Linda King, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-0385

Linda King,
Appellant,

vs.

2003 Silverado 1500, VIN *****6662,
Respondent.

Filed November 20, 2017
Affirmed
Smith, Tracy M., Judge

Dakota County District Court
File No. 19AV-CV-16-621

John G. Westrick, Westrick & McDowall-Nix, PLLP, St. Paul, Minnesota (for appellant)

Amy B. Schutt, Campbell Knutson, P.A., Eagan, Minnesota (for respondent)

Considered and decided by Smith, Tracy M., Presiding Judge; Peterson, Judge; and
Halbrooks, Judge.
U N P U B L I S H E D O P I N I O N
SMITH, TRACY M., Judge
Appellant Linda King appeals the district court’s decision that her son’s truck is
subject to forfeiture under Minn. Stat. § 169A.63 (2016). The truck was seized for
forfeiture following her son’s arrest for second-degree driving while impaired. King, along
with her son, was a borrower on the loan for the truck. King argues that she has the right

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to possess the truck under the Uniform Commercial Code (U.C.C.). Her argument depends
on her being a secondary obligor and being subrogated to the rights of the lender. The
district court, following a court trial, determined that King was neither. Because the district
court did not err in its determinations and findings, we affirm.
FACTS
King’s son was arrested fo r second-degree driving while impaired, and the City of
Lakeville seized for forfeiture the truck he was driving. Prior to this arrest, both King and
her son signed loan documents, consisting of a loan agreemen t and a security agreement,
with Toro Employees Federal Credit Union (Credit Union). The loan documents list the
truck as collateral for the loan . King’s son signed as “Borro wer 1” and King signed as
“Borrower 2.” One of the terms of the secur ity agreement provides that forfeiture of the
truck constitutes a default under the agreemen t. The truck is titled in King’s son’s name
alone. King testified that, although her so n was initially making payments on the loan
account, she began making payments following his arrest.
Minn. Stat. § 169A.63 provides for the forfeiture of vehicles that have been used in
connection with certain “designated offense[s]” including driving-while-impaired crimes.
Id., subd. 1(e). A vehicle may be seized following a lawful arrest. Id., subd. 2(b)(1). After
the seizure, the driver and each individual “k nown to have an ownership, possessory, or
security interest” are to receive notice of the seizure and of the government’s determination
that the vehicle is s ubject to forfeiture. Id., subd. 8(b). If none of these individuals
challenges the forfeiture within 60 days, the vehicle is “administratively forfeited.” Id.,
subds. 8(e) (providing for the fate of vehi cles subject to forfeit ure), 10(a) (defining

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administratively forfeited). Generally, forfeited vehicles are either kept by the government
or sold, with sale proceeds distributed to any parties with security interests in the vehicles,
minus the expenses for “s eizure, towing, storage, forfeiture and sale.” Id., subds. 10(a),
10(b), 7(b).1
In her original complaint, King sought relief from forfeiture of the truck on the
theory that she was an “innocent owner” and requested the release of the truck to the Credit
Union to satisfy the outstanding loan obligation. At trial, she abandoned this theory and
instead argued that she personally has a right to possession of the vehicle as a secondary
obligor or guarantor asserting the rights of the Credit Union. Despite King’s change of
argument and requested remedy at trial, the district court addressed King’s new argument.
The district court determined that King was a co-borrower and a primary debtor on
the loan, and not a secondary obligor or gu arantor, based on the language of the loan
documents. The district court also found that King is not subrogated to the rights of the
Credit Union. Based on the above, the district court concluded that King failed to meet her
burden of proving an adequate defense and that the truck should remain subject to forfeiture
under Minn. Stat. § 169A.63.
King appeals.

1 Minn. Stat. § 169A.63, subd. 11, permits a secured party to request the return of a vehicle
in order to sell it to satisfy the secured debt within 30 da ys of receiving notice of the
vehicle’s seizure and forfeiture. King does not argue this subd ivision applies, and so we
do not address it in our decision.

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D E C I S I O N
King argues that the district court erred by determining that the truck is subject to
forfeiture under Minn. Stat. § 169A.63. We review questions of law de novo. Nielsen v.
2003 Honda Accord , 823 N.W.2d 347, 349 (Minn. App. 2012), aff’d, 845 N.W.2d 754
(Minn. 2013). Appellate courts “review the district court’s factual findings for clear error.”
Rasmussen v. Two Harbors Fish Co., 832 N.W.2d 790, 797 (Minn. 2013). “‘Findings of
fact, whether based on oral or documentary ev idence, shall not be set aside unless clearly
erroneous.’” City of Golden Valley v. One 1998 Pontiac Grand Prix, VIN No.
1G2WP521WF309530, 616 N.W.2d 780, 782 (Minn. App. 2000) (quoting Minn. R. Civ.
P. 52.01). “Findings of fact are considered clearly erroneous only if they are not reasonably
supported by the evidence.” City of Golden Valley, 616 N.W.2d at 782 (quotation omitted).
Broadly, King argues that she is a secondary obligor2 on the loan documents and is
subrogated to the Credit Union’s rights through her payments on the loan.3 She contends
that the Credit Union has the right to possess the truck because King’s son defaulted on the
loan when the vehicle was sei zed. She further argues that sh e may exercise that right to
possession as a subrogated party asserting the subrogor’s rights in the collateral under the

2 King uses the terms “secondary obligor” and “guarantor” interchangeably in her briefing
and focuses her argument on U.C.C. provisions that use only the term “secondary obligor.”
See, eg. , Minn. Stat. §§ 336.9-102 (providing definition for secondary obligor, but not
guarantor), .9-618 (outlining the rights and obligations of secondary obligors) (2016).

3 King also argues that she is an “accommodation party” en titled to an assignment of the
loan collateral under the U.C.C. Because this issue was raised for the first time on appeal,
we decline to address it. See Annis v. Annis , 250 Minn. 256, 263, 84 N.W.2d 256, 261
(1957) (“[L]itigants are bound [on appeal] by the theory or theories, however erroneous or
improvident, upon which the action was actually tried below.”).

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U.C.C. King’s argument relies on the propos ition that a secured party has a right to
possession of a forfeited vehicle under the U. C.C., despite the apparently conflicting
language of the forfeiture statute, which provides a procedure fo r the disposition of
forfeited vehicles and specifically addresses the disposition of vehicles that are subject to
a security interest. The city argues that the forfeiture statute, and not the U.C.C., governs.
We need not decide whether King’s U.C.C. th eory has any merit be cause, as explained
below, the district court did not err in determining that King is not a secondary obligor and
that she is not subrogated to the rights of the Credit Union.
A. The district court did not err in de termining that King is not a secondary
obligor.

King argues that the district court erred in determining that she was primarily liable
on the debt and not secondarily liable as she asserts. The U.C.C. defines a “secondary
obligor” as “an obligor to the extent that: (A) the obligor’s obligation is secondary; or
(B) the obligor has a right of recourse with respect to an obligatio n secured by collateral
against the debtor, another oblig or, or property of either.” Minn. Stat. § 336.9-102,
subd. (a)(72). The U.C.C. defines an “obligor” as an individual who,
with respect to an obligation se cured by a security interest in
or an agricultural lien on the co llateral, (i) ow es payment or
other performance of the obligation, (ii) has provided property
other than the collateral to secure payment or other
performance of the obligation, or (iii) is otherwise accountable
in whole or in part for paymen t or other performance of the
obligation.

Minn. Stat. § 336.9-102, subd. (a)(59).

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King meets the definition of an obligor because she is someone who “owes payment
or other performance” of the loan obligation. See Minn. Stat. § 336.9-102, subd. (a)(59)
(defining “obligor”). But the record supports the district court’s determination that she is
not a secondary obligor, under either (A) the secondary-obligation prong or (B) the right-
of-recourse prong of the definition. See Minn. Stat. § 336.9-102, subd. (a)(72) (defining
“secondary obligor”).
We address the right-of-recourse prong firs t. Because no provision in the loan
documents provides King with a right of recourse against her son or his property with
respect to the loan obligation with the Credit Union and King does not argue she has such
a right, King is not a secondary obligor under that prong of the definition.
Second, as to the secondar y-obligation prong, the dist rict court concluded that
King’s obligation is not secondary to her son’s. The loan documents signed by the parties
describe their obligations under the documents. The loan agreement states, “Each person
who signs, or otherwise authenticates this Agreement will be in dividually and jointly
responsible for paying the entire amount owed under this Agreement. This means we can
enforce our rights against any one of you individually or against all of you together.” And
the loan agreement has language near the beginning of the agreement stating, “All
references to ‘you,’ or ‘your’ mean each person who signs, or otherwise authenticates, this
Agreement as a borrower.” The security agreement contains similar language. The plain
language of the loan document s indicates that King is in the same position of liability on
the loan obligation as her son—that is, primarily liable. There is no language in the loan
documents to suggest she has any other status. See Currie State Bank v. Schmitz , 628

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N.W.2d 205, 208-09 (Minn. App. 2001) (finding a party to an ambiguous agreement to be
secondarily liable when language in the “no tice to the cosigner” section said, “You are
being asked to guarantee this debt). The di strict court’s determination that King is
primarily liable for the loan obligation, and is therefore not a secondary obligor, is
supported by the plain language of the loan documents. As such, the determination is not
erroneous.
B. The district court did not clearl y e r r i n f i n d i n g t h a t K i n g i s n o t
subrograted to the rights of the Credit Union as a secondary obligor.

Regardless of whether King is a second ary obligor, she still cannot succeed under
her theory unless she is subrogated to the ri ghts of the Credit Union. King argues that,
because she assumed payments on the loan, she is subrogated to the rights of the Credit
Union.
“A secondary obligor acquires the rights and becomes obligat ed to perform the
duties of the secured party after the secondary obligor . . . is subrogated to the rights of a
secured party with respect to collateral.” Mi nn. Stat. § 336.9-618. “There are two types
of subrogation: equitable and conventional.” Melrose Gates, LLC v. Chor Moua , 875
N.W.2d 814, 818 (Minn. 2016). Conventional subrogation aris es out of a “contractual”
obligation. Id. Under the doctrine of equitable subrogation, “a person who has discharged
the debt of another may suc ceed in substitution to the right s and position of the satisfied
creditor.” Wells Fargo Home Mortg., Inc. v. Chojnacki , 668 N.W.2d 1, 5 (Minn. App.
2003). Equitable subrogation applies where “( 1) the party seeking subrogation has acted
under a justifiable or excusable mistake of fact and (2) injury to innocent parties will

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otherwise result.” Id. Generally, without clear cont ractual terms stating otherwise,
subrogation “will be denied prior to full recovery.” Westendorf by Westendorf v. Stasson,
330 N.W.2d 699, 703 (Minn. 1983). Because King makes no argument that conventional
subrogation applies in her case, and nothing in the record indicates a contractual agreement
between King and her son or be tween King and the Credit Un ion regarding subrogation,
our analysis here focuses on whether equitable subrogation applies.
For these reasons, the record evidence supports the district court’s finding that King
is not subrogated to the rights of the Credit Union. First, King ha s not acted under any
“mistake of fact” making her elig ible for equitable subrogation. See Wells Fargo Home
Mortg., Inc., 668 N.W.2d at 5 She signe d the loan documents in which she agreed to be
liable for the debt with the Credit Union and is now intentionally paying that debt. Second,
there are no “innocent parties” that would be injured if King were not compensated for the
debt. See id. Again, King voluntarily agreed to be liable for the loan amount by signing
the loan documents and cannot now claim to be an innocen t party injured by making
payments on the debt she agreed to pay. Th ird, King has only paid a portion of the debt.
She has continued to make monthly payments on the remaining loan balance but has not
paid the loan in full. Thus, the Credit Un ion has not made a “fu ll recovery,” permitting
King to be equitably subr ogated to its rights. See Westendorf, 330 N.W.2d at 703. The
evidence in the record reasonably supports the district court’s finding that King is not
subrogated to the rights of the Credit Union, a nd the district court’s finding is not clearly
erroneous.

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Because the district court did not err in determining that King is not a secondary
obligor and is not subrogated to the rights of the Credit Union, we affirm the district court’s
determination that the truck remains subject to forfeiture.
Affirmed.