from Chilton Circuit Court (CV-17-900020)
THOMPSON, PRESIDING JUDGE.
February 9, 2017, Southcrest Bank ("Southcrest")
filed an interpleader complaint in the Chilton Circuit Court
("the trial court"). Southcrest named as defendants
to the action Eugene J. Atchison, Walter C. Hayden III, in
his capacity as Atchison's guardian and as conservator of
Atchison's estate, and several fictitiously named
parties. In its complaint, Southcrest alleged that it had
recently foreclosed on its mortgages on two parcels of real
property ("the property") formerly owned by
Atchison. Southcrest alleged in its complaint that it
believed that Atchison was, at that time, physically and
mentally incapacitated and living in a nursing home.
Southcrest stated that the property had been sold in a
foreclosure sale on January 18, 2017, and that, after the
payment of its mortgages and certain expenses from the
proceeds of the foreclosure sale, surplus funds totaling $15,
352.95 remained. Southcrest claimed that it was unsure to
whom to release the extra funds from the foreclosure sale,
and it sought to interplead the funds into the court and
requested an award of an attorney fee for filing the action.
In support of its complaint, Southcrest submitted as exhibits
documents evidencing Atchison's incapacity, as well as
documents evidencing the foreclosure sale. The trial court
entered an order allowing the surplus funds from the
foreclosure sale to be paid into the court.
answered and moved the trial court to distribute funds to him
for his guardian services and to the nursing home at which
Atchison resided. On June 1, 2017, Hayden amended that claim
to assert that Atchison had died on April 30, 2017, and that
there was no balance due the nursing home at that time.
However, Hayden sought an award for additional time expended
as Atchison's guardian since the filing of his initial
claim, and he stated that there existed an outstanding
balance owed to Martin's Funeral Home for Atchison's
March 16, 2017, Southcrest moved the trial court to add the
Alabama Medicaid Agency ("Medicaid") as a defendant
to the action. Southcrest alleged that it had recently
learned that Medicaid had filed liens on each of the
foreclosed parcels. The trial court entered an order adding
Medicaid as a party. Southcrest then filed a motion again
requesting an award of an attorney fee for filing the action
and to be relieved of further liability.
filed an answer and a claim asserting that it had a lien on
the property in the amount of $24, 902.70, which exceeded the
amount of the funds deposited in the trial court. In support
of its claims, Medicaid filed in the trial court documents
supporting its assertion that on December 7, 2016, it had
recorded liens against the property.
2, 2017, the trial court entered a judgment determining that
Medicaid had the right to redeem the property, that Hayden
was entitled to a conservator's fee of $11, 000, that
$664 was to be paid to Martin's Funeral Home for the
balance due for Atchison's funeral, and that Southcrest
was entitled to a $750 attorney fee for filing the
interpleader action. The trial court then awarded the remainder
of the interpleaded funds to Medicaid. The trial court
amended the judgment twice to make slight adjustments to the
amounts awarded in its June 2, 2017, judgment. Medicaid filed
a timely postjudgment motion, which was denied by operation
of law pursuant to Rule 59.1, Ala. R. Civ. P. Medicaid timely
we note that the record indicates that the case was submitted
to the trial court based on the arguments of the parties and
the documents filed as exhibits to the parties' pleadings
and motions asserting claims to the interpleaded funds. The
trial court did not receive ore tenus evidence. Medicaid does
not argue on appeal that the trial court erred in failing to
conduct an evidentiary hearing, and, therefore, any such
argument is waived. Boshell v. Keith, 418 So.2d 89,
92 (Ala. 1982).
appeal, Medicaid argues that, as a matter of law, its liens
against the property had priority over the claims of the
other parties claiming an interest in the interpleaded funds.
Medicaid does not dispute that Southcrest's claim as the
holder of the mortgages on the property was superior to
Medicaid's claim. Medicaid argues that it was a junior
lienholder to Southcrest and that Hayden, Martin's
Funeral Home, and Southcrest, to the extent it claimed an
attorney fee in the interpleader action, were unsecured
relies on Bailey Mortgage Co. v. Gobble-Fite Lumber
Co., 565 So.2d 138 (Ala. 1990). In that case, our
supreme court stated:
"After the foreclosure sale of the mortgaged property,
if there are no other liens on the property, any surplus must
be paid to the mortgagor. 55 Am. Jur. 2d Mortgages
§ 930 (1971). However, if there are inferior liens
and there is a surplus, all encumbrances inferior to the
mortgage on which the sale is based must be paid in the order
of time in which they respectively became liens. 55 Am.
Jur. 2d Mortgages § 931 (1971).
"If there are no surplus proceeds, the only remedy or
recourse available to a junior encumbrancer is the right to
redeem. The statutory right of redemption is set forth in
Ala. Code 1975, § 6-5-230."
565 So.2d at 144 (emphasis added). See also Cochran v.
Pate, 712 So.2d 1099, 1102 (Ala. Civ. App. 1998)
(holding that, following a foreclosure action, a junior
lienholder was entitled to at least a portion of the surplus
funds from the foreclosure sale that remained after the
initial debt to the mortgagee was satisfied).
case, the parties do not dispute that approximately $15,
352.95 in proceeds from the foreclosure sale remained after
the satisfaction of Southcrest's mortgages. Medicaid had
liens on the property that, although they were inferior to
Southcrest's mortgage lien, established its priority over
nonlienholders to the surplus funds from the foreclosure
sale. Bailey Mortgage, supra. Accordingly, we
conclude that the ...