## Facts

- A closely held corporation operated a spring and distilled water bottling business owned by members of the Gilliss family.
- The business used two adjacent parcels in North Dakota: a 0.9-acre tract with the bottling plant titled to the corporation, and a surrounding 50.63-acre tract with wells/springs titled to two family members individually, who lived there.
- A bank foreclosed on the 50.63-acre tract, and a sheriff’s sale occurred in 1987.
- To refinance operations, a credit union loaned $125,000 to the corporation to acquire the sheriff’s certificate, pay other debts, and cover taxes and insurance.
- As collateral, the credit union took mortgages on both tracts, Article 9 security interests in the corporation’s personal property (including equipment and a state water permit), and personal guaranties from family members.
- After the redemption period expired, the credit union obtained a sheriff’s deed and tendered a quitclaim deed conveying the 50.63-acre tract to the corporation, but the family members did not accept it because they wanted individual ownership.
- The corporation defaulted; the credit union sued to foreclose the mortgages and security interests and to enforce the guaranties.
- The trial court entered judgment for the credit union; one guarantor appealed pro se but did not provide a complete transcript.

## Issues

1. Whether homestead rights barred foreclosure of the mortgage on the 50.63-acre tract.
2. Whether any homestead or ownership rights survived the earlier foreclosure after expiration of the statutory redemption period.
3. Whether a state water permit may serve as Article 9 collateral as a “general intangible.”
4. How an incomplete appellate record affects review of fact-dependent challenges to the foreclosure judgment.

## Decision

- The appellate court affirmed the foreclosure judgment and enforcement of the guaranties.
- It held that any homestead and other rights in the 50.63-acre tract were extinguished when the redemption period from the earlier foreclosure expired.
- In the alternative, it held that state homestead protections do not prevent forced sale to satisfy mortgage debt secured by a valid mortgage.
- It upheld the secured party’s interest in the state water permit as an enforceable Article 9 security interest in a general intangible.
- Because the appellant failed to provide a sufficient transcript, the court presumed the trial court’s findings were supported by the evidence and declined to review issues requiring an evidentiary record.
- Costs were assessed against the appellant for noncompliance with appellate rules.

## Legal Principles

- After foreclosure and expiration of the statutory redemption period, the mortgagor’s property rights—including homestead rights—are terminated and cannot be asserted to defeat later foreclosure proceedings on the same tract absent a new legal basis.
- Homestead protections do not immunize property from foreclosure for mortgage debt when the debt is secured by a valid mortgage on the property.
- A state-issued permit or similar license right can qualify as a UCC Article 9 “general intangible,” permitting attachment and enforcement of a security interest unless governing law prohibits encumbrance.
- An appellant must provide an adequate record for review; absent a transcript, an appellate court presumes regularity and affirms on fact-dependent issues unless error appears on the face of the limited record.

## Conclusion

The court affirmed foreclosure and guaranty enforcement, rejecting homestead defenses as extinguished after redemption lapsed and confirming that a state water permit could be taken as Article 9 collateral, while applying deferential review due to an inadequate appellate record.


Lake Region Credit Union v. Crystal Pure Water, Inc., 502 N.W.2d 524 (N.D. 1993)