Mulligan v. Snavely
| Decision Date | 10 January 1929 |
| Docket Number | No. 25774.,25774. |
| Citation | 223 N.W. 8,117 Neb. 765 |
| Court | Nebraska Supreme Court |
| Parties | MULLIGAN v. SNAVELY ET AL. (FARMERS' & MERCHANTS' BANK OF IMPERIAL, INTERVENER). |
OPINION TEXT STARTS HERE
Syllabus by the Court.
Actual notice of the existence of an instrument affecting title to real estate is as binding as constructive notice by the record.
One who by himself or his agent has examined the record, or an abstract (so far as the same is correct), of title purporting to be taken therefrom, is charged with actual notice of what the record contains, not only of such matters as are properly of record, but also of instruments not entitled to record but appearing thereon; and in such case the effect of the record as constructive notice is immaterial.
A subsequent purchaser or mortgagee can take no benefit from a false statement in an abstract of title, but may rely upon such abstract to the extent that it correctly reflects the record.
One charged with actual notice of what a record contains is entitled to the benefit of such facts appearing thereon which are to his advantage, and may rely upon the validity of all instruments which do not disclose facts impeaching them or putting him upon inquiry.
A deed or other instrument required by statute to be witnessed, though not witnessed, is nevertheless valid between the parties and as against all others except creditors and subsequent purchasers or mortgagees in good faith, if otherwise unobjectionable.
A subsequent mortgagee in good faith, having no notice of an assignment of the debt secured by a prior mortgage, may rely upon a release of said prior mortgage executed by the prior mortgagee of record, of which he has actual or constructive notice.
An assignment of a real estate mortgage, securing a negotiable promissory note to the indorsee of such note, is an “instrument affecting the title to real estate” within the meaning of the Recording Acts (Comp. St. 1922, § 5611 et seq.).
A subsequent mortgagee upon whom no duty rests to pay a prior mortgage, and who in good faith relies upon a release thereof executed by the mortgagee, has a superior equity to an assignee of such prior mortgage whose assignment is not of record, and of which he had no knowledge, nor of any facts sufficient to put him upon inquiry. Especially is this true where the assignee knew of the negotiations for a new mortgage and kept silent, though under the belief induced by the fraud of his assignor that his assignment was of record, the subsequent mortgagee not being a party to such fraud.
Whether or not a release of a real estate mortgage requires a subscribing witness, or whether the signature of the notary (in whose presence the document was signed) to the certificate of acknowledgment is a sufficient witnessing, not decided.
Appeal from District Court, Chase County; Eldred, Judge.
Action by Joseph J. Mulligan against Ira C. Snavely and others, wherein the Farmers' & Merchants' Bank of Imperial intervened, and wherein Thomas Wolfe and David G. Wine and another filed separate cross-petitions. From the decree, defendant Thomas Wolfe appeals and David G. Wine and others cross-appeal. Affirmed.
Roper & Fuller, of David City, for appellant.
Meeker & Anderson, of Imperial, and T. B. Dysart, of Omaha, for appellee Mulligan.
Scott & Scott and Cordeal, Colfer & Russell, all of McCook, for appellees Snavely and others.
Heard before GOSS, C. J., ROSE, DEAN, GOOD, THOMPSON, and EBERLY, JJ., and REDICK, District Judge.
This case was originally presented to Commission No. 1, an opinion written and adopted by this court, affirming the judgment of the court below; a motion for rehearing was filed and arguments heard thereon by the court. The same will now be disposed of. The action is to foreclose a mortgage upon lands, and the only question presented is the priority of liens.
The plaintiff, Joseph J. Mulligan, is the assignee of a mortgage originally executed by Ira C. Snavely and wife to the Peters Trust Company of Omaha, for the sum of $10,000, upon 1,200 acres of land, dated August 1, 1918, and recorded August 7, 1918, at 9 o'clock a. m., upon the records of Chase county, where the land was situated.
The defendant Thomas Wolfe filed a cross-petition seeking foreclosure of a mortgage dated March 1, 1918, and recorded the same day, for $18,000, executed by the Snavelys to one David G. Wine, the note which it secured having been indorsed by said Wine to Wolfe about the day of its date, as collateral security for certain indebtedness of Wine to Wolfe. It was agreed that an assignment of the mortgage should be executed and filed for record by Wine for Wolfe, but this was never done. The defendants David G. Wine and Farmers' & Merchants' Bank of Imperial filed a joint answer and cross-petition seeking the foreclosure of a mortgage for $17,636.75, executed January 5, 1921, by the Snavelys to Wine, which, with the note it secured, were held by the bank as collateral security for an indebtedness of Wine. It was alleged that Wine's debt to Wolfe and the $18,000 mortgage had been fully paid, and Wine and the bank claim a lien second only to that of the Peters mortgage. The defendant Harley G. Humphrey purchased a part of the lands from the Snavelys subject to a portion of the Peters mortgage which he agreed to pay, and filed his answer and cross-petition asking that the remaining lands not covered by his deed be first exhausted to pay the prior liens. The allegations of the several answers and cross-petitions are put in issue by replies. The decree of the district court established the Peters mortgage as a first lien, the $18,000 mortgage as a second lien, in favor of Wolfe, except as to the Humphrey lands, and the Wine mortgage for $17,636.75, a third lien in favor of the bank. Wolfe, appeals, and Wine, the bank and Humphreys file cross-appeals.
The fruitful cause of the litigation involved was the failure of Wolfe to obtain an assignment of the $18,000 mortgage and file the same for record, whereby it was made possible for the Peters Trust Company to make the loan secured by its mortgage, the circumstances of which we will now relate. Early in July negotiations were instituted by Snavely and Wine to procure a loan of $10,000 from the Peters Trust Company on the lands covered by the $18,000 mortgage, which culminated, August 1, 1918, in the execution of the note and mortgage of the plaintiff. Wolfe had knowledge of these negotiations, and there is written evidence in a letter signed by Wolfe tending to prove that Wine had Wolfe's authority to collect the $18,000 mortgage. The transaction was carried out and completed in the customary manner with loan companies as follows: The note and mortgage were executed by the Snavelys to the trust company August 1, 1918, and were sent to Chase county for record, and recorded at 9 o'clock a. m. August 7. At the same hour and date a release of the $18,000 mortgage was recorded, executed by David G. Wine, the record holder thereof. There was no subscribing witness to this release at the place upon the instrument provided therefor, but it was properly acknowledged before a notary public who testified that Wine executed the same in his presence. The evidence does not establish which one of these documents was actually first filed for record, but at the top of the release appears in pencil the figure “1,” and at the top of the mortgage the figure “2,” which is the customary method by the recording officer of indicating the order of filing. The abstract was then extended to show these filings, and submitted to the plaintiff which approved the same, and thereafter the money was paid to the mortgagor Snavely or his order. It seems that $5,080 was paid to Wine on account of the $18,000 mortgage, the application of the remainder not shown.
Upon this state of facts, the plaintiff takes the position that it relied upon the recorded release of the $18,000 mortgage, having no notice of the fact that the note secured thereby had been assigned to Wolfe, and that therefore it was an innocent mortgagee and entitled to priority.
On the other hand, defendant Wolfe contends that, because the release did not have a subscribing witness as required by statute, it was not entitled to record, and therefore did not impart constructive notice upon which plaintiff might rely. To this plaintiff replies (1) that the instrument in question did not require a witness under the statute, and (2), if it did so require, that the signature of the notary to the acknowledgment, coupled with the fact that the instrument was executed by Wine in his presence, was a sufficient compliance as to witnessing; (3) “any irregularities in the execution, which was actually recorded, would not be known by those relying on the record until the record was inspected and then the instrument, as actually recorded, would be actual notice of its existence to the person who saw the record.”
These questions--the necessity for witness, the sufficiency of the notary's signature, whether the instrument was entitled to record, and whether it imparted constructive notice are exceedingly interesting and are learnedly and exhaustively discussed in the briefs, the major portions of which are devoted to that purpose; but after the most careful consideration we are convinced that their decision is not requisite to a proper disposition of the case, which presents a state of facts involving not constructive, but actual, notice.
[1] The object of recording instruments affecting real estate is to secure a permanent record of the title and provide a place where persons dealing with the property may inform themselves as to the condition of the title. The record, when regularly made, is constructive notice to the world of what it contains. All persons dealing with the land are conclusively presumed to have knowledge of it and are bound thereby. The purpose of the record, so far as third persons are concerned, is to give notice to those who have it...
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