This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Irwin Union Bank and Trust
Sheriff of Washington County, et al.,
Washington County District Court
File No. C6-04-1730
Eric D. Cook, Wilford & Geske, P.A., 7650 Currell Boulevard, Suite 300, Woodbury, MN 55125 (for appellant)
David S. Holman, The Law Office
of David S. Holman, 201 West Travelers Trail,
Considered and decided by Randall, Presiding Judge; Minge, Judge; and Wright, Judge.
Appellant, a senior lienor, brought an action against respondent, a junior lienor, after respondent’s redemption extinguished appellant’s interest in certain property. The district court entered summary judgment for respondent, holding that appellant did not comply with statutory requirements for redemption. Appellant argues that, because it substantially complied with statutory requirements for redemption and respondent failed to do so, the district court erred. In the alternative, appellant asserts that it is entitled to equitable relief. We affirm.
Jodie and Richard Combs, a married couple,
were the owners of a single parcel of real property in
As a result of the Combs’s nonpayment of state income tax, the Minnesota Department of Revenue (department) recorded two notices of a tax lien against the property dated October 15, 2003. Although both notices set forth the same lien number and the same amount of unpaid taxes, one notice identifies Jodie Combs as the debtor and the other notice identifies Richard Combs as the debtor. In addition, each notice is recorded with a different document number. The department recorded two notices of its intent to redeem on January 8, 2004. Although both notices recite the same lien number, each relates back to one of the separately numbered notices of October 15.
With $56,485 owed by the Combs on the second mortgage, Irwin Bank recorded a notice of its intent to redeem the property on January 9, 2004. Irwin Bank subsequently paid redemption funds to Standard Federal Bank on January 16, 2004. But Irwin Bank did not record a certificate of redemption or an affidavit of the amount due against its mortgage until February 11, 2004.
The department assigned its redemption rights to respondent Elliot Cobb, a judgment creditor of Richard Combs, on January 30, 2004. That same day, Cobb paid redemption funds to the Washington County Sheriff and recorded an affidavit of amount due. The certificate of redemption for this transaction was recorded on February 4, 2004.
On March 10, 2004, Irwin Bank brought an action against Cobb and the sheriff, seeking a declaratory judgment and other relief. Cobb moved for summary judgment, asserting that Irwin Bank had forfeited its right of redemption because Cobb had recorded his certificate of redemption before Irwin Bank recorded its certificate of redemption or its affidavit of amount due.
In opposition to the motion, Irwin Bank argued that its redemption was effective because it had paid redemption funds to Standard Federal Bank before Cobb paid redemption funds to the sheriff. Irwin Bank also asserted that Cobb had not substantially complied with the statutory requirements for redemption.
In the alternative, Irwin Bank claimed that, because Cobb was not a bona fide purchaser, he could not proceed with redemption. This contention was based on a series of contacts between the sheriff and Irwin Bank in late January 2004. According to Irwin Bank, the sheriff asked Irwin Bank to disclose its redemption amount, purportedly, to pass along this information to Cobb. Responding to the sheriff, Irwin Bank faxed an affidavit detailing its transaction with Standard Federal Bank and an unsigned copy of the certificate of redemption that had been sent to Standard Federal Bank. Irwin Bank contends that the sheriff then advised Cobb about Irwin Bank’s efforts at redemption, thereby putting Cobb on notice that the redemption had been effected.
Following a hearing on the summary judgment motion, the district court ordered summary judgment for Cobb. This appeal followed.
Whether summary judgment was
properly granted is a question of law, which we review de novo.
validity of redemption depends on whether the redemptioner has substantially
complied with statutory redemption procedures.
Sieve v. Rosar, 613 N.W.2d 789, 793 (
To establish the right to proceed
with redemption, a lienor or mortgagee must record a notice of intent to redeem
during the mortgagor’s six-month redemption period.
To effect redemption during the
appropriate period, a redemptioner must pay redemption funds to either the
sheriff or the immediate senior redemptioner.
The parties here do not dispute that Irwin Bank properly paid redemption funds to Standard Federal Bank on January 16, 2004. But Irwin Bank did not record an affidavit of amount due or a certificate of redemption until February 11, 2004. Thus, Irwin Bank’s purported redemption was recorded 26 days after the payment of redemption funds and seven days after Cobb recorded his certificate of redemption on February 4, 2004.
The recording of an affidavit of
amount due and a certificate of redemption are essential to an effective
redemption, as these documents disclose that a redemption has occurred and
inform junior lienors of the amount required to redeem. Taber v. Rathbun, 168
redemptioner is unlikely to meet the threshold of substantial compliance,
however, when statutory violations prejudice or compromise the rights of junior
lienors. For example, in Coffman, when a senior lienor recorded a
certificate of redemption five days after the four-day statutory deadline, and
junior lienors had proceeded with redemption before the senior lienor’s
certificate was recorded, the senior lienor’s redemption was void. 102
In determining whether Irwin Bank’s substantial compliance was sufficient to effectuate redemption, we examine the effect, if any, on the redemption rights of junior lienors. By the time Irwin Bank recorded its affidavit of amount due and certificate of redemption, Cobb had completed the redemption process. If subjected to the untimely actions of Irwin Bank, Cobb would lack a record of the amount required to redeem. Thus, Cobb would suffer substantial prejudice to his rights as a junior lienor. Such an outcome also would undermine the certainty of the redemption procedure and the reliability of record title. Rambeck, 156 Minn. at 314, 194 N.W. at 645 (observing that junior lienor is entitled to rely on record title); Nussbaumer v. Fetrow, 556 N.W.2d 595, 599 (Minn. App. 1996) (“Notice of title given by the registry is presumed to be certain, and we will not allow it to be overridden by equivocal evidence of an unrecorded change in ownership.”), review denied (Minn. Feb. 26, 1997). We, therefore, conclude that Irwin Bank has not satisfied the requirements of the foreclosure statutes, and its redemption is void.
With respect to the effectiveness of Cobb’s redemption, the parties’ arguments are limited to timeliness. Proceeding on the basis of his assignment from the department, Cobb paid redemption funds to the sheriff and recorded the appropriate documents on January 30, 2004. The certificate of redemption was then recorded on February 4, 2004.
Before the timeliness of this transaction can be calculated, we first determine the number and seniority of liens on the property. Irwin Bank contends that there is a question of fact regarding the number of tax liens. But it is possible to resolve this question as a matter of law on the existing record.
The creation of tax liens is
governed by Minn. Stat. § 270.69, subd. 1 (2004), which provides: “The tax . .
. administered by the commissioner of revenue . . . shall become a lien upon
all the property within this state, both real and personal, of the person
liable for the payment or collection of the tax . . . from and after the date
of assessment of the tax.” In order for the
department to redeem an existing tax lien, it must first comply with Minn. Stat.
§ 270.69, subd. 2(a) (2004), which provides: “The lien imposed by subdivision 1
is not enforceable against [other lienors] until a notice of lien has been
filed by the commissioner of revenue in the office of the county
recorder . . . .” In
accordance with these provisions, a tax lien is created by statute when
delinquent taxes are assessed against a taxpayer.
Here, the department recorded separate notices of a tax lien for both
Jodie Combs and Richard Combs. Both
notices recite an identical lien number and an identical amount of unpaid taxes
for the 2001 tax year. The only reasonable
conclusion is that the Combs shared joint and several liability for a unitary
sum of delinquent taxes, which resulted in the creation of a single tax
lien. See Minn. Stat. § 289A.31, subd. 2(a) (2004) (imposing joint and
several liability on tax obligations of married couples filing joint income tax
returns); Erickson v. Comm’r of Internal Revenue Serv., 172 B.R. 900,
914 (Bankr. D.
Having established the existence of a single tax lien, we next consider whether Cobb’s redemption of the tax lien was timely. The timing of successive redemption periods is governed by Minn. Stat. § 580.24, which provides in relevant part:
[E]ach subsequent creditor having a lien in succession, according to priority of liens, within seven days after the time allowed the prior lienholder, respectively, may redeem . . . . Saturdays, Sundays, legal holidays, and the first day following the expiration of the prior redemption period must be included in computing the seven-day redemption period. When the last day of the period falls on Saturday, Sunday, or a legal holiday, that day must be omitted from the computation.
statute itself prescribes the method for the calculation of a redemption
period, we need not consider other timing provisions. See Molloy v. Meier, 679 N.W.2d
711, 723 (
The foreclosure sale was held on
July 10, 2003. Because the six-month
date falls on a Sunday, the last day of the mortgagor’s redemption period was
January 12, 2004. See In re Petition of Nelson,
495 N.W.2d 200, 201 (
Assuming for the purpose of this analysis that Cobb’s untimely attempt to redeem was not fatally defective, the other timing issue relates to recording the certificate of redemption. Section 580.26 provides that “if [redemption is] made by a creditor holding a lien, the certificate shall be recorded within four days after such redemption.” Because the method for calculating a statutory time period is not expressly defined, such calculation is made with reference to both Minn. Stat. § 645.15 (2004) and Minn. R. Civ. P. 6.01. JBI & Assocs., 592 N.W.2d at 141.
Section 645.15 provides:
[T]he time . . . shall be computed so as to exclude the first and include the last day of the prescribed or fixed period or duration of time. When the last day of the period falls on Saturday, Sunday, or legal holiday, that day shall be omitted [from] the computation.
When calculating time according to this provision, the first day in which a legal right or status arises is omitted. JBI & Assocs., 592 N.W.2d at 141 (omitting first day in which junior lienor has right to redeem); Career Res., Inc. v. Pearson Candy Co., 435 N.W.2d 114, 116 (Minn. App. 1989) (omitting first day of employment when determining duration of employment under terms of contract).
In computing any period of time . . . by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday . . . . When the period of time prescribed or allowed is less than 7 days, intermediate Saturdays, Sundays, and legal holidays shall be excluded [from] the computation.
The exception for periods of seven days or fewer applies to statutory time periods. JBI & Assocs., 592 N.W.2d at 141; Springfield Farmers Elevator Co. v. State Bank of Springfield, 360 N.W.2d 402, 403 (Minn. App. 1985), review denied (Minn. Mar. 21, 1985).
Because the obligation to record the certificate arose on the date of the redemption payment, January 30, 2004, this date is not counted in the calculation of the four-day period. The next two days are Saturday and Sunday, which also are not counted in the four-day period. Counting four days from February 2, 2004, the last day of the recording period is February 5, 2004. Thus, Cobb’s certificate of redemption was timely recorded on February 4, 2004.
Although Cobb’s redemption payment
was untimely, the validity of his redemption depends on whether Cobb
substantially complied with statutory redemption procedures. See Sieve,
613 N.W.2d at 793. Substantial
compliance is dependent on the facts and circumstances of the case, with
particular attention to whether the rights of junior lienors are
prejudiced. See Rambeck,
Aside from commencing three days after the expiration of his redemption period, Cobb’s redemption was regular in all other respects. The rights of junior lienors, if any, were not affected by Cobb’s untimely commencement of the redemption process. Conversely, senior lienor Irwin Bank had its opportunity to redeem, and it challenges Cobb’s redemption only incident to the effort to restore its own defective redemption. We also note that, because the department assigned its redemption rights after its redemption period had ended, Cobb may have had no reason to know that his redemption was defective. Under these circumstances, we conclude as a matter of law that Cobb substantially complied with statutory redemption procedures.
Irwin Bank next asserts that, because Cobb had notice of its attempt to redeem, he was not a bona fide purchaser and his redemption was ineffective. According to Irwin Bank, the sheriff contacted it about its attempt at redemption, purportedly so that the sheriff could give this information to Cobb. On review from summary judgment, all reasonable inferences favor the nonmoving party. Fabio, 504 N.W.2d at 761. Thus, we assume here, without deciding whether the evidence reasonably supports this inference, that Cobb had actual notice of Irwin Bank’s attempt at redemption.
The record notice required in the redemption procedure is essential to preserving [junior lienors’] rights and we have required strict compliance with the notice provisions of the statute. . . . Actual notice, obtained, we presume, by direct communication with a senior lienholder or “through the grapevine,” is not an adequate substitute for the certainty and accuracy of the record notice required by the redemption statute.
Brainerd Nat’l Bank, 383 N.W.2d at 289. Because a junior lienor may proceed even with actual notice that another party has possession of the property, Coffman, 102 Minn. at 465, 113 N.W. at 1066, or with actual notice that another party has available rights of redemption, First Nat’l Bank of Glencoe/Minnetonka v. Pletsch, 543 N.W.2d 706, 708 (Minn. App. 1996), review denied (Minn. Apr. 16, 1996), Irwin Bank’s arguments with respect to notice are unavailing.
Bank’s next argument for relief is based on
The purpose of the race-notice
statute is to prevent competing claims to title. See Miller v. Hennen, 424
N.W.2d 89, 91 (Minn. App. 1988), aff’d, 438 N.W.2d 366 (
Irwin Bank’s last argument may be characterized as a plea for equitable relief. Because Cobb redeemed before Irwin Bank and extinguished its mortgage, Cobb was not required to pay off this mortgage and, thus, paid less to acquire the property. Based on this purported windfall, Irwin Bank argues that it should be allowed to recover against Cobb.
Similarly, in First Nat’l Bank of Glencoe/Minnetonka, we expressly rejected equitable relief for a senior lienor whose interest is extinguished by the redemption of a junior lienor. 543 N.W.2d at 709-10. After noting the “longstanding, strict rule of law” that controls redemptions, we concluded:
[Junior lienors] could have proceeded more nobly, volunteering to pay [senior lienors’] second mortgage. But [junior lienors] chose instead to stand on their rights, paying only what had to be paid to secure redemption. The record contains no evidence that [junior lienors] made fraudulent representations to [senior lienors], and [junior lienors’ redemption] was not a “sham” but a lawful means for satisfying the mortgage demands on the [property] . . . .
 Since the events giving
rise to this action, Minn. Stat. § 580.24 has been substantially amended to
include more detailed redemption procedures.
 Minn. Stat. § 580.25 also
has been substantially amended to include more detailed redemption
The only case to discuss the computation of redemption periods under Minn. Stat. § 580.24 is Washington County
Sheriff v. JBI & Assocs., 592 N.W.2d 139 (Minn. App. 1999), review
denied (Minn. July 28, 1999). An
earlier version of the statute at issue in JBI & Assocs. did not
include language accounting for Saturdays, Sundays, or legal holidays and only
provided a successive five-day period for redemption. Since then, the holding of JBI &
Assocs., as it pertains to Minn. Stat. § 580.24,
has been superseded by amendment of the statute. 1998
 The sheriff is not an agent
of Cobb. Thus, the sheriff’s knowledge
cannot be imputed to Cobb as a matter of law.