|Stephens Millirons law firm of Huntsville, AL|
The banker types, in this instance, are from Chase Mortgage, which held the note on our home. The lawyers are from the Huntsville firm of Stephens Millirons, which orchestrated the foreclosure, with attorney Robert Wermuth playing the lead role.
It's not like the relevant law is hard to find or difficult to understand. That tells me that someone intentionally wanted to shuffle several thousand dollars of our money to Liberty Duke. And that leads to this question: why?
The law can be found at a number of places, but it perhaps is most succinctly and recently stated in a case styled Cheryl Williams v. Wells Fargo Home Mortgage (S.D., Alabama, 2015). You will notice that Williams is a federal case, from a district court, which generally means it would not be binding precedent in foreclosure matters that tend to be governed by state law. But Williams is based largely on two Alabama state cases -- Springer v. Baldwin Co. Fed. Savings Bank, 562 So. 2d 138 (Ala. Sup. Ct., 1989) and Davis v. Huntsville Production Credit Assoc., 481 So. 2d 1103 (Ala. Sup. Ct., 1985) -- which are binding law.
The Williams court relied on Springer to spell out the basics on a foreclosure sale that produces a surplus:
[A] mortgagee (Chase) is, in a sense, a trustee for the mortgagor (Carol and me), and is charged with the `duty of fairness and good faith in its execution to the end that the mortgagor's property may be disposed of to his pecuniary advantage in the satisfaction of his debt.'" Springer, 562 So. 2d at 139 (quoting J.H. Morris, Inc. v. Indian Hills, Inc., 212 So. 2d 831, 843 (Ala. 1968) (emphasis added)). Thus, "[t]he mortgagee, as trustee for the mortgagor, is obligated to apply that profit realized after foreclosure and during the redemption period to the reduction of the mortgagor's debt. . . .
Consider the powerful language here. Chase, and its lawyers (Stephens Millirons) had a trustee relationship with Carol and me, with a duty to act in "fairness" and "good faith." That includes an obligation to apply any profit realized where it lawfully belongs. Where is that? The Davis case provides clarity:
The law is equally clear in regard to the issue of who gets the surplus proceeds. When property is sold at a foreclosure sale, conducted under the power of sale contained in a mortgage, at an amount greater than the indebtedness secured by the mortgage, the mortgagee (Chase) is liable to the mortgagor (Carol and me) for the surplus. Atlas, supra, 251 So.2d at 237; Bartlett v. Jenkins, 213 Ala. 510, 511, 105 So. 654, 655 (1925). The result is unchanged by the fact that the purchaser at the sale is the mortgagee. Muscle Shoals Bank, supra, at 298. See, also, Pruett v. First National Bank of Anniston, 229 Ala. 441, 157 So. 846 (1934).
Did Chase and Stephens Millirons fulfill their trustee duties by making sure that the surplus proceeds went to Carol and me? No, they did not -- not even close. They knowingly violated the law -- or they turned a blind eye -- as someone allowed the funds unlawfully to go to Liberty Duke.
In a curious note, public records show that Spartan and JAG never have engaged in a transaction on any other house, at least in Shelby County. Why did our house go from one house-flipper to another?
For now, our focus is on the bankers and lawyers who made sure our surplus funds went not to us but to a party who had no lawful claim on them. How did Stephens Millirons, as Chase Mortgage's representative, respond when we inquired about the funds, and what does it say about their commitment to a "trustee" relationship with Carol and me? Were they more committed to their "thievery" relationship with Liberty Duke?
We will examine those questions in an upcoming post.
(To be continued)