Hull v. Diehl
| Decision Date | 18 April 1898 |
| Citation | 52 P. 782,21 Mont. 71 |
| Parties | HULL v. DIEHL et al. |
| Court | Montana Supreme Court |
Appeal from district court, Lewis and Clarke county; H. R. Buck Judge.
Action by Calvin E. Hull against George B. Diehl and others. Judgment for defendants. Plaintiff appealed. Reversed.
McConnel Clayberg & Gunn, for appellant.
Wm Wallace, for respondents.
On this appeal the only question presented is whether the mortgages of which the plaintiff is assignee, are liens entitled to precedence over the mortgage lien of the defendant bank. The material facts are admitted, and may be summarized as follows: On January 15, 1892, defendant Thornburgh, to secure the payment of his note for $12,155, executed to defendant First National Bank a mortgage upon certain city lots in Helena, Mont., then owned by him. The mortgage was not recorded until July 22, 1893. On April 9, 1892, Thornburgh conveyed the lots by warranty deed, dated March 1, 1892, to defendant Diehl, and this deed was recorded April 11, 1892; and on April 9, 1892, Diehl executed to one Wallace two mortgages on the lots to secure payment of a like number of negotiable promissory notes, each for $800. These mortgages were recorded April 11, 1892. Diehl and Wallace had knowledge of the mortgage to the bank at the time the mortgages last mentioned were made. On May 13, 1892, before their maturity, Wallace indorsed and assigned the Diehl notes and mortgages to the plaintiff, but no assignment of the mortgages was ever recorded. The district court adjudged the mortgage of January 15, 1892, from Thornburgh to the bank, a lien prior to the lien acquired by plaintiff under his assignment of the mortgages made by Diehl to Wallace in April, 1892. From the judgment and order refusing a new trial plaintiff appeals. The bank is the only respondent.
1. Appellant pleaded that he purchased the mortgages for a valuable consideration and without notice of the unrecorded prior mortgage to respondent. It was both proved and admitted that he paid a valuable consideration, but there was no evidence establishing affirmatively that he was without actual knowledge of such prior mortgage. Respondent claims that the burden of proving want of notice was upon appellant, and that, in the absence of such proof, the later, but first recorded, mortgages assigned to him must yield to the prior, but last recorded, mortgage to respondent. In so far as pertinent to the question raised, section 260, div. 5, Comp. St. 1887, then in force, declares that an unrecorded conveyance shall be deemed void as against a subsequent purchaser in good faith and for a valuable consideration. It must be conceded that many respectable courts hold to the doctrine that a recorded deed or mortgage is prima facie evidence, as against one subsequently recorded, of every fact essential to its validity, including the payment of a valuable consideration as well as the existence of good faith in the purchaser. In the case of Le Neve v. Le Neve, 2 Amb. 436, 2 White & T. Lead. Cas. Eq. pt. 1, p. 89, it was for the first time held Campbell, C.J., dissenting, in Shotwell v. Harrison, 22 Mich., at page 425.
Whether the burden of proving the payment of a valuable consideration is upon the person claiming under a conveyance recorded before the record of a prior conveyance is not presented for decision in this case, and we express no opinion. We are, however, satisfied that the good faith of the purchaser will sufficiently appear by proof of the record of conveyances showing title in his grantor at the time of the purchase, upon which record he had the right to rely and is presumed to have relied. If he had actual notice of the prior conveyance, "this is a fact affirmative in its nature, and it is therefore more reasonable to require it to be shown by the party claiming under the prior unrecorded deed than to call upon the purchaser to prove the negative." Shotwell v. Harrison, 22 Mich. 410. See, also, Eversdon v. Mayhew, 85 Cal. 9, 21 P. 431, and 24 P. 382; Nolan v. Grant, 53 Iowa, 392, 15 N.W. 513; Garber v. Gianella, 98 Cal. 527, 33 P. 458; Hiller v. Jones, 66 Miss. 636, 6 So. 465; Roll v. Rea, 50 N. J. Law, 264, 12 A. 905. We think this is the better rule, and therefore, on the record before us, and for the purposes of this appeal, it must be presumed that appellant purchased the mortgages in good faith.
2. Appellant claims that, under the statutes then in force, the mortgage made by Thornburgh to respondent was void as to the mortgages made by Diehl to Wallace at the time appellant acquired them in good faith and for value, for the reason that the prior mortgage was not then of record; that, when he purchased the notes secured by the mortgages, he presumably did and had the right to rely upon the records of the county which failed to give notice of the respondent's mortgage; and that the silence of the records was due to the laches and negligence of respondent. But respondent meets this by insisting that the assignment of a mortgage is a conveyance within the meaning of the recording acts then in force, and that, in order to put himself in a position to take advantage of the law protecting an innocent purchaser against a prior unrecorded conveyance, appellant should have recorded the assignment before the respondent placed its mortgage on record. We have held that appellant was the indorsee of underdue negotiable notes, the payment of which was secured by the mortgages assigned to him, and that he was without knowledge of the prior mortgage by Thornburgh to respondent. Under these facts, respondent practically concedes that appellant should prevail unless the assignment of a mortgage is within the provisions of the recording acts. We note the following sections of the fifth division of the Compiled Statutes of 1887:
The word "conveyance" is declared to include an instrument in writing by which real estate or an interest therein is mortgaged. A mortgage is therefore a conveyance within the recording acts. But a mortgage does not create an estate in real property. It is a mere security for the payment of a debt or the fulfillment of an obligation, and is only a chattel interest. Gallatin Co. v. Beattie, 3 Mont. 173; Holland v. Commissioners, 15 Mont. 460, 39 P. 575. While it affects lands by imposing a lien or charge upon them, it in no wise conveys title thereto. It is a mere incident to that which...
To continue reading
Request your trial