Dawson v. McCarty

• Decision Date: 30 June 1899
• Citation: 57 P. 816,21 Wash. 314
• Parties: DAWSON v. McCARTY et al.
• Court: Washington Supreme Court

57 P. 816

21 Wash. 314

DAWSON v. McCARTY et al.

Supreme Court of Washington

June 30, 1899

Appeal from superior court, Whatcom county; H. E. Hadley, Judge.

Action by Joseph B. Dawson, as receiver of the Columbia National Bank of New Whatcom, against Morris McCarty and others. From a judgment for defendant school district No. 1 of Whatcom county, plaintiff appeals. Reversed.

Stratton & Powell, for appellant.

John R Crites, for respondents.

REAVIS, J.

Appellant brought suit to foreclose a mortgage on certain lands in Whatcom county. The mortgage was executed by the defendants Morris McCarty and wife to the Columbia National Bank of New Whatcom, of which the appellant is receiver. Respondent (defendant) school district No. 1 of Whatcom county has a judgment against defendants McCarty and wife, which is a lien upon the mortgaged premises. On the 16th of September, 1893 the bank was in the custody of a receiver appointed by the comptroller of the currency. At that time the defendant Morris McCarty was indebted to the bank in the sum of $25,490.08, exclusive of interest. The indebtedness was in the form of promissory notes and overdrafts made prior to June 23, 1893. The greater portion of the indebtedness was due September 18, 1893. On the 16th of September, 1893, the defendants McCarty and wife, for the purpose of securing the payment on October 1, 1894, of all said indebtedness executed their mortgage upon the real estate in controversy. The mortgage specifically extended the time of payment of all the indebtedness to October 1, 1894. On the day of its execution the mortgage was delivered to the attorney of the receiver, to be held by him in escrow until it could be submitted to, and the terms approved by, the comptroller of the currency, and thereupon be delivered to the receiver of the bank. On the 27th of September, 1893, the comptroller of the currency duly authorized and approved the acceptance of the mortgage by the receiver, and the mortgage was thereafter delivered by the attorney to the receiver about the 5th of January, 1894. The mortgage was not filed for record until March 8, 1894. On the 2d of August, 1892 the defendant school district instituted an action in the superior court against defendant Morris McCarty, and on the 6th day of February, 1894, recovered judgment against him for the sum of $1,831.39, exclusive of interest. At the time of the entry of the judgment the school district had no notice of the existence of appellant's mortgage. By a mistake a portion of the property covered by the mortgage was incorrectly described as the west hall of a certain quarter section, when it should have been described as the east half of the same quarter section. The superior court corrected this error and reformed the mortgage. That court also adjudged the mortgage inferior to the judgment lien of the school district. To this portion of the decree the plaintiff (appellant) excepted.

1. Respondent moves to dismiss the appeal on the ground that no proper notice of appeal was given or served, and that no valid bond has been given or filed in the cause, because no revenue stamp is attached to the certificate of the qualifications of the sureties to the bond. The notice of appeal is clear, and conveyed fully to the adverse parties the fact of the appeal. And the objection to the bond is not well taken. The certificate of the qualifications of the sureties is part of the proper execution of the bond on appeal. The federal revenue law exempts bonds used in legal proceedings. Section 25, Schedule A, War Revenue Law 1898. And, again, it is elementary constitutional law that the federal government cannot impose any burden upon procedure in state courts. Collector v. Day, 11 Wall. 113; Cooley, Tax'n, pp. 82-86, and authorities cited.

2. The controversy upon the merits is, which is the prior lien, the mortgage or judgment? At comon law the uniform rule seems to have been that a prior unrecorded deed or mortgage conveyed good title as against a subsequent judgment. The rule is thus stated in 2 Freem. Judgm. § 366 'Wherever, under the law, a deed or mortgage is valid without being recorded, a subsequently attaching judgment lien against the grantor or mortgagor will not be of any benefit to the lienholder, as against the deed or mortgage. Under the principle already referred to, that the lien of a judgment attaches to the debtor's real rather than to his apparent interest, such lien is subordinate to any unrecorded conveyance or incumbrance executed prior to the rendition of the judgment, unless the statutes of the state give to judgment creditors the same protection against unrecorded instruments which they give to bona fide purchasers without notice.' Mr. Pomeroy, in his work on Equity Jurisprudence (section 721), under the caption, 'Prior Unrecorded Mortgage Superior to Subsequent Docketed Judgment,' observes: 'The most important question under this head which has come before the American courts relates to the respective claims arising from a prior specific and a...