(251) 299-0101

MORTGAGE FORECLOSURE SUMMARY JUDGMENT - TURNER V. WELLS FARGO BANK, N.A.

Turner v. Wells Fargo Bank, N.A., [Ms. 2150320, Sept. 30, 2016] __ So.2d __ (Ala. Civ. App. 2016). The Court of Civil Appeals affirms a summary judgment entered by the Jefferson Circuit Court in favor of Wells Fargo in an action for ejectment pursuant to § 6-6-280, Ala. Code 1975. The court rejects the homeowner's contention that Wells Fargo failed to present substantial evidence in support of its motion for summary judgment showing that it was a holder of the note and the mortgage at the time notice of the impending foreclosure sale was published. The court found that prior to such publication, an assignment of the note and mortgage had been recorded such that Wells Fargo was a holder and had authority to foreclose based upon the reasoning in Smalls v. Wells Fargo Bank, N.A., 180 So.3d 910, 915-16 (Ala. Civ. App. 2015), as follows:

In Gray v. Federal National Mortgage Ass'n, 143 So.3d 825 (Ala. Civ. App. 2014), this court addressed a nearly identical issue, stating:

"In Harris v. Deutsche Bank National Trust Co., 141 So.3d 482, 491 (Ala. 2013), our supreme court reasoned:

" ' The Harrises also argue that the power of sale described in the mortgage was given by the Harrises as part of the security for the repayment of the debt evidenced by the note and can be "executed" only by the trustee if it was the party entitled to the money thus secured. They cite § 35–10–12, Ala. Code 1975, which states that the power to sell lands given in a mortgage "is part of the security and may be executed by any person, or the personal representative of any person who, by assignment or otherwise, becomes entitled to the money thus secured." In Carpenter v. First National Bank, 236 Ala. 213, 181 So. 239 (1938), this Court applied the predecessor to § 35–10–12, stating:

" ' "A power of sale in a mortgage of real estate is a part of the security, and passes to any one who by assignment or otherwise becomes entitled to the money secured. Code 1923, § 9010.

" ' "But an agent of such holder to whom the mortgage is delivered merely for the purpose of foreclosure, having no ownership of the debt, is not authorized to foreclose in his own name, and execute a deed in his name to the purchaser. Ownership of the debt does not pass to such agent merely because the note is endorsed in blank. Such foreclosure is ineffective, and a court of equity may take jurisdiction for the purpose of foreclosure.'

" '236 Ala. at 215, 181 So. at 240 (emphasis added). The foreclosure deed in this case was executed by the trustee in its own name, not on behalf of the lender, SouthStar, or any other party to which SouthStar may have assigned the note. The deed was effective to transfer title and to foreclose the rights of the mortgagor, therefore, only if the trustee, in its own name, was entitled to receive the money secured by the note at the time it executed and delivered that deed.

"'The parties agree in their briefs, however, and we accept for purposes of this case, that the mortgage given MERS "solely as a nominee for Lender and Lender's successors and assigns" did not entitle MERS to the money secured by the mortgage. Accordingly, the subsequent assignment of that mortgage by MERS to the trustee did not accomplish an assignment of that right to the trustee. The trustee in fact concedes that summary judgment was inappropriate in this case and that on the state of the current record there is a genuine issue of material fact as to whether the trustee received an assignment of the note so as to have entitled it to execute the power of sale in its own name. (It asserts that, if this case is returned to the trial court, it will introduce "conclusive evidence" of its receipt as early as 2005 of the debt evidenced by the original note signed by the Harrises). The summary judgment entered by the trial court therefore is due to be vacated and the case remanded for a determination as to whether the trustee received an assignment by the note, and thus the power to execute the corresponding power of sale in its own name, before executing and delivering the foreclosure deed.'

"(Footnote omitted.). See also Ex parte BAC Home Loans Servicing, LP, 159 So.3d 31, 35-36 (Ala. 2013) (holding that the right of the foreclosing entity to conduct a foreclosure sale must be proven in order to show that the buyer at a foreclosure sale has superior legal title and a cause of action to eject the debtor). Further, in Coleman v. BAC Servicing, 104 So. 3d 195 (Ala. Civ. App. 2012), this court explained:

" 'Alabama law specifically contemplates that there can be a separation. See § 35–10–12 and Harton [v. Little, 176 Ala. 267, 57 So. 851 (1911)]. The Restatement (Third) of Property: Mortgages takes the position that a note and mortgage can be separated but that "[t]he mortgage becomes useless in the hands of one who does not also hold the obligation because only the holder of the obligation can foreclose." Restatement (Third) of Property: Mortgages § 5.4, Reporter's Note –- Introduction, cmt. a at 386. The Restatement explains: "'The note is the cow and the mortgage the tail. The cow can survive without a tail, but the tail cannot survive without the cow.'" Id. at 387 (quoting Best Fertilizers of Arizona, Inc. v. Burns, 117 Ariz. 178, 179, 571 P.2d 675, 676 (Ct. App.), reversed on other grounds, 116 Ariz. 492, 570 P.2d 179 (1977)).'

"104 So. 3d at 205."

143 So. 3d at 830-31.

"An assignee of a debt secured by a mortgage may execute the right to foreclose. § 35–10–1 and § 35-10-12, Ala. Code 1975. '"The clear test of the right of an assignee of the mortgage to exercise the power of sale under [§ 35–10–1, Ala. Code 1975,] is that such assignee is entitled to receive the money secured by the mortgage."' Ex parte GMAC Mor[t]g., LLC, 176 So. 3d 845, 848 (Ala. 2013) (quoting Kelly v. Carmichael, 217 Ala. 534, 537, 117 So. 67, 70 (1928)). ...

"....

" 'In Alabama, a note secured by a mortgage is a negotiable instrument. Thomas v. Wells Fargo Bank, N.A., 116 So. 3d 226, 233 (Ala. Civ. App. 2012). A holder of a note secured by a mortgage is entitled to enforce the terms of the note. Perry v. Federal Nat'l Mortg. Ass'n, 100 So. 3d [1090,] 1094 [(Ala. Civ. App. 2012)].'

"Sturdivant v. BAC Home Loan Servicing, LP, 159 So. 3d 47, 55 (Ala. Civ. App. 2013) (footnote omitted); see § 7-3-301, Ala. Code 1975 (providing that a holder is a 'person entitled to enforce' the negotiable instrument). The negotiable instrument must have been either issued or negotiated to a person or an entity in order for the transferee to become a holder. § 7-3-302, Ala. Code 1975; Stone v. Goldberg & Lewis, 6 Ala. App. 249, 259, 60 So.744, 748 (1912) (opinion on rehearing) ('[T]he instrument must be "negotiated" to the holder in order for the holder to be a "holder in due course."'). A negotiation requires a transfer of possession and an indorsement by the holder if the instrument is payable to an identified person or transfer by possession only if the instrument is payable to bearer. § 7-3-201(b), Ala. Code 1975."

Smalls v. Wells Fargo Bank, N.A., 180 So. 3d 910, 915-16 (Ala. Civ. App. 2015).

Ms. *23-27 (underlined emphases in original).

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