INTERSTATE PRODUCTION CREDIT ASSOCIATION, Respondent, v. LYLE R. MACHUGH, ET AL., Appellants.
[1] Courts - Rules of Court - Construction - Rules of Statutory Construction. Court rules are interpreted in the same manner as statutes.
[2] Courts - Rules of Court - Application - Mixed Question of Law and Fact - Review. An appellate court decides a dispute involving the interpretation of a court rule and the inferences to be drawn from the facts of the case by independently determining the law and then applying the law to the trial court's findings of fact that are not clearly erroneous.
[3] Judgment - Construction - Incorporation of Agreement Between Parties - Intent of Court - Objective Manifestations of Parties. The intent of a court order incorporating an agreement between parties is the intent of the parties as objectively manifested at the time the agreement was formed. If only one reasonable meaning can be ascribed to the agreement when viewed in context, that meaning necessarily reflects the parties' intent. A question of fact is presented if the agreement is susceptible of two or more reasonable meanings.
[4] Appeal - Findings of Fact - Review - Substantial Evidence - In General. Findings of fact are reviewed to determine if they are supported by substantial evidence in the record. A finding of fact supported by substantial evidence in the record will not be overturned by the appellate court.
[5] Judgment - Construction - Incorporation of Agreement
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Between Parties - Intent of Court - Plain Language. A judgment incorporating an agreement between parties is construed according to the plain language of the agreement.
[6] Supersedeas - Agreed Order To Suspend Judgment - Court Rules - Applicability. An order incorporating an agreement between parties to suspend the enforcement of a judgment pending an appeal is not governed by RAP 8.1(b)(2) (which establishes a procedure for suspending decisions affecting property pending appeal by filing a supersedeas bond) if the rule is not referenced in the agreement and the parties did not intend for the rule to apply.
[7] Appeal - Rights Pending Appeal - Restitution of Unsuperseded Judgment - Favorable Judgment - Effect. RAP 12.8, which provides for restitution when an unsuperseded judgment is collected but later reversed on appeal, does not provide a remedy for a party in whose favor judgment was entered.
[8] Execution - Sale - Certificate of Purchase - Nature of Interest - Passage of Title. A sheriffs certificate of purchase issued upon property sold in execution does not pass title to the property.
[9] Judgment - Vacation - Effect - In General. A judgment vacated by a valid order is entirely destroyed, and the rights of the parties are left as though no such judgment had ever been entered.
Nature of Action: In an action by a production credit association to foreclose on certain liens or interests securing a farm loan, the defendants sought to recover damages for loss of use of the land during the time the production credit association's appeal of a judgment in favor of the defendants was pending. Enforcement of the judgment had been suspended during the pendency of the appeal by the terms of a stipulated order that authorized the establishment of an escrow fund in lieu of a supersedeas bond. The debtors' son had offered to lease and farm the land while the appeal was pending on the condition that the production credit association would relinquish any rights to the crop if the judgment on the foreclosure action were reversed on appeal, but the production credit association refused the offer. The land was not farmed while the appeal was pending. After the production credit association lost the appeal, it paid the judgment and released its security interests in the land.
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Superior Court: The Superior Court for Franklin County, No. 86-2-50125-1, Dennis D. Yule, J., on June 13, 1996, denied the defendants' claim for damages for the loss of use of the land while the appeal was pending.
Court of Appeals: Holding that the defendants had retained the right to use the land and were not prevented by the stipulated order from farming the land during the pendency of the appeal, the court affirms the judgment.
C. Matthew Andersen of Winston & Cashalt, for appellants.
John R. Nelson of Preston Gates & Ellis, for respondent.
Rules of Court; Stay of Action or Proceeding.
SWEENEY, J. - The question here is whether Lyle and Barbara MacHugh, the debtors, are entitled to loss of use damages after successfully asserting an equitable estoppel defense to a foreclosure action. The court concluded they were not. We agree and affirm.
FACTS
The MacHughs owed Interstate Production Credit Association (IPCA) $2,646,888.74 in agricultural loans and interest. The loans were secured by mortgages and an unrecorded quitclaim deed to part of the MacHughs' farm. In 1986, IPCA sued to foreclose. The property was in receivership until 1989. In 1989, the court granted IPCA's summary judgment to foreclose. It purchased the farm at the judicial sale. The MacHughs appealed the foreclosure. This court vacated the summary judgment and remanded
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for trial on the merits. Interstate Prod. Credit Ass'n v. MacHugh, 61 Wn. App. 403, 810 P.2d 535 (1991).
On December 2, 1992, a jury awarded the MacHughs a total judgment of $4,888,335. In addition to $2,241,456 in money damages, IPCA was equitably estopped from foreclosing or otherwise collecting the underlying $2,646,889 debt.
IPCA appealed. The parties agreed on a dollar amount necessary to supersede enforcement of the judgment. Stay of enforcement of judgments pending appeal is governed by RAP 8.1(b). RAP 8 1(b)(1) applies to money judgments and provides relief from enforcement of a money judgment by filing a supersedeas bond. The bond must be in the amount of the judgment and interest, plus attorney fees, costs and expenses likely to be awarded on appeal. RAP 8.1(b)(2) pertains to judgments affecting land and allows a stay of enforcement of a decision affecting the rights to land by filing a supersedeas bond.
In February 1993, the parties stipulated to a supersedeas order requiring IPCA to escrow, in lieu of bond, a certificate of deposit for $2.7 million. This amount covered the $2.241 million money judgment plus anticipated interest at 12 percent and costs on appeal. The order granted IPCA the right to "supersede the enforcement of the judgment and decision" in the action. IPCA retained its security interests in the property during the appeal.
The MacHughs' son, David MacHugh, offered to lease and farm the land on the condition IPCA would relinquish any rights to the crop if the judgment were reversed on appeal. IPCA refused. It responded that title and possession remained with the MacHughs. David MacHugh decided not to farm the property. The land remained idle and deteriorated. No taxes or irrigation assessments were paid.
In August and September 1994, lawyers for IPCA and the MacHughs exchanged letters in which both. parties acknowledged that the supersedeas procedure for money judgments outlined in RAP 8.1(b)(1) was the controlling authority. The MacHughs' lawyer acknowledged that this
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rule precluded the MacHughs from returning to court for relief after the supersedeas order had been entered.
However, in September 1994, the MacHughs suggested that the supersedeas order effectively superseded not only the money judgment but also the equitable estoppel defense leaving IPCA free to foreclose. The MacHughs invoked for the first time RAP 8.1(b)(2). The MacHughs concede the stipulated order neither invoked RAP 8.1(b)(2) nor complied with its procedural requirements.
IPCA lost its appeal. IPCA paid the judgment and released its security interests in the land. The MacHughs then moved for $429,708.94 damages for the loss of use of the land during the appeal. The court denied recovery of damages for loss of use. The MacHughs appeal.
DISCUSSION
[1-4] The Judgment Of Estoppel Was Never Superseded. We apply principles of statutory construction to the interpretation of court rules. State v. Greenwood, 120 Wn.2d 585, 592, 845 P.2d 971 (1993). When a dispute involves both interpretation of the rule and inferences to be drawn from the facts, this court determines the law independently and applies it to the facts as found by the court unless those findings are clearly erroneous. Edinger v. Employment Sec. Dep't, 58 Wn. App. 525, 528, 793 P.2d 1004 (1990). When a court order incorporates an agreement between the parties, the meaning of the order is the same as the meaning objectively manifested by the parties at the time they formed the agreement. In re Marriage of Boisen, 87 Wn. App. 912, 920, 943 P.2d 682 (1997). If only one reasonable meaning can be ascribed to the agreement when viewed in context, that meaning necessarily reflects the parties' intent; if two or more meanings are reasonable, a question of fact is presented. Id. at 920-21. We review questions of fact only for substantial evidence. Thorndike v. Hesperian Orchards, Inc., 54 Wn.2d 570, 575, 343 P.2d 183 (1959). The stipulated order of supersedeas incorporates an agreement between the parties. If the court's
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determination of the meaning of the stipulation is supported by substantial evidence, we must uphold the court's finding.
The MacHughs claim the estoppel, and thus the stay of foreclosure, was superseded by the stipulated order. They point to language in the order providing that IPCA can supersede the judgment and decision. "Judgment," they contend, refers to the money judgment. And since "decision" must refer to something, they conclude it refers to the favorable equitable estoppel verdict, which was therefore also superseded.
[5] Since IPCA retained its security interests, the MacHughs claim they were neither in possession nor control of the property. IPCA responds that the stipulated agreement by its plain language did not supersede the estoppel. We agree. The plain language of the stipulated order and RAP 8.1 are dispositive.
A judgment is superseded under RAP 8.1 by following its mandatory procedures, including the posting of bond. RAP 8.1(b); Lampson Universal Rigging, Inc. v. Washington Pub. Power Supply Sys., 105 Wn.2d 376, 378-79, 715 P.2d 1131 (1986). In a decision affecting land, the amount of the bond will ordinarily be the reasonable value of the use of the land. RAP 8.1(b)(2). If that is inadequate to secure the loss, that party must prove the additional losses. RAP 8.1(b)(2). The posting of bond is a prerequisite to superseding the judgment. RAP 8.1(c).
[6] In construing the MacHugh-IPCA stipulated supersedeas agreement, the court looked at both the language of the agreement and the conduct of the parties. The court observed that neither the agreement nor the conduct implicated RAP 8.1(b)(2) or made any attempt to implement its bond procedures. Therefore, the court correctly concluded that the parties did not intend to supersede the estoppel under the provisions of RAP 8.1.
Here, the correspondence between counsel shows that until a year after the entry of the stipulated order, all
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supersedeas negotiations focused on the $2.241 million money judgment. It was not until September 1994, a year and a half after entry of the supersedeas order, that counsel for the MacHughs noted that the stipulated agreement contained no provision covering the accumulating expenses associated with the non-use of the land. A party signals the intent to supersede a judgment by filing a motion and posting bond. RAP 8.1(b), (c). The other party may object to the amount of the bond within seven days. RAP 8.1(d). The trial court's finding that the stipulated order does not manifest an intent to supersede the estoppel is amply supported by the evidence.
The MacHughs Retained The Right To Use The Land.
The MacHughs contend IPCA effectively retained title to the property by refusing to relinquish its security interests pending appeal. This prevented the MacHughs from selling. The MacHughs also claim IPCA prevented them from leasing the farm to David MacHugh when it refused to relinquish any claim to the MacHughs' profits in the event IPCA won on appeal.
The MacHughs base this claim on the RAP 12.8«1» provisions for recovery of losses incurred during the pendency of an appeal. They rely on Norco Constr., Inc. v. King County, 106 Wn.2d 290, 721 P.2d 511 (1986) for their contention that loss of use damages are recoverable even when not provided for in the supersedeas order.
[7] The MacHughs misinterpret RAP 12.8. RAP 12.8 by its terms provides for restitution if an unsuperseded judgment is collected but later reversed on appeal. Here, the MacHughs did not lose below. No judgment was ever enforced against them. No judgment was reversed on appeal. And they seek not restitution but lost profits. RAP 12.8 does not apply.
«1» RAP 12.8 provides in part:
"If a party has . . . satisfied a trial court decision which is modified by the appellate court, the trial court shall enter orders and authorize the issuance of process appropriate to restore to the party any property taken from that party, the value of the property, or in appropriate circumstances, provide restitution."
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Their reliance on Norco is similarly misplaced. In Norco a developer suffered losses pending an appeal by King County from a writ of mandamus to issue a building permit. The county could, and did, supersede the judgment without posting a bond. Norco, 106 Wn.2d at 292. Norco prevailed on appeal. The court held that a municipality that supersedes a judgment without posting a bond (pursuant to RAP 8.1(e) immunity) is liable for loss of use notwithstanding the absence of bond. Id. at 296-97. Here, IPCA was not a municipality. It was therefore required to post a bond. Norco is distinguishable.
[8, 9] The MacHughs' contention that IPCA's security interest operated to preclude them from using their land is also unsupported. At no time did title pass from the MacHughs to IPCA. When the receivership terminated prior to the judgment, the MacHughs owned and controlled the property. The sheriff's sale pursuant to the summary judgment of foreclosure did not vest title in IPCA. W.T. Watts, Inc. v. Sherrer, 89 Wn.2d 245, 248, 571 P.2d 203 (1977) (sheriffs certificate of purchase does not pass title); Cogswell v. Brown, 102 Wash. 625, 173 P. 623 (1918) (title does not pass until redemption period expires and sheriff's deed issues). Furthermore, this court reversed and vacated the summary judgment of foreclosure, voiding the sheriff's sale. Interstate Prod. Credit, 61 Wn. App. 403. A judgment vacated by valid order is entirely destroyed and the rights of the parties are left as though no such judgment had ever been entered. In re Estate of Couch, 45 Wn. App. 631, 634, 726 P.2d 1007 (1986).
IPCA concedes the mortgages created a cloud on the title. But the MacHughs do not claim they intended to sell the land. There was nothing to prevent them from farming the land or leasing it. If IPCA had won reversal on appeal, the mortgages could have been foreclosed at that time. The most IPCA could recover from the MacHughs by way of restitution (under RAP 12.8) would be the rental value the MacHughs received. Neither side cites authority for what seems to have been their operating assumption--that
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IPCA could have claimed against David MacHugh, a third party lessee, for the value of the crop. The MacHughs' losses pending review were not caused by IPCA.
Affirmed.
SCHULTHEIS, C.J., and BROWN, J., concur.
Reconsideration denied April 12, 1998.
Review denied at 136 Wn.2d 1021 (1998).