RUCKER, J.
A mortgage holder foreclosed its mortgage, took title to the subject property at a sheriff’s sale, and then sold the property to a third party. The foreclosing mortgagee subsequently discovered it had inadvertently failed to name a junior lienholder in the foreclosure action. We granted transfer to shed light on the status of the original first mortgage in this context.
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The law in this jurisdiction is well settled that a junior lienholder who is not made a party to a foreclosure action is “in no wise bound by such foreclosure and his situation after the foreclosure remained the same as it had been before. The purchaser at the foreclosure sale simply stepped into the shoes of the original holder of the real estate and took such owners‟ interest subject to all existing liens and claims against it.” Watson v. Strohl, 46 N.E.2d 204, 210 (Ind. 1943). See also Catterlin v. Armstrong, 101 Ind. 258, 264 (1885) (characterizing as “settled” the proposition “[t]hat the rights of a junior mortgagee, who was not made a party, are in no manner affected by the foreclosure of and sale on a senior mortgage”); Holmes v. Bybee, 34 Ind. 262, 264 (1870) (holding that a junior judgment creditor stands on “essentially the same ground” as a junior mortgagee in that his rights are “in no way affected by the foreclosure of a senior mortgage, where the junior mortgagee was not made a party to the proceedings”). As the Court of Appeals has more recently declared, “[W]hen junior lienholders are not made parties, the foreclosure and sale cannot be enforced against them . . . . Where a mortgagee knows or should know that a person has an interest in property upon which the mortgagee seeks to foreclose, but does not join that person as a party to the foreclosure action, and the interested person is unaware of the foreclosure action, the foreclosure does not abolish the person’s interest.” Deutsche Bank Nat’l Trust Co. v. Mark Dill Plumbing Co., 903 N.E.2d 166, 169-70 (Ind. Ct. App. 2009), clarified on reh’g, 908 N.E.2d 1273.
Countrywide concedes that it simply missed and did not discover the existence of Citizens Bank’s judgment lien until sometime after filing its complaint for statutory foreclosure. Countrywide contends that this oversight was the result of “technicalities and circumstances of time.” Br. of Appellee at 5. More precisely Countrywide complains that the close proximity in time between its foreclosure action and the entry of Citizens Bank’s judgment caused this oversight and thus Citizens Bank was omitted and not named as a party in the suit for foreclosure. Apparently recognizing that because of the doctrine of merger the statutory foreclosure did not abolish Citizens Bank’s judgment lien, Countrywide filed what it characterized as a “Complaint for Strict Foreclosure” to prevent Citizens Bank from asserting its lien. We pause here to discuss this particular cause of action.
As with much of our property law the concept of “strict foreclosure” is also a product of the English common law and was characterized as “’A rare procedure that gives the mortgagee title to the mortgaged property – without first conducting a sale – after a defaulting mortgagor fails to pay the mortgage debt within a court-specified period.’” Deutsche Bank, 903 N.E.2d at 168 (quoting Black’s Law Dictionary 658 (7th ed. 1999)). However, Indiana, like many American jurisdictions, rejected this proceeding in lieu of foreclosure by judicial sale because the proceeding amounted to forfeiture which “is often offensive to our concepts of justice and inimical to the principles of equity.” Skendzel v. Marshall, 301 N.E.2d 641, 650 (Ind. 1973). In any event, this cannot be the “strict foreclosure” sought by Countrywide since Countrywide already had title to the subject property by way of the statutory foreclosure proceeding. Instead this Court has adopted a modified version of strict foreclosure:
A strict foreclosure proceeds upon the theory that the mortgagee or purchaser has acquired the legal title, and obtained possession of the mortgaged estate, but that the right and equity of redemption, of some judgment creditor, junior mortgagee, or other person similarly situate, has not been cut off or barred. In such a case, the legal title of the mortgagor having been acquired, the remedy by strict foreclosure is appropriate to cut off the equity and right of junior incumbrancers to redeem. Such persons have a mere lien upon, or an equity in, the land which is subordinate to the right of the owner of the legal title. A statutory foreclosure, in such a case, would be manifestly inappropriate. The owner of the legal title may, with propriety, maintain a proceeding in the nature of a strict foreclosure, to bar the interest of persons who have a mere lien upon or right of redemption in the land.
Jefferson v. Coleman, 11 N.E. 465, 466-67 (Ind. 1887) (internal citations omitted).
Here Countrywide seems to suggest that a complaint for strict foreclosure is an end in and of itself. It cites for example various cases in which our courts have confirmed strict foreclosure as a viable remedy where a junior lienholder has been omitted. [Footnote omitted.] And Countrywide concludes thereby that its preexisting mortgage lien survives and is superior to Citizens Bank’s junior judgment lien. But there is nothing particularly sacrosanct about a strict foreclosure action. That is to say, simply alleging that strict foreclosure would be a proper remedy does not make it so, nor does such allegation resolve the question of merger. In the end strict foreclosure as used in this case is merely a mechanism to place before the court the question of whether the doctrine of merger should be enforced.
As indicated earlier in this opinion our case authority declares, “[w]hether the conveyance of the fee to the mortgagee results in a merger of the mortgage and the fee depends primarily upon the intention of the parties, particularly that of the mortgagee.” Ellsworth, 424 N.E.2d at 168 (citations omitted). This is not, in our view, an “anti-merger” rule. Instead, we view it simply as an exception to the rule, providing a starting point in determining whether merger occurred in the first instance. As one court has observed “it must be presumed that the mortgagee intended to do that which was most advantageous to himself, and if this is that the two estates shall not merge, no merger will take place. This presumption, however, is not conclusive; it may be rebutted by evidence that would warrant a . . . finding that a merger had been expressly agreed to, or that the mortgagee’s conduct and action were such as could fairly be ascribed only to an intention to merge.” Barton v. Cannon, 489 P.2d 1021, 1022 (Idaho 1971) (quotation omitted).
In this case the evidence before the trial court rebuts the presumption that Countrywide intended that the two estates remain separate. The limited warranty deed transferring the property to FNMA declares in part, that Countrywide “grants and conveys” the same and “warrants the title . . . against the acts of the Grantor and all persons claiming lawfully by, through or under the Grantor.” Appellant’s App. at 35. Under our statutes such words of conveyance are taken to mean that the “conveyance is in fee simple” and that the grantor, “(1) is lawfully seized of the premises; (2) has good right to convey the premises; (3) guarantees the quiet possession of the premises; (4) guarantees that the premises are free from all encumbrances; and (5) will warrant and defend the title to the premises against all lawful claims.” I.C. § 32-17-1-2.
On the record before us it is not sufficiently clear whether Countrywide did or did not intend merger to occur at the precise moment the trial court entered judgment of foreclosure in favor Countrywide and against the Clouds on October 30, 2006. But at the very least by April 19, 2007 – when Countywide transferred its interest in the real estate to FNMA – Countrywide’s intent was manifest: conveyance of title in fee simple, free from all encumbrances. Such a transfer would not have been possible absent a merger of the mortgage with the lien. In essence by conveying title to a third party by way of warranty deed, albeit limited, Countrywide demonstrated that it intended a merger of its interests. This view is consistent with that of other jurisdictions that have addressed the issue. See e.g., Constr. Mach. of Ark. v. Roberts, 819 S.W.2d 268, 270 (Ark. 1991) (“An intent to effect a merger is indicated where, after acquiring the equity, the mortgagee conveys the property or leases it to a stranger . . . .”); Downstate Nat’l Bank v. Elmore, 587 N.E.2d 90, 94 (Ill. Ct. App. 1992) (concluding it was “clear that [the mortgagee] merged [its] interest by its conveyance” to a third party); Thorp Consumer Disc. Co. v. Hartigan, 683 N.E.2d 373, 377 n.3 (Ohio Ct. App. 1996) (finding merit in the proposition “that a holder of a mortgage lien who acquires title to the mortgaged property and subsequently conveys it with full covenants to a bona fide purchaser, absent an agreement to the contrary, extinguishes his mortgage interest in the property”).
Here Countrywide undoubtedly transferred the property to FNMA with the intent to pass clear title so that the transferee could dispose of the property as it wished. Indeed Countrywide acknowledges that its transfer of the property to FNMA with the lien of Citizens Bank in place may result in a breach of the limited warranty deed. Br. of Appellee at 14. Simply because in retrospect it might not have been in Countrywide’s “best interest” to extinguish its mortgage lien when it conveyed the property to FNMA cannot change Countrywide’s intent after the fact.
We hasten to add that although the mortgagee’s intent is the primary consideration in determining whether a merger has occurred, there may be circumstances under which the equitable remedy of strict foreclosure may nonetheless be appropriate. For example, this is not a case in which a junior lienholder was not joined in the foreclosure action because of an indexing error resulting in the lien not appearing in the court records. See U.S. Bank of Wash. v. Hursey, 806 P.2d 245, 247 (Wash. 1991) (declaring that a “reforeclosure” was appropriate where a junior lienholder was omitted from a foreclosure action because of indexing error by the court clerk’s office). Were such facts before us, then the outcome of this case very well may have been different. [Footnote omitted.] Instead, the record is clear that Citizen Bank’s lien on the property was properly recorded and indexed. Other than essentially declaring mistake or inadvertence Countrywide does not explain why the lien was overlooked. In sum, Countrywide has failed to demonstrate that it is entitled to the remedy of strict foreclosure.
Conclusion
We conclude the trial court erred by entering summary judgment in favor of Countrywide and FNMA. We thus reverse the trial court on this issue and remand with instructions to enter summary judgment in favor of Citizens Bank, and for all other relief consistent with this opinion.
Judgment reversed and cause remanded.
Shepard, C.J., and Dickson and David, JJ., concur.
Sullivan, J., dissents with separate opinion.
Sullivan, Justice, dissenting.
Indiana precedent holds that the result reached by the Court “lend[s] sanction to an unjust enrichment of” Citizens Bank. Oldham v. Noble, 117 Ind. App. 68, 78-79, 66 N.E.2d 614, 618 (1946). I respectfully dissent.
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The Court grounds its decision in merger and anti-merger doctrine. In this regard, it seems to me that the Restatement (Third) of Property: Mortgages § 8.5 (1997), is correct to pro-vide that the “doctrine of merger does not apply to mortgages.” The Restatement (Third) quotes the following rationale which seems particularly apt for this case:
Modern courts’ application of the merger doctrine to mortgages primarily results from the fact that at certain points in the early common law the paths of their legal development crossed. Because some early mortgage counterparts legitimately were subject to the operation of merger, it has clung tenaciously to mort-gages ever since, although mortgages have evolved beyond the form to which merger applied. The law has grown up around merger, developing systems, such as the title records, that reflect modern practices and obviate the need for merger. Elimination of merger will strengthen this infrastructure.
Ann M. Burkhart, Freeing Mortgages of Merger, 40 Vand. L. Rev. 283, 386-87 (1987), quoted in Restatement (Third) § 8.5, Reporters’ Notes, cmt. a.