Dalton v. Franken Construction Companies, Inc

On December 8, 1992, Robert Dalton (plaintiff) filed for Chapter 7 bankruptcy, which temporarily stayed foreclosure proceedings that were pending against five of Dalton’s properties. On April 7, 1994, the stay was lifted, and the properties were sold in foreclosure subject to Dalton’s right to redeem. However, because of the bankruptcy, the right of redemption was controlled by the bankruptcy trustee. On April 12, the court confirmed the sale of the properties. On June 2, the bankruptcy trustee abandoned its right to redemption, and Dalton was permitted to pursue redemption on his own behalf. By agreement, Dalton was afforded a two-month redemption period, and he redeemed four of the five properties within this time frame. Franken Construction Companies Incorporated (Franken) (defendant) was the purchaser of the property that Dalton had not redeemed. On June 7, Dalton obtained conditional approval for a loan for the cost of redemption of Franken’s property. The conditions of the loan included the assurances that the bank would have superior lien rights and that the funds would be returned if the property was not redeemed. On that same day, proceeds were delivered by cashier’s check to three payees: Dalton, the district court clerk, and the bank. The check was deposited into a trust account pending the bank’s endorsement after Dalton secured the loan’s conditions. On June 9, Dalton obtained a title commitment establishing that the bank was the superior lienholder, thereby satisfying the first condition. On June 13, the last day of the redemption period, Dalton’s attorney attempted to electronically file a motion setting forth the assurances. However, court procedure required that all documents be filed by hard copy, and they were not received by the court until June 14. On June 14, an order was entered. However, the check was not fully endorsed, and the funds were not deposited until June 17. Dalton argued that his actions constituted substantial compliance with the redemption statute and that he should still be allowed to redeem. The trial court determined that Dalton did not timely exercise his right to redemption because the funds were not deposited until after the expiration of the redemption period. Dalton then filed an appeal.