Bayview Loan Servicing v. Chandler & Newville

When deciding whether a party is entitled to pursue foreclosure in order to resolve another party’s interest, previous court’s have held, “where a first mortgagee acquires the mortgagor’s interest, the first mortgage does not merge with it so as to elevate the second mortgage to a position of a first and only mortgage. See W.J. Seufert Land Co v. Greenfield, 273 Or 408, 412, 541 P2d 814 (1975).

Plaintiff appealed from a judgment declaring Defendant the owner of the disputed property and that Plaintiff had no interest in the property. Plaintiff assigned error to the trial court’s declaratory rulings and dismissal of Plaintiff’s complaint. On appeal, Plaintiff argued the trial court erred in granting Defendant’s summary judgment declaring Defendant to be the owner of the property because Defendant was on notice of Plaintiff’s senior lien interests that were recorded in the trust deed. Additionally, Plaintiff argued the trial court erred in dismissing its claim because the proper procedure when a party is omitted in a proceeding is to require that party to elect to redeem or be foreclosed. In response, Defendant argued the trial court did not err because Plaintiff succeeded in closing on a different lot due to its accidental listing of the lot as “16” instead of “6” and that strict foreclosure is not the “correct remedy by which to foreclose the interest of a previously omitted party who, in the interim, has become an owner in fee simple.” When deciding whether a party is entitled to pursue foreclosure to resolve another party’s interest, previous court’s have held, “where a first mortgagee acquires the mortgagor’s interest, the first mortgage does not merge with it so as to elevate the second mortgage to a position of a first and only mortgage.” See W.J. Seufert Land Co v. Greenfield, 273 Or 408, 412, 541 P2d 814 (1975). The Oregon Court of Appeals concluded the trial court erred on both assignments of error because Defendant was on notice of the senior lien and Defendant did not provide any relevant case law to determine that strict foreclosure was not the proper remedy.
Reversed and Remanded.