Coates v. Smith

• Decision Date: 17 October 1916
• Citation: 160 P. 517,81 Or. 556
• Parties: COATES v. SMITH ET AL.
• Court: Oregon Supreme Court

160 P. 517

81 Or. 556

COATES v. SMITH ET AL.

Supreme Court of Oregon

October 17, 1916

In Banc.

Appeal from Circuit Court, Multnomah County; C. U. Gantenbein Judge.

Suit by Catherine Coates against Chester A. Smith, Otis S. Smith, and R. L. Sabin, trustee in bankruptcy. From a decree for plaintiff, the trustee appeals. Reversed, and cause remanded for further proceedings.

This is a suit in equity to reform and foreclose a mortgage for $1,621, and interest, executed on January 2, 1913, by the defendants Chester A. Smith and Otis S. Smith. A demurrer was filed and sustained to the complaint. An amended complaint and a supplemental complaint were thereafter filed. Defendant R. L. Sabin, trustee in bankruptcy, demurred to the amended complaint.

It is shown by the pleadings of plaintiff that on January 2, 1913 the defendants Chester A. Smith and Otis S. Smith executed to plaintiff their promissory note as follows:

"$1,621.

Portland Oregon, January 2, 1913.

"Five years after date, without grace, we promise to pay to the order of Catherine Coates sixteen hundred and twenty-one dollars, for value received, with interest after date at rate of 7 per cent. per annum until paid. Principal and interest payable in U.S. gold coin at Sunnyside, Portland, Oregon, and in case suit or action is instituted to collect this note, or any portion thereof, we promise to pay such sum as the court may adjudge reasonable as attorney's fees in said suit or action. There may be paid on any interest-bearing date any amount in even hundred dollars.

Chester A. Smith.

"Otis S. Smith."

On the same date, for the purpose of securing the payment of the note, defendants Chester A. Smith and Otis S. Smith executed their real estate mortgage which is set forth in h AC VERBA IN THE COMPLAINT, TO WHICH WAS AFFIXED THE FOLLOWING CERTIFICATE OF ACKNOWLEDGMENT, OMITTING THE FORMAL PARTS:

"On the 2d day of January, A. D. 1913, personally came before me, a notary public in and for said county and state, the within-named Samuel H. Smith and Adora L. Smith, his wife to me personally known to be the identical persons described in and who executed the foregoing instrument, and acknowledged to me that they executed the same freely for the uses and purposes therein mentioned."

This mortgage was duly recorded on January 2, 1913. No interest having been paid on the note, plaintiff elected to declare the whole amount due, and instituted proceedings to foreclose the mortgage. In addition to the allegations of the original complaint, the pleadings of the plaintiff contained the following:

"That at the time the said note was executed and subsequent to the date of its execution, the said defendants Chester A. Smith and Otis S. Smith orally promised and agreed to pay the said interest provided for in said note yearly, that is, to pay the interest on the principal sum of said note on or about the 2d day of January of each year, after the time of the execution of said note, but that the scrivener who drew up the said note neglected to state in said note that the interest made payable thereby should be paid annually; that at the time of the execution of said note it was, and now is, the custom to pay the interest on promissory notes annually when the time of payment of said note is not stated in said note, and the said custom was known to the plaintiff and the defendants at the time of the execution of said note; that at the time of the execution of said note and mortgage the said E. C. Minor, who acknowledged the same as notary public, erroneously inserted in the acknowledgment of said mortgage the names of Samuel H. Smith and Adora L. Smith, wife of said Samuel H. Smith, in place and instead of the names of the makers of said mortgage, and that the insertion of said names of Samuel H. Smith and Adora L. Smith was through the error, inadvertence, and mistake of the said E. C. Minor, and that the said defendants Chester A. Smith and Otis S. Smith were present at the execution thereof, and in the presence of said notary public acknowledged the execution of said document, and that it was the intention of said scrivener or notary public to insert the names of said Chester A. Smith and Otis S. Smith in the said acknowledgment instead of the names of said Samuel H. Smith and Adora L. Smith."

Plaintiff prayed that the note and mortgage be reformed to correct the alleged mistake.

It appears that in May, 1914, subsequent to the date of the execution of the mortgage, the defendant Chester A. Smith was declared bankrupt; that thereafter, about May 28, 1914, R. L. Sabin, one of the defendants, was elected by the creditors of Chester A. Smith, as trustee in bankruptcy for the latter, and that he has duly qualified as such. It further appears than on April 21, 1913, defendant Otis S. Smith executed a deed conveying all his right and title in the real property mortgaged to defendant Chester A. Smith, in consideration of the sum of $1,500, to be paid thereafter, with interest at 6 per cent., and that such deed was duly recorded; that on June 17, 1914, Otis S. Smith filed his claim against the estate of Chester A. Smith, bankrupt, in the sum of $1,566.50, based upon the note given for the conveyance of said real estate, and received from the trustee in bankruptcy 3 per cent. on the amount claimed. The defendant Chester A. Smith made no defense to this suit. The defendant R. L. Sabin made no answer and has pleaded no equities for the creditors in the bankruptcy proceedings. The defendant Otis S. Smith filed an answer setting up that at the date of the execution of the mortgage he was a minor, and therefore not liable upon his contract.

Plaintiff filed a supplemental complaint pleading therein facts occurring subsequently to the date of filing the original and amended complaints as a waiver and estoppel against the defendant Otis S. Smith of his right to plead infancy as a defense, and setting forth particularly that all right, title, and interest owned by him in the real property described in the mortgage had been conveyed to Chester A. Smith. No other or additional allegations affecting the rights or interests of the defendant R. L. Sabin, other than as appeared in the amended complaint, were contained in the supplemental complaint. Otis S. Smith defaulted, and R. L. Sabin filed a demurrer identical in terms with the demurrer filed to the amended complaint. The court entered his default, and also a judgment and decree on the pleadings reforming the note and mortgage and foreclosing the latter as reformed. From this decree R. L. Sabin, trustee in bankruptcy for defendant Chester A. Smith, appeals.

Burnett J., dissenting.

Sidney Teiser, of Portland, for appellant. John K. Kollock, of Portland (Kollock, Zollinger & McDowall and Jeffrey & Lenon, all of Portland, on the brief), for respondent.

BEAN, J. (after stating the facts as above).

It is contended by defendant R. L. Sabin that he is an innocent third party, that the acknowledgment of the mortgage did not entitle the same to be recorded, and that therefore the recordation imparted no notice to the trustee, and that the latter took the title to the property unaffected by the plaintiff's mortgage.

In the consideration of the certificate of the acknowledgment of the mortgage the whole instrument should be examined. Where the certificate of acknowledgment of a conveyance identifies the parties as known to the officer taking the acknowledgment to be the persons who executed the same, the fact that the names of the parties appear in such certificate spelled as "Samuel H. Smith" and "Adora L. Smith" instead of the names of the mortgagors, Chester A. Smith and Otis S. Smith, will not vitiate the instrument. It will be presumed that such variance in names is the result of a clerical error merely. 1 C.J. p. 848, note 67 b; 1 R. C. L. p. 284, § 62; Rodes v. St. Anthony & Dakota Elevator Co., 49 Minn. 370, 52 N.W. 27; Bell v. Evans, 10 Iowa, 353. The material matter in such a certificate of acknowledgment is the identification of the mortgagors, and not the notation of their names. The one in question shows that the officiating notary declares that the persons appearing before him and acknowledging the execution of the instrument are personally known to him to be the identical persons described therein, and who executed the same. It therefore appears from the instrument that the officer taking the acknowledgment identified the mortgagors, although he did not correctly write their names.

Under our statute there is no specific requirement that the name of a grantor or mortgagor shall be contained in the certificate of acknowledgment. Section 7109, L. O. L., directs that:

"The officer taking such acknowledgment shall indorse thereon a certificate of the acknowledgment thereof, and the true date of making the same, under his hand."

If the certificate shows that such officer knows that "the person making such acknowledgment is the individual described in and who executed such conveyance," the identification is complete according to section 7119, L. O. L. No other description or name of the grantor is absolutely essential. Omitting the erroneous names, which may be treated as surplusage, the certificate in the present case plainly identifies the mortgagors. A reference to the mortgage clearly indicates that the names written in the certificate and also the description of one of the mortgagors as the wife of the other, when both are designated in the conveyance as "single," are clerical errors. It is now well established by the great weight of authority that a certificate failing to name the acknowledging party where reference is made in the certificate to the party who executed the conveyance does not affect the validity of...