First Financial Bank, F.S.B. v. Johnson

• Decision Date: 11 October 1985
• Docket Number: No. CA-3181,CA-3181
• Citation: 477 So.2d 1267
• Court: Court of Appeal of Louisiana — District of US
• Parties: FIRST FINANCIAL BANK, F.S.B. v. Mary Vaughn, Wife of/and James J. JOHNSON, Dryades Savings & Loan Assoc. 477 So.2d 1267

Page 1267

477 So.2d 1267

FIRST FINANCIAL BANK, F.S.B. v. Mary Vaughn, Wife of/and James J. JOHNSON, Dryades Savings &amp Loan Assoc.

No. CA-3181.

477 So.2d 1267

Court of Appeal of Louisiana Fourth Circuit.

Oct. 11, 1985.

Dutel & Dutel, Peter S. Thriffiley, Charles J. Nunez, New Orleans, for appellee-First Financial Bank.

D. Michael Dendy, Susan Stagg Robinson, New Orleans, for intervenor-appellant.

Before WILLIAMS and ARMSTRONG, JJ., and PRESTON H. HUFFT, J. Pro tempore.

PRESTON H. HUFFT, Judge Pro Tempore.

In this contest between conventional mortgagees, the issue is whether a recorded mortgage executed by "James J. Johnson" on real property owned and registered on the public records in the name of "James Johnson" affords sufficient notice of the encumbrance to third parties so as to prime a subsequent mortgage of the same property. Because we conclude that the later mortgagee was entitled to rely upon the name "James Johnson" as that of the record owner under the Public Records Doctrine, we hold that the earlier mortgage is inferior and subordinate, where an examination of the public records for encumbrances against property owned in the name of "James Johnson", without specification of any middle initial, failed to disclose the existing mortgage.

On January 20, 1978, James Johnson acquired real property located at 3101-03 Broadway Street in New Orleans in a sale captioned and recorded as follows: "Sale by Josephine Sagnibene, wife of/and Frank Costa to James Johnson". On June 15, 1982, Johnson and his wife mortgaged this property and a second piece of real estate located at 1731-33-33 1/2 Forstall Street. This mortgage was captioned and recorded as follows: "Mortgage by Mary Vaughans wife of/and James J. Johnson in favor of First Homestead Federal Savings and Loan Association". Johnson had acquired the Forstall Street property on June 12, 1975 in an act of sale by "Dixie Homestead to Mrs. Gearleen Abrin wife of/and James J. Johnson".

On August 4, 1982, Johnson sold the Broadway Street property to Dryades Savings and Loan Association in an instrument entitled: "Sale by James Johnson to Dryades Savings and Loan Association". Dryades Savings had requested and received mortgage and conveyance certificates for the name of "James Johnson" as the record owner of the Broadway Street property from the Recorder of Mortgages and Register of Conveyances for the Parish of Orleans. The certificate from the Recorder of Mortgages did not reflect the existence of any mortgage in favor of First Homestead Federal Savings and Loan on the Broadway Street property. Dryades Savings subsequently sold the Broadway Street property to Mr. & Mrs. James J. Landry, Jr., who executed a mortgage on the property in favor of Dryades on August 4, 1982.

On October 25, 1983, First Financial Bank, the successor to First Homestead Federal Savings and Loan, filed a petition for executory process to foreclose on both the Broadway Street and Forstall Street properties. Dryades Savings intervened and prayed for an injunction to arrest the seizure and sale of the Broadway Street property, on the grounds that First Financial Bank's mortgage was inferior because it had been improperly drawn in the name of "James J. Johnson" instead of the record name of "James Johnson".

At the hearing on the petition of intervention, Francis J. Demarest, Jr. the Recorder of Mortgages for Orleans Parish, testified that the mortgage certificate requested by Dryades Savings was in the name of "James Johnson" without any middle initial, wife's name, or marital status. He stated that the certificate had been run in the name of "James Johnson" as requested, and that no encumbrances or inscriptions of any nature were given for the name James Johnson with any middle initial. The face of the pertinent mortgage certificate bears a printed proviso that the certificate has "... been run exclusively in the exact names here under set forth and not any variations of any said names" and "... where no middle initials have been furnished, identical names with middle initials have not been run and will not be unless specifically requested."

The trial judge dismissed the injunction and recognized First Financial as the "first mortgage holder on the property at 3101-03 Broadway Street, New Orleans, Louisiana". In oral reasons for judgment, the judge found that the name "James J. Johnson" was "a lot more explicit" than the name "James Johnson", and noted: "If the Dryades Homestead had probably been a little more explicit in their request for certificates, they probably would have come up with 'James J. Johnson' because at the top of the certificate, they say they only search in the names submitted, which was 'James Johnson' without the middle initial."

Appealing, Dryades Savings contends that in examining Johnson's title for encumbrances under the Public Records Doctrine it was entitled to rely solely on the name "James Johnson" as the record owner of the Broadway Street property, and should not be prejudiced by First Financial's fault in recording its mortgage in the name "James J. Johnson" instead of the record name. On the other hand, First Financial argues that Dryades Savings was negligent in failing to observe its duty as a lending institution to determine the full name of the vendor of the property and any other names that he may have used, particularly where the Recorder of Mortgages requires that a different certificate be issued for each Christian name with a different middle initial.

Under the Public Records Doctrine, a third person, such as a potential mortgagee searching for encumbrances on the potential mortgagor's title, need only look at public records to determine adverse claims. LSA-R.S. 9:2721-2722; Judice-Henry-May Agcy, Inc. v. Franklin, 376 So.2d 991 (La.App. 1st Cir.1979), writ denied 381 So.2d 508 (La.1980); Brewster Development Company, Inc. v. Fielder, 271 So.2d 299 (La.App. 2nd Cir.1972), application not considered, 272 So.2d 695 (1973). The Public Records Doctrine is intended to protect those third parties by what they find or could have found in the public records, i.e., one who deals with the record owner is protected vis-a-vis the true owner. Sick v....