## Facts

- Kirkeby-Natus held a first mortgage on 403 acres securing $521,458.11.
- Springer Corporation held a second mortgage on 94.96 acres within the 403-acre tract securing $77,800.
- Kirkeby foreclosed the first mortgage, obtained judgment, and bought the entire 403 acres at the foreclosure sale for $323,625, leaving a deficiency of $197,833.11.
- Because of an abstracting error, Springer (a junior lienholder) was not joined as a party in the first-mortgage foreclosure.
- Springer later filed a separate action to foreclose its second mortgage on the 94.96 acres.
- In that action, Kirkeby counterclaimed to foreclose its first mortgage against Springer, since Springer had not been bound by the earlier proceeding.
- The trial court ruled Springer could redeem from the senior foreclosure only by paying (within nine months) the full $323,625 foreclosure bid plus the unpaid deficiency balance of $13,041.07 (after credits totaling $184,792.04).

## Issues

1. What is the effect of omitting a junior mortgagee from a senior mortgage foreclosure action and sale?
2. May an omitted junior mortgagee redeem only the portion of the property covered by its lien (pro tanto), rather than the entire tract sold under the senior foreclosure?
3. If redemption is allowed, must the junior mortgagee pay the full senior-foreclosure bid price plus the remaining deficiency balance?

## Decision

- The court affirmed the judgment requiring redemption of the entire tract, not a partial redemption.
- The court held that Springer’s rights as a nonparty to the first foreclosure were not cut off by the prior foreclosure judgment or sale.
- The court held that Springer could redeem only by redeeming the entire 403 acres purchased at the senior foreclosure sale.
- The court upheld the redemption amount: $323,625 plus $13,041.07, within the time set by the trial court.
- The trial court’s unchallenged findings on deficiency credits were binding on appeal.

## Legal Principles

- A foreclosure judgment and sale do not affect the rights of a person who was not made a party to the foreclosure action; the omitted party’s lien and equity of redemption remain intact.
- Preserving an omitted junior lienholder’s rights does not deprive the senior mortgagee of the benefit of the foreclosure judgment and deficiency judgment obtained against parties who were properly before the court.
- An omitted junior mortgagee who seeks to redeem from a senior foreclosure must redeem the senior mortgage as a whole and cannot compel pro tanto redemption of only the portion subject to the junior lien.
- Redemption requires payment of the amount necessary to discharge the senior mortgage interest as determined by the foreclosure outcome, including the foreclosure-sale purchase price and any remaining deficiency balance.

## Conclusion

The court held that an omitted junior mortgagee’s redemption rights survive a senior foreclosure to which it was not a party, but the junior mortgagee may redeem only by paying the full amount required to redeem the entire property sold under the senior foreclosure, including the full bid price and any remaining deficiency.


Springer Corp. v. Kirkeby-Natus, 453 P.2d 376 (N.M. 1969)