American Mortgage Company v. Mouse River Live Stock Company

Decision Date15 June 1901
Citation86 N.W. 965,10 N.D. 290
CourtNorth Dakota Supreme Court

Appeal from District Court, McHenry County; Morgan, J.

Action by the American Mortgage Company of Scotland, Limited against the Mouse River Live Stock Company and others. Judgment for plaintiff, and defendant C. A. Prouty appeals.


Cochrane & Corliss, for appellant.

The law presumes as against an unrecorded mortgage that appellant was a bona fide purchaser for value, without notice. Roll v Rea, 50 N.J.L. 264; Vest v. Michie, 31 Am. Rep 722; Wood v. Chapin, 13 N.Y. 509; Ryder v Rush, 102 Ill. 338; Lacustrine v. Co., 82 N.Y. 476; Holmes v. Stout, 10 N.J.Eq. 419; Coleman v. Barklew, 27 N.J.L. 357; Marshall v. Dunham, 66 Me. 539; Anthony v. Wheeler, 130 Ill. 128; Gratz v. Improvement Co., 82 F. 381; Hoyt v. Jones, 31 Wis. 389; Doody v. Hollwedell, 48 N.Y.S. 93; Beman v. Douglas, 37 N.Y.S. 859; Saunders v. Isbell, 24 S.W. 307; Red River Land & Imp. Co., v. Smith, 7 N.D. 236. At the time of the purchase appellant held the promissory note of E. M. Prouty for $ 5,000, and paid the purchase price, $ 2,000, by crediting the amount on such indebtedness and endorsing the same upon such note. Appellant extinguished $ 2,000 of a valid claim against his grantor, and was in the same position as though Prouty had paid him $ 2,000 on the note and appellant had handed the money back as the consideration on the purchase price of the land. Under these circumstances appellant was a bona fide purchaser for a valuable consideration. Mayer v. Heidelbach, 123 N.Y. 332; Wert v. Naylor, 93 Ind. 431; Murray v. Bank, 49 P. 326; Clark v. Barnes, 72 Ia. 563; Adams v. Vanderbeck, 47 N.E. 24; Butterfield v. Pitcher, 36 N.J.Eq. 482; Bunn v. Schnellbacher, 45 N.E. 227; Adams v. Vanderbeck, 45 N.E. 645; State Bank v. Fraine, 20 S.W. 620; Heath v. Company, 39 Wis. 146; 2 Warvell on Vendors, 612; 20 A. & E. Enc. L. 591; Bump on Fraudulent Conveyances, 198. The certificate of acknowledgement to the mortgage in question was fatally defective. A statement that the person is known to the notary public to be the person who is described in the mortgage as president is not equivalent to a certificate that the person signing is known to be the president. Tully v. Davis, 30 Ill. 103; Newman v. Samuels, 70 Ill. 528; Fell v. Young, 63 Ill. 106; Murphy v. Williamson, 85 Ill. 149; Coburn v. Harrington, 114 Ill. 104; Fryar v. Rockerfeller, 63 N.Y. 268; Dewey v. Campan, 4 Mich. 565; Harrington v. Fish, 10 Mich. 415; Pickney v. Burrage, 31 N.J.L. 21; Wood v. Cochrane, 39 Vt. 544; Callaway v. Fash, 50 N.W. 420; Hines v. Himkin, 47 N.W. 818; Cannon v. Deming, 3 S.D. 421; 53 N.W. 863; Davidson v. Wellingford, 32 S.W. 1030; Davidson v. Company, 19 So. Rep. 390; Salman v. Huff, 15 S.W. 1047; Holt v. Company, 78 N.W. 947. It is essential that a real estate mortgage should be recorded to entitle the mortgagee to foreclose by advertisement under the power of sale therein contained. Holt v. Trust Co., 78 N.W. 947; § 5846, Rev. Codes. An instrument with a defective certificate of acknowledgment is not entitled to record and the recording of the same does not constitute constructive notice. Webb on Record Title, § 55; I A. & E. Enc. L. (2 Ed.) 489, 491; James v. Moore, 14 Am. Dec. 521; Staples v. Shackleford, 51 S.W. 1032; Donovan v. Elev. Co., 8 N.D. 585; Abney v. Company, 32 S.E. 256; Emmerick v. Alvarado, 27 P. 356; Cannon v. Deming, 3 S.D. 421; § 648, Civil Code; § 3269, Comp. Laws; § § 3564, 3568, 3588, 3589, 3590, Rev. Codes. While the legislature may cure defective acknowledgments, it cannot, under the guise of passing a curative law, divest vested rights. Webb on Record Title, § 97; McGehee v. McKenzie, 43 Ark. 156; Thompson v. Morgan, 6 Minn. 292; Fogg v. Holcomb, 64 Ga. 621; Green v. Drinker, 7 S.W. 440; Newman v. Samuels, 17 Ia. 521; Brinton v. Seevers, 12 Ia. 389. A validating statute will not operate upon an acknowledgment which has been adjudged defective prior to the passage of the act, even though the case be still pending on appeal. 1 A. & E. Enc. L. (2 Ed.) 566; Wright v. Graham, 42 Ark. 141; Ralston v. Moore, 83 Ky. 571; Barnett v. Barnett, 16 Am. Dec. 516. The rule that one cannot claim to be a bona fide purchaser who claims under a quit-claim deed does not apply where the purchaser claiming to be a bona fide purchaser takes under a warranty deed, and the quit-claim deed is in the chain of title back of his warranty deed. Winker v. Willer, 54 Ga. 476; Hubert v. Bossart, 70 Ga. 78; Snowden v. Tyler, 21 Neb. 199; Sherwood v. Moelle, 36 F. 478; United States v. Co., 148 U.S. 31; Michael v. Border, 129 Ind. 529; Finch v. Trent, 22 S.W. 132. A purchaser even under a quit-claim deed is entitled to protection if he is in fact a bona fide purchaser. Devlin on Deeds, § § 672, 673; Schott v. Dosh, 68 N.W. 346; Wilhelm v. Wilkin, 44 N.E. 82; Stanley v. Hamilton, 33 S.W. 601; Baylor v. Scottish Co., 66 F. 631; Elliott v. Buffington, 51 S.W. 408; Smith v. McClaim, 45 N.E. 41; Moelle v. Sherwood, 13 S.Ct. 426; U. S. v. Company, 13 S.Ct. 458.

John W. Maher and M. H. Brennan, for respondent.

Plaintiff's claim in the former litigation furnishes sufficient information to put a prudent man upon his inquiry as to the existence of outstanding incumbrances regardless of the record in the register's office. Appellant cannot take advantage of the judgment and close his eyes to the information given by the record in the case. Ferguson v. Tarbox, 44 P. 905; § 5118 Rev. Codes; Doran v. Dazy, 5 N.D. 167, 64 N.W. 1023. The consideration for the deed to C. A. Prouty was a pre-existing indebtedness and will not support his claim of being a bona fide purchaser. 16 A. & E. Enc. L. 837; Pride v. Whitfield, 51 S.W. 1100; Richerson v. Moody, 42 S.W. 317; Marshall v. Marshall, 42 S.W. 353; Hirsch v. Jones, 42 S.W. 604; Huff v. Maroney, 56 S.W. 754; Freeman v. Linsley, 40 S.W. 835; Lillibridge v. Allen, 69 N.W. 931; Williams v. Williams, 76 N.W. 1039; Howells v. Hettrick, 150 N.Y. 308, 54 N.E. 677; Frey v. Clifford, 44 Cal. 335; Stanley v. Schwalby, 162 U.S. 276. A judgment in ejectment is not a bar to a subsequent action as to the same property. Evans v. Kunze, 31 S.W. 123; Ryan v. Fulghin, 22 S.E. 940; Sampson v. Mitchell, 28 S.W. 768; Harper v. Campbell, 14 So. Rep. 650; Newell v. Neal, 27 S.E. 560; Dawson v. Parkham, 18 S.W. 48; Buford v. Adair, 64 Am. St. Rep. 854.

WALLIN, C. J. MORGAN, J., did not sit in the case; FISK, J., of the First Judicial District, sitting by request.



This action is brought to foreclose a mortgage upon certain real estate situated in McHenry county, which mortgage was executed on the 15th day of September, 1886, by the defendant Mouse River Live-Stock Company, a corporation, and was delivered to the plaintiff, in whose favor it was made. This mortgage was filed for record and was recorded in the office of the register of deeds of said county on the 10th day of October, 1886, in Book 20 of Mortgages. The complaint states that the defendants Richardson and C. A. Prouty claim an interest in said real estate as purchasers since the recording of said mortgage, and after having notice of the mortgage, and that the other defendants claim an interest in the real estate as tenants of Richardson and Prouty. All of the defendants except C. A. Prouty defaulted, and made no appearance in the action. After a trial in the District Court without a jury, judgment was entered in favor of the plaintiff, from which judgment C .A. Prouty has appealed to this court, and demands a trial anew in this court.

The defendant C. A. Prouty, in his answer to the complaint alleges that he is the owner in fee simple of the real estate described in plaintiff's mortgage; that he purchased the same in good faith, for a valuable consideration, and without notice of the mortgage, actual or constructive, for a consideration of $ 2,000, which amount defendant states was paid to one E. M. Prouty by giving him credit for $ 2,000, and indorsing that amount on a certain promissory note for $ 5,000 held by the defendant, and signed by E. M. Prouty. The answer further alleges that E. M. Prouty was seized of a fee-simple title to the land on the 24th day of February, 1894, and was then in possession of the land, and that on said day and for said consideration E. M. Prouty executed and delivered to him a deed of warranty of said land, with full covenants, and that said deed was duly recorded in the office of the register of deeds of McHenry county, and that he (the said C. A. Prouty) now owns the land, and claims title under said deed of E. M. Prouty. To sustain the allegation of his answer, C. A. Prouty offered certain evidence at the trial to establish a chain of title to the land extending from the mortgagor, the Mouse River Live-Stock Company, to himself. The register of deeds of McHenry county was called as a witness by the defendant, and produced a certain deed-record book, which he identified as an official record in his office, whereupon the defendant offered in evidence what purported to be the record of a warranty deed recorded on page 566 of said record book, and which deed, according to the record, was dated on the 24th day of February, 1894, and purported to be the deed above described, conveying the title of the land from E. M. Prouty to C. A. Prouty. To the introduction of this evidence the plaintiff, by its counsel, objected as follows: "Objected to as incompetent, irrelevant, immaterial, and no foundation laid; does not appear that E. M. Prouty had any record title, or any title whatever. " Counsel for defendant then offered in evidence page 366 of said record book, on which page a quit-claim deed of the premises appeared to be...

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