Kellogg v. Kelly

• Decision Date: 28 June 1897
• Citation: 69 Minn. 124,71 N.W. 924
• Parties: KELLOGG v KELLY ET AL.
• Court: Minnesota Supreme Court

69 Minn. 124

71 N.W. 924

KELLOGGvKELLY ET AL.

Supreme Court of Minnesota.

June 28, 1897.

(Syllabus by the Court.)

A. real-estate mortgage, executed before, but not recorded until after, the mortgagor has made an assignment for the benefit of his creditors, under the insolvency law of the state, is void as to the assignee in so far as he represents such creditors. He has the same right to avoid such a mortgage as creditors would have had if they had acquired a lien on the mortgaged premises by attachment or judgment.

Appeal from district court, Hennepin county; David F. Simpson, Judge.

Action by Levi D. Kellogg against Austin F. Kelly and others. Judgment for plaintiff, and defendants Charles M. Hanson and Albert C. Cobb appeal. Reversed.

Cobb & Wheelwright (W. A. Lancaster, of counsel), for appellants.

Geo. R. Robinson, for respondent.

START, C. J.

This is an appeal by the assignees in insolvency of Austin F. Kelly from a judgment adjudging the lien of the plaintiff's unrecorded mortgage, in the form of an absolute deed upon certain real estate of the assignor, to be superior to their title as such assignees. The only question for our decision is whether the judgment is justified by the finding of fact upon which it is based. The here material facts as found by the trial court are these: The assignor, Kelly, was on April 30, 1896, the owner in fee and in the exclusive possession of lot 10, block 90, in the town of Minneapolis, and so continued in the possession thereof until September 12, 1896, when, being insolvent, he duly made an assignment for the benefit of his creditors of all of his unexempt property, under the insolvency laws of this state, to the defendants Charles M. Hanson and Albert C. Cobb. The assignment was duly filed on the 14th day of September, 1896, and three days thereafter a certified copy thereof was duly recorded in the office of the register of deeds of the proper county. The assignees accepted the trust, duly qualified, and, as such, have been continuously in possession of the lot since the making of the assignment. On April 30, 1896, their assignor, Kelly, and his wife, made to Jonas F. Brown their promissory note for $5,000, and, as security for its payment, executed to him a warranty deed of the lot. Afterwards Brown conveyed by deed his interest in the lot to the plaintiff herein. Neither of these deeds was ever recorded in the office of the register of deeds, and the title to the lot stood of record in the name of the assignor until the assignment was recorded. None of the creditors of the assignor ever had, prior to the making and recording of the assignment, any notice or knowledge of the deeds, or of any claim on or interest in the premises on the part of Brown, or of the plaintiff herein. The plaintiff commenced this action to foreclose his mortgage after the making and recording of the deed of assignment.

Did the trial court err in holding that the lien of the plaintiff's mortgage upon the lot was superior to the rights of the creditors of Kelly, as represented by the assignees? The question is answered in the affirmative. Section 4180, Gen. St. 1894, declares every unrecorded conveyance, by deed, mortgage, or otherwise, of real estate, void as against any attachment levied thereon or judgment lawfully obtained at the suit of any party against the person in whose name the title to such land appears of record, prior to the recording of such conveyance. Hence, if this assignment had not been made, any creditor of the assignor could have attached the lot, and in such case his lien would be paramount to the lien of the mortgage, as none of the creditors ever had any notice of it. So, also, the lien of a judgment would be superior to that of the plaintiff's mortgage. It is only as to creditors who have acquired a lien on the land by attachment or judgment that this statute declares an unrecorded conveyance void. Therefore, if the mortgage had been recorded, or this action commenced, and lis pendens filed, at any time before the assignment was made, the title of the assignees would be subordinate to the lien of the plaintiff's mortgage. But before the mortgage was recorded or the action commenced, and before the creditors had seized the lot by attachment, or obtained a judgment lien thereon, it was placed in the custody of the court for their benefit, to be disposed of by the assignees, by direction of ...