Agricultural Credit Corp. v. State

• Decision Date: 05 October 1945
• Docket Number: 6952.
• Citation: 20 N.W.2d 78,74 N.D. 71
• Court: North Dakota Supreme Court

20 N.W.2d 78

74 N.D. 71

AGRICULTURAL CREDIT CORPORATION v. STATE.

No. 6952.

Supreme Court of North Dakota

October 5, 1945

Syllabus by the Court.

1. Pursuant to section 5594, Comp. Laws 1913 (section 47-1941, Rev.Codes 1943), a judgment creditor under a judgment lawfully obtained and docketed against the record owner of real estate occupies the same position with respect to an unrecorded conveyance of such real estate as does any subsequent purchaser thereof in good faith whose conveyance is first duly recorded, the words 'in good faith' in said section 5594 applying as well to judgment creditors as to subsequent purchasers.

2. One who has knowledge of facts sufficient to put a prudent man upon inquiry with regard to the existence of an unrecorded deed and fails to make such inquiry, cannot claim protection as a bona fide purchaser under the recording act.

3. Open and notorious possession and occupancy of real property by another than his grantor is generally sufficient to charge a purchaser of real estate with knowledge of the rights of the occupant thereof.

4. Land farmed by a tenant under lease from the owner is in the possession of the owner.

5. The record in the instant case is examined and it is held for reasons stated in the opinion, that the facts and circumstances shown are such as to have put a prudent man on inquiry as to the ownership of the land involved and accordingly the defendant was charged with notice that the plaintiff was the owner thereof at the time the defendant's judgment was rendered and docketed.

Alvin C. Strutz, Atty. Gen., and P. B. Garberg, Asst. Atty. Gen for appellant.

Sinness & Duffy, of Devils Lake, for respondent.

NUESSLE, Judge.

This action to determine adverse claims was brought pursuant to the statute, section 8144, Comp.Laws 1913, section 32-1701, Rev.Codes 1943. The complaint alleges that the plaintiff has an interest in the Northeast Quarter of section twenty-four township one hundred fifty-four, range fifty-nine, in Nelson County, North Dakota; that the defendant claims interests or estates therein adverse to the plaintiff and demands judgment for the usual statutory relief.

The defendant, answering, denies that the plaintiff has any interest in or lien upon the premises in question and alleges that if it has, the same is subject and inferior to the interest of the defendant therein. The answer further sets forth that the defendant, the State of North Dakota, doing business as the Workmen's Compensation Bureau, pursuant to the provisions of Title 65, 1943 Revised Codes, on October 10, 1938, procured a judgment against the Gronna Investment Company, a domestic corporation; that an execution was issued upon such judgment and a levy made thereunder upon the real estate in question; that the land was sold at execution sale and bid in by the defendant; that a sheriff's certificate therefor was issued to the defendant on September 17, 1942, and the sale thereafter duly confirmed; that no redemption has been made therefrom and the defendant is entitled to a sheriff's deed therefor.

On the issues thus made the case was tried to the court and judgment was ordered and entered for the plaintiff. Whereupon the defendant perfected the instant appeal demanding a trial de novo in this court.

The facts are substantially as follows: The Gronna Investment Company, a domestic corporation, owned numerous tracts of North Dakota farm land, including that involved in the instant case. It was engaged in leasing these lands and in various commercial enterprises. In 1930, the investment company borrowed a considerable sum of money from the plaintiff and secured the loan thus made by a mortgage upon the real estate here involved. It made a further loan in 1931, and secured its whole indebtedness by a renewal mortgage covering the same property. The indebtedness was not paid. The plaintiff pressed for payment so in May, 1938, a settlement and adjustment was agreed upon whereby the company, in satisfaction of its indebtedness, was to deed the real estate here involved and certain other real property to the plaintiff and to assign to it the leases covering such of the real estate as was rented. Pursuant to this agreement the investment company on August 30, 1938, executed a deed to the property and delivered the same to the plaintiff. Due, however, to the fact there were unpaid taxes against the property the deed was not placed of record until April 2, 1943. There were no buildings on this tract but the investment company had leased it to one Hodek, who occupied and farmed it during the season of 1938 on a share-crop basis. Pursuant to the settlement agreement Hodek delivered and the plaintiff received the landlord's share of the crop for that year in September 1938.

The investment company in carrying on its operations employed various individuals for whom it was charged with workmen's compensation premiums according to the classifications of these employees. These charges were made for the years 1932 and thereafter each year, up to and including the year 1938. The company, however, failed to pay these premiums so in June, 1938, the State sued to recover the amount thereof, together with penalties for the defaults in payment and recovered judgment which was entered and docketed in the office of the Clerk of District Court of Nelson County on October 10, 1938. On 1942 an execution was issued on this judgment and levy thereunder was made upon the real estate in question. This was sold under the execution on September 8, 1942, and bid in by the defendant. Sheriff's certificate was issued on September 17 and the sale was duly confirmed. No redemption was made and the defendant now claims the premises by virtue of this certificate.

The defendant's case is predicated upon two contentions: First, that the deed executed and delivered to the plaintiff by the investment company on August 30, 1938, is void and ineffective as against the lien of the defendant's judgment and rights accruing therefrom for the reason it was not placed of record prior to the entry and docketing of the judgment; and, second, that the mortgages on the premises executed by the investment company to the plaintiff in 1930 and 1931 are inferior to the lien of the defendant's judgment, pursuant to the provisions of chapter 315, Session Laws 1931, section 65-0426, 1943 Rev.Codes, since this judgment was for premiums due to the Compensation Bureau from the investment company for the insurance of its employees.

On the other hand, the plaintiff contends, and the trial court so held, that the deed to the premises in question, executed and delivered to it on August 30, 1938, was for a good and sufficient consideration, that the plaintiff was in possession and occupancy of the premises under and by virtue of the deed from and after the date of its delivery, and that defendant was charged with notice thereof through the occupancy and possession of its tenant Hodek. Plaintiff further contends that if this be not so, nevertheless, its mortgages above described are superior to the lien of the defendant's judgment notwithstanding the provisions of section 65-0426, supra. And in this behalf it cites Federal Farm Mortgage Corporation v. Berzel, 69 N.D. 760, 291 N.W. 550.

In passing on the questions raised by the defendant's first contention it will be necessary for us to consider the following sections of the statute:

Section 7691, Comp.Laws 1913, see, section 28-2013, Rev.Codes 1943:

'On filing a judgment roll upon a judgment directing in whole or in part the payment of money, it may be docketed with the clerk of the court, in which it was rendered, in a book to be known as the judgment docket, and in any other county upon filing with the clerk of the district court for said county a transcript of the original docket, and it shall be a lien on all the real property except the homestead in the county where the same is so docketed of every person against whom any such judgment shall be rendered, which he may have at the time of the docketing thereof in the county in which such real property is situated * * *.'

Section 5594, Comp.Laws 1913, see, section 47-1941, Rev.Codes 1943:

'Every conveyance by deed, mortgage or otherwise, of real estate within this state, shall be recorded in the office of the register of deeds of the county where such real estate is situated, and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith, and for a valuable consideration, of the same real estate, or any part or portion thereof, whose conveyance, whether in the form of a warranty deed or deed of bargain and sale, deed of quit claim and release, of the form in common use or otherwise, is first duly recorded; or as against any attachment levied thereon or any judgment lawfully obtained, at the suit of any party, against the person in whose name the title to such land appears of record, prior to the recording of such conveyance. * * *'

Thus section...