Federal Farm Mortg. Corp. v. Schmidt, 14849.

• Decision Date: 18 May 1942
• Docket Number: 14849.
• Citation: 126 P.2d 1036,109 Colo. 467
• Parties: FEDERAL FARM MORTGAGE CORPORATION v. SCHMIDT.
• Court: Colorado Supreme Court

126 P.2d 1036

109 Colo. 467

FEDERAL FARM MORTGAGE CORPORATION v. SCHMIDT.

No. 14849.

Supreme Court of Colorado, En Banc.

May 18, 1942

Error to District Court, Yuma County; H. E. Munson, Judge.

Action by Federal Farm Mortgage Corporation against Ludwig C Schmidt for declaratory judgment to determine marketability of title to certain real property. To review a judgment for defendant, plaintiff brings error.

Reversed and remanded with directions.

M. M. Bulkeley, of Wray, and W. E. Pepperell Conrad L. Ball, J. P. Flinn, and Edward H. Jamison, all of Wichita, Kan., for plaintiff in error.

No appearance for defendant in error.

Golding Fairfield, I. L. Quiat, and Percy S. Morris, all of Denver amici curiae.

OTTO BOCK, Justice.

We here are concerned with a controversy culminating in an action brought under the Declaratory Judgments Act by the Federal Farm Mortgage Corporation, to determine the marketability of the title to a certain tract of real estate. For convenience, we refer to the parties as they appeared in the trial court. Plaintiff sold the real estate to defendant under an agreement to deliver to him an abstract showing marketable title in plaintiff. The sole question presented is the effect of sections 146 to 151, inclusive, chapter 40 '35 C.S.A., upon the title in question, so as to render it marketable. It is admitted that without the benefit of these sections the title would not be marketable. There is no dispute over the facts. The trial court held the effect of said sections to be adverse to the contentions of counsel for plaintiff and entered judgment in favor of defendant. Plaintiff is here seeking reversal on writ of error. Defendant makes no appearance. Amici curiae, favoring the marketability of the title, have filed a brief in support of that position. They claim no personal interest in the result of the litigation, but assert that an affirmance of the judgment would render unmarketable titles to thousands of parcels of real estate in this state which have been passed as marketable in reliance upon said sections.

The rule with reference to marketable titles is stated in Thompson on Real Property, vol. 5, page 407, section 4296, as follows: 'A purchaser of land, Before he is required to pay the purchase price, is entitled, unless stipulated to the contrary, to receive a marketable title, a title that is fairly deducible of record and not depending on matters resting in parol. The term 'marketable title,' when applied to real estate, means a title free from reasonable doubt. * * * It means a title that is reasonably free from such doubts as will affect the market value of the estate; one which a reasonably prudent person with knowledge of all the facts and their legal bearing would be willing to accept.' See, also, 66 C.J., p. 862, § 534.

What does the abstract show as to plaintiff's title? It discloses that in June, 1888, one George Collins was the owner and holder of the record fee-simple title to the property. On the 7th day of that month Collins and his wife, Mattie E. Collins, made, executed and delivered to one Elizabeth P. Avery a certain real estate mortgage conveying the property to the mortgagee as security for the payment of an indebtedness described in the mortgage. This mortgage was properly recorded in the office of the county clerk and recorder. Thereafter, Collins and his wife made, executed and delivered to one George E. Clark a second real estate mortgage covering the same property, which mortgage also was recorded in the office of the county clerk and recorder. After the execution of both of these mortgages and on the 16th day of June, 1888, Collins and his wife sold the property and made, executed and delivered a warranty deed transferring it to one Charles F. Frank, which warranty deed was duly recorded in the proper office. Thereafter, and in July, 1893, Elizabeth P. Avery, the mortgagee in the first real estate mortgage, instituted an action in the county court of Yuma County, Colorado, to foreclose her mortgage, and November 3, 1893, a judgment and decree was duly entered in said action in her favor foreclosing her mortgage and directing sale of the property by the sheriff of Yuma county. The sale was held December 11, 1893, and the property bid in by Avery, who received a certificate of purchase and caused the same to be recorded on the county records January 9, 1894. After the period of redemption had expired, and on September 27, 1894, the sheriff of Yuma county made, executed and delivered to Elizabeth P. Avery a sheriff's deed to the property, which was placed on record October 1, 1894, and since that date has so remained of record.

In the foreclosure action brought by Avery, personal service of summons was made upon defendant Clark, who was the holder of the second real estate mortgage on the property. Constructive service of summons on defendants George Collins and Mattie E. Collins, the mortgagors, and Charles F. Frank the record owner of the property at the time the foreclosure action was instituted, was attempted by Avery, but the affidavit for service by publication was fatally defective in that it did not state the post office addresses of the parties defendant sought to be served, nor did it state that the addresses of these parties were unknown to the affiant; there was, therefore, no valid service upon the mortgagor and record owner of the property at the time the action was brought, and this defect was fatal to the validity of the decree entered in the foreclosure suit.

The title to the property since the execution and delivery of the sheriff's deed is free from objection and runs in a regular unbroken chain from Avery, the grantee in the sheriff's deed, to the plaintiff. All of the respective conveyances were made by warranty deeds, regular in form, properly executed and acknowledged, and properly recorded in the office of the county clerk and recorder of Yuma county, Colorado.

Defendant claiming that the title was not marketable because of the failure of service upon the record owner in the foreclosure action in 1893, refused to accept the deed because of this alleged defect in title. Counsel for plaintiff contend that, irrespective of failure of the service mentioned, the title is marketable by reason of sections 146 to 151, supra. In the solution of this controversy we primarily are concerned with section 146, which reads as follows: 'No action shall be commenced or maintained against a person in possession of real property, to question or attack the validity of, or to set aside, upon any ground or for any reason whatsoever, any final decree or final order of any court of record of this state, or any instrument of conveyance, deed, certificate of sale or release executed by any private trustee, successor in trust, public trustee, sheriff, marshal, public officer or officer or appointee of a court, when such document shall be the source of or in aid of or in explanation of the title or chain of title, or right of the party in possession, or any of his predecessors or grantors, in so far as the same may affect the title or explain any matter connected with the title in reference to said real property; provided, such document shall have been recorded and have remained of record in the office of the recorder of the county where said real property is situated for a period of seven years. Any and all defects, irregularities, want of service, defective service, lack of jurisdiction or other grounds of invalidity, nullity or causes or reasons whereby or wherefore any such document might be set aside or rendered inoperative must be raised in a suit commenced within said seven year...