Morrison v. Farmers' & Traders' State Bank

• Court: Montana Supreme Court
• Writing for the Court: HOLLOWAY, J.
• Citation: Morrison v. Farmers' & Traders' State Bank, 70 Mont. 146, 225 P. 123 (Mont. 1924)
• Decision Date: 24 March 1924
• Docket Number: 5410.
• Parties: MORRISON v. FARMERS' & TRADERS' STATE BANK ET AL.

225 P. 123

70 Mont. 146

MORRISON v. FARMERS' & TRADERS' STATE BANK ET AL.

No. 5410.

Supreme Court of Montana

March 24, 1924

Appeal from District Court, Yellowstone County; A. C. Spencer Judge.

Suit by Esther M. Morrison against Farmers' & Traders' State Bank, Anna D. Goodwin, administratrix of the estate of Thomas E. Goodwin, deceased, and others. Decree for plaintiff and defendant Goodwin appeals. Affirmed.

Waldo & Cunningham, of Billings, for appellant.

Sterling M. Wood, of Billings, for respondent.

HOLLOWAY J.

In August, 1907, William Birely and wife executed and delivered to Thomas E. Goodwin their promissory note for $3,000, due three years after date with interest at seven per cent. per annum, and to secure the payment thereof gave a mortgage upon lots 14 and 15, block 11, Westside Addition to Billings which mortgage was duly recorded. In 1915 the property was sold to James M. Lapp, subject to the mortgage, and soon thereafter Lapp conveyed it to plaintiff subject to the mortgage. In 1920 plaintiff instituted this suit to quiet title, joining Goodwin and the Farmers' & Traders' State Bank as defendants. Later the bank was eliminated. Goodwin died and the administratrix of his estate was substituted, and Birely and wife were brought in as additional defendants. By way of cross-complaint defendant Goodwin alleged the execution and delivery of the note and mortgage, nonpayment of the principal and nonpayment of interest after February 8, 1920, and prayed for a decree of foreclosure. In answer to the cross-complaint plaintiff and the defendants Birely alleged that neither Goodwin, his personal representative, nor any one else for him had filed the renewal affidavit required by section 8267, Revised Codes of 1921, and this was admitted to be true. The trial court rendered and had entered a decree quieting title in plaintiff, and defendant Goodwin appealed.

When plaintiff purchased the property from Lapp, the record imparted notice of the Goodwin mortgage (section 6934, Rev Codes); but in addition thereto she had actual notice conveyed by the recital in her deed. However she did not assume any personal liability for the debt. Lang v. Cadwell, 13 Mont. 458, 34 P. 957. So long as the mortgage continued to be a lien, the land was charged with the duty to pay the debt, and conversely, if the mortgage ceased to be a lien the land was freed of its burden. Whether the mortgage ceased to be a lien upon the lots in question depends upon the proper construction of section 1, chapter 27, Laws of 1913, now section 8267, Revised Codes 1921. That section reads as follows:

"Section 1. Every mortgage of real property made, acknowledged and recorded, as provided by the laws of this state, is thereupon good and valid as against the creditors of the mortgagor or owner of the land mortgaged, or subsequent purchasers or incumbrancers, from the time it is so recorded until eight years after the maturity of the entire debt or obligation secured thereby and no longer, unless the mortgagee, his heirs, executors, administrators, representatives, successors, or assigns, shall within sixty days after the expiration of said eight years file in the office of the county clerk and recorder where said mortgage is recorded, an affidavit, setting forth the date of said mortgage, when and where recorded, the amount of the debt secured thereby, and the amount remaining unpaid, and that the said mortgage is not renewed for the purpose of hindering, delaying or defrauding creditors of the mortgagor or owner of the land, and upon the filing of said affidavit, the said mortgage shall be valid against all persons for a further period of eight years." The language is so plain, simple and direct that it would appear to construe itself; however, the United States court for the district of Montana, in Cullen v. Reed (D. C.) 220 F. 356, reached a different conclusion and held that the words "in good faith" are to be interpolated to qualify the terms "subsequent purchasers or incumbrancers." This conclusion was reached by construing chapter 27 as in pari materia with our Recording Acts. The like conclusion was reached by the Supreme Court of the United States in construing a somewhat similar statute in Louisiana, in Patterson v. De La Ronda, 8 Wall. 292, 19 L.Ed. 415. A different construction was placed upon the same statute by the Supreme Court of Louisiana, in Shepherd v. Orleans Cotton Press Co., 2 La. Ann. 100, and in Adams v. Daunis, 29 La. Ann. 315. When the question again came before the Supreme Court of the United States, in Pickett v. Foster, 149 U.S. 505, 13 S.Ct. 998, 37 L.Ed. 829, the construction of the Louisiana court was followed.

Bearing in mind that aside from making permanent the evidence of titles, the sole purpose of recordation laws is to impart notice, then if chapter 27 was intended as a recording statute, or was intended to be construed with existing Recording Acts, the conclusion of the federal court might be justified. On the other hand, if by the enactment of chapter 27 the Legislature intended to fix a definite point of time beyond which a recorded mortgage ceases to be an enforceable lien upon real property, it is altogether immaterial whether the subsequent purchaser or incumbrancer became such with or without notice. In other words, if it was the intention of the Legislature by this enactment to affect only the notice which the recorded mortgage imparts, the act is a recording statute in effect, whatever may be its form. But if the intention was to affect the remedy by which a recorded mortgage may be enforced, then it is to all intents and purposes a statute of limitations even though it may not in terms purport to be such. The intention of the Legislature in enacting the statute is the consideration which must control in its construction (sec. 10520, Rev. Codes 1921), and to ascertain that intention recourse must be had, first, to the language employed (State v. Cudahy Packing Co., 33 Mont. 179, 82 P. 833, 114 Am. St. Rep. 804, 8 Ann. Cas. 717), indulging the presumption that the terms used were intended to be understood in their ordinary sense, unless it is made apparent from the context that they were intended to be given a different meaning (State ex rel. Anaconda C. Min. Co. v. District Court, 26 Mont. 396, 68 P. 570, 69 P. 103).

The statute declares explicitly that a mortgage on real property, duly recorded, is good and valid as against the persons mentioned for eight years and no longer, computing the period from the due date of the debt secured, unless the renewal affidavit is filed. While a better selection of words might have been made, each of the terms "good" and "valid" has a well-understood meaning. "Good" means "valid, sufficient in law." Black's Law Dictionary. "Valid" means "of binding force or legal sufficiency." Bouvier's Law Dictionary. In other words, according to the language employed in this act, a mortgage on real property, duly recorded, ceases to be of binding force as against the persons mentioned and becomes unenforceable, by the lapse of eight years from the maturity of the debt or obligation secured, unless the renewal affidavit is filed. If, however, this interpretation of the language leaves any room for doubt as to the legislative intent, recourse may be had to the title of the act, since the title is presumed to indicate the intention. State ex rel. Smith v. Duncan, 55 Mont. 376, 177 P. 248. The title is "An act defining the duration of liens of mortgages upon real estate and the manner of the extension thereof." To "define" is "to fix the bounds of." Webster's International Dictionary. "Duration" means "the portion of time during which anything exists." Id. The title indicates beyond peradventure that it was the intention of the Legislature to fix a definite and easily ascertainable point of time beyond which a recorded mortgage ceases to be of any force as against the persons mentioned in the body of the act, unless it is renewed within the time and in the manner provided.

A mortgage does not transfer any title to the property. Sections 8224, 8229, Rev. Codes 1921. It is merely a lien fixed upon the property to secure the performance of an act (sec. 8264; Davidson v. Wampler, 29 Mont. 61, 74 P 82); hence it follows that whenever it ceases to be a lien, it ceases to be a mortgage (Berkin v. Healy, 52 Mont. 398, 158 P. 1020). Nowhere in either the title or body of the act is there the slightest intimation that the Legislature intended merely to affect the notice which a recorded mortgage imparts (sec. 6934); on the contrary, both the title and the body of the act indicate as clearly as language can convey ideas that it was...