Connecticut Nat. Bank v. Lorenzato

• Citation: 221 Conn. 77,602 A.2d 959
• Decision Date: 04 February 1992
• Docket Number: No. 14371,14371
• Court: Connecticut Supreme Court
• Parties: The CONNECTICUT NATIONAL BANK v. Gina LORENZATO, et al.

Page 959

602 A.2d 959

221 Conn. 77

The CONNECTICUT NATIONAL BANK v. Gina LORENZATO, et al.

No. 14371.

Supreme Court of Connecticut.

Argued Dec. 11, 1991.

Decided Feb. 4, 1992.

Thomas P. Parrino, with whom was James F. Sullivan, Darien, for appellant (defendant New Canaan Bank & Trust Co.).

Peter M. Nolin, with whom was Scott G. Grubin, Stamford, for appellee (plaintiff).

Before PETERS, C.J., and CALLAHAN, GLASS, BORDEN and BERDON, JJ.

PETERS, Chief Justice.

This appeal concerns the circumstances under which a properly executed mortgage takes priority over a subsequent judicial lien when the mortgage, as recorded, inadvertently contains an unsigned signature page. The plaintiff, Connecticut National Bank (mortgagee), brought an action to foreclose a mortgage against the defendants Gina and Mario Lorenzato because of their default on the underlying promissory note secured by the mortgage. The mortgagee's action also cited as defendants other allegedly subsequent lienholders, including the defendant New Canaan Bank & Trust Company (lien creditor). All of the defendants were defaulted, except for the lien creditor, which filed a motion for summary judgment maintaining that its lien took precedence over that of the mortgage. The mortgagee responded by filing a cross motion for summary judgment. The trial court, Cioffi, J., granted the motion filed by the mortgagee, and the court, Nigro, J., subsequently rendered a judgment of strict foreclosure on its behalf. The lien creditor appealed to the Appellate Court ¹ and we transferred the appeal to this court pursuant to Practice Book § 4023. We affirm.

The trial court's memorandum of decision contains the following relevant facts, which are undisputed. Gina Lorenzato owned property in New Canaan. On February 10, 1989, Gina Lorenzato executed an open-end construction mortgage on this property to secure the contemporaneous promissory note of Gina and Mario Lorenzato in the amount of $1.7 million in favor of the mortgagee. The mortgage, and a rider attached to it, were properly signed, witnessed and acknowledged on that date in accordance with the requirements of General Statutes § 47-5(a). ² That same day, the mortgage was recorded in the town land records. Through the inadvertence of the mortgagee, the copy of the mortgage that was recorded contained a signature page lacking the required signatures and acknowledgment. The rider, attached to and referencing the mortgage, contained the required signatures and was properly witnessed, executed and acknowledged.

On March 3, 1989, the lien creditor recorded a writ of attachment in the amount of $55,000 against the same property on the town land records. The mortgagee has challenged the priority status, but not the validity, of that lien.

On March 27, 1989, the mortgagee again recorded its mortgage on the town land records. The newly recorded mortgage differed from the one earlier recorded in only one respect: it contained a fully executed signature page.

The trial court, Cioffi, J., ruled that the mortgage and rider, as recorded, gave sufficient notice to the lien creditor of the Lorenzatos' obligation to the mortgagee. The court noted that the lien creditor had not alleged either that it had been misled by the omission of the signature page, or that it could not have determined the validity of the mortgage by common prudence and by the exercise of ordinary diligence. Dart & Bogue Co. v. Slosberg, 202 Conn. 566, 580, 522 A.2d 763 (1987). For these reasons, the court denied the lien creditor's motion for summary judgment and granted the cross motion filed by the mortgagee.

In subsequent proceedings, the trial court, Nigro, J., rendered a judgment of strict foreclosure, finding the debt owed to the mortgagee to be $1,734,204.70 plus fees, and the appraised value of the mortgaged property to be $845,000. Because of the trial court's refusal to terminate the stay of execution attendant to the filing of the lien creditor's appeal, law days that were set in conjunction with the judgment of foreclosure have not been implemented.

In its appeal, the lien creditor maintains that the trial court improperly granted the mortgagee's cross motion for summary judgment for two reasons. Its principal contention is that our recording statute makes the defective recordation of a deed a nullity. From that premise, it argues that a defectively recorded deed cannot give constructive notice to third persons. It buttresses this contention with an interpretation of a recent validating act, which provides no relief for the mortgagee in the circumstances of this case. ³ Nevertheless, we are unpersuaded that the lien creditor should prevail in the present factual situation.

The rights of the parties depend upon the terms of our recording statute. General Statutes § 47-10 provides, in relevant part: "No conveyance shall be effectual to hold any land against any other person but the grantor and his heirs, unless recorded on the records of the town in which the land lies." We must determine under what circumstances a recorded deed containing an unsigned signature page can qualify as a "conveyance" that has been sufficiently "recorded" to afford constructive notice to a third party lien creditor.

The effectiveness of a recorded conveyance lacking a requisite signature page, when the underlying mortgage deed was validly executed, is a question of first impression in this state. Resolution of this question must take into account three overlapping lines of authority in our existing caselaw.

The lien creditor emphasizes that, in cases dating back to the early part of the nineteenth century, this court has considered the effectiveness of a mortgage that was defectively executed because of the absence of a necessary signature or acknowledgement. We have consistently held that the recordation of such a defectively executed mortgage does not give constructive notice to third persons. See, e.g., Goodman v. Randall, 44 Conn. 321, 325-26 (1877); Winsted Savings Bank & Building Assn. v. Spencer, 26 Conn. 195, 198 (1857); Sumner v. Rhodes, 14 Conn. 135, 139 (1840); Carter v. Champion, 8 Conn. 549, 558-59 (1831); Watson v. Wells, 5 Conn. 468, 473 (1825); Merwin v. Camp, 3 Conn. 35, 41-42 (1819).

The mortgagee reminds us that, during the same period, this court has also determined the criteria for the effective recordation of a properly executed mortgage. We have consistently held that the recordation of a valid mortgage gives constructive notice to third persons if the record sufficiently discloses the real nature of the transaction so that the third party claimant, exercising common prudence and ordinary diligence, can ascertain the extent of the encumbrance. People Savings Bank v. Corrado, 151 Conn. 388, 391, 198 A.2d 209 (1964); Sadd v. Heim, 143 Conn. 582, 585, 124 A.2d 522 (1956); Swaye v. Murphy, 126 Conn. 497, 500, 12 A.2d 547 (1940); Bridgeport Land & Title Co. v. George Orlove Co., 91 Conn. 496, 497-98, 100 A. 30 (1917); Beach v. Osborne, 74 Conn. 405, 408, 50 A. 1019 (1902); Merrills v. Swift, 18 Conn. 257, 264 (1847); Pettibone v. Griswold, 4 Conn. 158, 162 (1822). We have most recently reaffirmed the notice-giving function of our mortgage recordation law in Dart & Bogue Co. v. Slosberg, supra, 202 Conn. at 578-79, 522 A.2d 763.

Finally, this court has adjudicated the effect to be given to a properly executed mortgage, duly tendered for recordation, that is imperfectly recorded due to no fault of the mortgagee. We have held that the imperfect recordation of a valid mortgage gives constructive notice to third persons, despite a clerk's mistake in its actual recordation, at least if the mistake is so obvious as to have put a third party claimant "upon inquiry" to ascertain what the mortgage contains. Lewis v. Hinman, 56 Conn. 55, 67-68, 13 A. 143 (1887); see also Butchers' Ice & Supply Co. v. Bascom, 109 Conn. 433, 440, 146 A. 843 (1929). ⁴

There is a principled distinction between a mortgage deed that is imperfectly executed and one that is imperfectly recorded. The former is a nullity and is, therefore, incapable of giving constructive notice; the latter affords constructive notice to subsequent third party creditors to the extent that the mortgage, as recorded, contains sufficient information to put a title searcher on inquiry. From the point of view of the third party who relies on that which the recorded conveyance purports to encumber, it is immaterial whether an imperfect recordation is attributable to the inadvertence of the recording clerk or to the inadvertence of the mortgagee. We have, in effect, so held in Connecticut National Bank v. Esposito, 210 Conn. 221, 230-31, 554 A.2d 735 (1989...