Non-Party Ordered To Make A Turnover Of Proceeds Of A Sale Has No Standing To Appeal

On July 15, the Eight District Court of Appeals dismissed the appeal of a nonparty who was ordered to make a turnover of the proceeds of a public sale, pursuant to the motion of a bank. The Court dismissed the appeal, finding that the non-party lacked standing.

In Huntington National Bank v. The Mortgage Zone, Inc. et al., a bank held a promissory note executed by Defendants Mortgage Zone, Inc. and Smart Choice Marketing, Inc. The note was secured by certain business equipment. The Defendants defaulted on the note and the bank sought to enforce its right to possession of the collateral. Beckett & Chambers, which claimed to have a warehouseman’s lien over the property, was never a party in the action and never intervened in the action. Beckett & Chambers claimed that the Municipal Court had ordered Beckett & Chambers to take the property to its premises during a forcible entry and detainer action against Defendants.

The bank filed a replevin action against Mortgage Zone, Inc. and Smart Choice Marketing, Inc. The trial court granted the bank’s motion for possession in March 2007, and granted a default judgment against Mortgage Zone and Smart Choice in May 2007. In January 2008, the bank filed a motion for turnover of property directed at non-party Beckett & Chambers. The Court granted the motion for turnover of property, and Beckett & Chambers appealed.

The Court held that Beckett & Chambers was never a party in the action, and despite the trial court’s treating it as if it were a party to the action, Beckett & Chambers had no standing to appeal the trial court’s order to turn over the proceeds of sale.

Posted by: Katherine M. Klingelhafer

Categories: Bankruptcy & Banking Law