudicial foreclosure sale of parcels of property located in different counties, but covered by the same deed of trust, to be held in any county where property securing the deed of trust is located. Nothing in that section indicates that it is intended to apply only to property that straddles the county lines. Thus, the trustee properly sold both the Whatcom and Snohomish County properties, which secured a single deed of trust, at the nonjudicial foreclosure sale in Snohomish County.

The statute, RCW 61.24.040(5), provides in pertinent part:

The place of sale shall be at any designated public place within the county where the property is located and if the property is in more than one county, the sale may be in any of the counties where the property is located.

(Italics ours.)

To our reading, the clear intent of this statute is that where a single obligation is secured by separate parcels of land in two or more counties, a nonjudicial foreclosure sale may be held in any of the counties wherein one of the parcels is located. The Court of Appeals majority opinion, however, held that the statute "does not allow for the sale of property outside the county in which it is located except in those situations where contiguous parcels straddle a county line."⁴ Thus, according to the Court of Appeals majority opinion, the sale of the Whatcom County property at a Snohomish County sale was not proper. In reaching this result, the majority nevertheless conceded that the statute did encompass the sale in one county of land that straddles a county line.⁵ It found less clear the issue of whether the statute allowed a single sale in one county of noncontiguous parcels of property in separate counties.⁶ Relying on the objectives of the Deeds of Trust Act, and a rule of strict construction favoring borrowers, it determined that the Whatcom County property should have been sold in Whatcom, not Snohomish County.⁷

It is the beneficiary's contention, however, that the language of the statute (RCW 61.24.040(5)) allows the nonjudicial foreclosure sale of noncontiguous property in different counties to be held in a single county and that the Court of Appeals majority erred in ruling to the contrary. We agree and reverse.

In discerning the intent of this statute, as with any statute, we look first to the language used by the Legislature.⁸ The phrase "the property" in the statute (RCW 61.24-.040(5)) plainly and unambiguously refers in its context to the property securing the deed of trust. The statute goes on to declare that, "if the property is in more than one county, the sale may be in any of the counties where the property is located."⁹ To us, this is clear on its face and permitted the sale in question.

In general, a court may construe singular words in the plural and vice versa, unless such a construction would be repugnant to the context of the statute or inconsistent with the manifest intention of the Legislature.¹⁰ Here, with reference to RCW 61.24.040(5), we hold that the "statute’s reference to 'property' includes the plural form 'properties.'"¹¹ Such construction is not repugnant in the context of the statute or inconsistent with the intention of the Legislature as we glean it from the entire Deeds of Trust Act.

We enunciated the act's objectives in Cox v. Helenius, 103 Wn.2d 383, 387, 693 P.2d 683 (1985):¹²

First, the nonjudicial foreclosure process should remain efficient and inexpensive. Second, the process should provide an adequate opportunity for interested parties to prevent wrongful foreclosure. Third, the process should promote the stability of land titles.

(Citation omitted.) The parties in this case as well as the majority of the Court of Appeals panel agree that allowing one sale of property located in two or more counties promotes efficiency in the nonjudicial foreclosure process. The parties (and the majority of the Court of Appeals panel) disagree, however, on the effect of allowing one sale on prevention of wrongful foreclosure and promotion of stable land titles. We find the comments of the Honorable Ward Williams in his dissenting opinion to be particularly persuasive:

Allowing one sale in a single county, as the majority noted, keeps the nonjudicial foreclosure process efficient and inexpensive. Moreover, it provides an adequate opportunity for interested parties to prevent wrongful foreclosure; notice requirements remain unchanged, and a unified proceeding reduces the inconvenience to challengers. In addition, conducting one sale promotes the stability of land titles by resolving all ownership questions at one time, rather than increasing uncertainty by fragmenting the process.

Queen City Sav. & Loan Ass'n v. Mannhalt, 49 Wn. App. 290, 298, 742 P.2d 754 (1987) (Williams, J., dissenting).

Another consideration is that not allowing one sale of property in two counties could create unnecessary problems and complications for junior lienors. The junior lienors of property in county A could well want the property in county B sold first, while junior lienors of the property in county B could want the property in county A sold first.¹³ Resultant conflicts among subordinate lienors could negatively affect the stability of land titles.

To our view, a consideration of the language of the place of sale statute (RCW 61.24.040(5)), together with the objectives of the Deeds of Trust Act as enunciated in Cox, on balance favors allowing the trustee to hold a single foreclosure sale for separate parcels of property covered by the same trust deed but located in more than one county. For nearly a century, this court has allowed such single sedes under the very similar language of mortgage judicial foreclosure statutes,¹⁴ an approach which also finds favor in other jurisdictions.¹⁵ We conclude that the single sale in Snohomish County of the Whatcom and Snohomish County properties by the trustee herein was proper.

The Court of Appeals also held that the phrase "as additional security only" in the deed of trust regarding the Snohomish County property required that the Whatcom County property be sold before any sale of the Snohomish County property, thus stripping the trustee of authority to sell both properties as a unit.¹⁶ As to this, we also conclude, as did the dissenting judge of the Court of Appeals, that while the phrase "as additional security only" contained in the deed of trust does create a priority among the properties securing the obligation, "because notice was adequate and the place of sale proper, requiring a particular sequence of offering when [the beneficiary] was the only bidder present would have been a useless act.''¹⁷ The beneficiary's interest in the Whatcom County property was "valid and subsisting" as a result of the properly conducted deed of trust sale.¹⁸ Therefore, title here should be quieted in Queen City as beneficiary of the deed of trust.

The Court of Appeals is reversed and the trial court's summary judgment in favor of the beneficiary, Queen City Savings and Loan Association, is affirmed.

The grantee Mannhalt's request for attorneys' fees is denied.

Pearson, C.J., and Utter, Brachtenbach, Dolliver, Callow, and Durham, JJ., concur.

1 Queen City Sav. & Loan Ass'n v. Mannhalt, 49 Wn. App. 290, 298, 742 P.2d 754 (1987).

2 Queen City, at 297.

3 The beneficiary's petition raises an additional issue: "Did the Court of Appeals commit error by ruling that a holder of an unrecorded interest in property was entitled to notice of a trustee's sale?" As the Court of Appeals made no such ruling, we do not consider the issue.

⁴

5 Queen City, at 295.

6 Queen City, at 295-96.

7 Queen City, at 296-97.

8 See State v. Neslund, 103 Wn.2d 79, 82, 690 P.2d 1153 (1984).

9 RCW 61.24.040(5) (part).

10 73 Am. Jur. 2d Statutes § 220 (1974 & Supp. 1987); 2A C. Sands, Statutory Construction § 47.34 (4th ed. 1973 & Supp. 1987).

11 Grace Episcopal Church v. Madison, 129 Wis. 2d 331, 337, 385 N.W.2d 200 (Ct. App. 1986).

12 See Comment, Court Actions Contesting the Nonjudicial Foreclosure of Deeds of Trust in Washington, 59 Wash. L. Rev. 323, 330 (1984).

13 See Commercial Nat'l Bank v. Johnson, 16 Wash. 536, 544, 48 P. 267 (1897).

14 See Empire State Sur. Co. v. Ballou, 66 Wash. 76, 118 P. 923 (1911); Commercial Nat'l Bank v. Johnson, supra; RCW 61.12.040.

15 See, e.g., Bateman v. Carter-Jones Drilling Co., 290 S.W.2d 366, 370-71 (Tex. Civ. App. 1956); Federal Land Bank of Baltimore, Inc. v. Esham, 43 Md. App. 446, 467-69, 406 A.2d 928 (1979).

16 Queen City Sav. & Loan Ass'n v. Mannhalt, 49 Wn. App. 290, 295, 742 P.2d 754 (1987).

17 Queen City, at 299 (Williams, J., dissenting); see also Koegel v. Prudential Mut. Sav. Bank, 51 Wn. App. 108, 112-13, 752 P.2d 385 (1988) (technical, nonprejudicial errors by trustee conducting a nonjudicial foreclosure sale under RCW 61.24 do not void a sale); Steward v. Good, 51 Wn. App. 509, 514-15, 754 P.2d 150 (1988) (same).

18 See Queen City, at 299 (Williams, J., dissenting).