Nelson v. Stoker

• Decision Date: 01 August 1983
• Docket Number: No. 18244,18244
• Citation: 669 P.2d 390
• Parties: Heber D. NELSON and Carol K. Nelson, Plaintiffs and Respondents, v. Richard W. STOKER and Lanae S. Stoker, his wife; Tom Darnell and Diane Truscott; Ray Quintana, dba Silver Way; The State of Utah Dept. of Social Services and Patricia Kunz, Defendants and Appellants.
• Court: Utah Supreme Court

Page 390

669 P.2d 390

Heber D. NELSON and Carol K. Nelson, Plaintiffs and Respondents, v. Richard W. STOKER and Lanae S. Stoker, his wife; Tom Darnell and Diane Truscott; Ray Quintana, dba Silver Way The State of Utah Dept. of Social Services and Patricia Kunz, Defendants and Appellants.

No. 18244.

Supreme Court of Utah.

Aug. 1, 1983.

Alan D. Frandsen, Thomas N. Crowther, Ted Cannon, Randall L. Skeen, Salt Lake City, for defendants and appellants.

Dwight L. King, Salt Lake City, for plaintiffs and respondents.

DURHAM, Justice:

This is an action to foreclose a trust deed and note which secure monies loaned to purchase certain real property. The trial court held that the trust deed and note had a priority superior to that of a prior judgment lien. We affirm.

In March of 1978, the plaintiffs Heber and Carol Nelson purchased a parcel of real property in Salt Lake County. In conjunction with that purchase, the plaintiffs executed a deed of trust and note for $40,700 naming Western Mortgage Loan Corporation (hereafter "Western Mortgage") as the beneficiary. The trust deed and note were recorded on March 29, 1978.

On May 1, 1979, the plaintiffs conveyed the real property by warranty deed to the defendants Richard and LaNae Stoker. In exchange for the real property, the Stokers agreed to make the payments on Western Mortgage's trust deed and note. In addition, as part of the purchase price, on May 1, 1979, the Stokers executed a trust deed and note for $8,464.76 naming Heber Nelson as the beneficiary. The warranty deed shows that it was recorded at 12:35 p.m. on June 5, 1979, and bears a county recorder's number of 3289485. The trust deed shows that it was also recorded at 12:35 p.m. on June 5, 1979, and bears a county recorder's number of 3289486. The Stokers made no down payment and only one monthly payment.

Prior to the conveyance of the real property by the plaintiffs to the Stokers, several outstanding judgments existed against Richard Stoker. The plaintiffs were cognizant of these outstanding judgments. The defendant Ray Quintana dba Silver Way has a judgment against Richard Stoker dated January 13, 1977, in the approximate amount of $1,400. In addition, defendants the State of Utah Department of Social Services (hereafter "State") and Patricia Kunz have a judgment against Richard Stoker dated February 23, 1979, in the amount of $21,610. The latter judgment was taken against Richard Stoker for unpaid child support.

The Stokers defaulted on their payments and the plaintiffs initiated foreclosure proceedings against the real property. The plaintiffs filed a complaint seeking a declaration by the trial court that their trust deed and note created a lien superior to all claims except Western Mortgage's trust deed and note. On summary judgment, the trial court concluded that the "[p]laintiffs should be granted a priority ahead of the other interests in the property ... and subject only to the Trust Deed of Western Mortgage Loan Company." The State appeals that decision.

I.

Before we may address the issue of whether the trial court erred in ruling that the plaintiffs' lien had priority over the State's judgment lien, we must determine whether this Court has jurisdiction pursuant to Rule 73(a) of the Utah Rules of Civil Procedure. The State's notice of appeal was filed prematurely. On January 29, 1982, by minute entry, the trial court granted the plaintiffs' motion for summary judgment, thereby establishing the priority of the plaintiffs' lien over the State's judgment lien. The State filed a notice of appeal on February 8, 1982. The trial court's written Findings of Fact, Conclusions of Law and Judgment were not executed and docketed until March 10, 1982.

Rule 73(a) of the Utah Rules of Civil Procedure requires an appellant to file a notice of appeal with the trial court within "one month from the date of the entry in the Register of Actions of the judgment or order appealed from ...." Timely notice of appeal is jurisdictional. See, e.g., Armstrong Rubber Co. v. Bastian, Utah, 657 P.2d 1346 (1983); Bowen v. Riverton City, Utah, 656 P.2d 434 (1982). However, with respect to the premature filing of a notice of appeal, this Court has stated:

The premature filing of the notice of appeal such as was done in this case should not be regarded as a defect which will ipso facto entirely deprive the appellate court of jurisdiction. It is an irregularity which would be grounds for dismissal of the appeal within the discretion of the court.

Wood v. Turner, 18 Utah 2d 229, 231, 419 P.2d 634, 635 (1966) (notice of appeal was filed four days prior to entry of the formal written judgment).

Rule 4(a) of the Federal Rules of Appellate Procedure, after which our Rule 73 was modeled, was amended in 1979 to reflect the practice of the federal courts which followed a rule similar to that enunciated in the Wood case. That amendment reads as follows:

Except as provided in (a)(4) of this Rule 4, a notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the day thereof.

Fed.R.App.P. 4(a)(2). The Notes of the Advisory Committee on Appellate Rules states:

Note on Subdivision (a)(2). The proposed amendment to Rule 4(a)(2) would extend to civil cases the provisions of Rule 4(b), dealing with criminal cases, designed to avoid the loss of the right to appeal by filing the notice of appeal prematurely. Despite the absence of such a provision in Rule 4(a) the courts of appeals quite generally have held premature appeals effective.

(Citations omitted).

The Wood decision remains good law and reflects the great weight of authority, and we reaffirm our holding therein. See Fed.R.App.P. 4(a)(2); 9 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice p 204.14 (1982 & Supp.1982-83). As we stated in the Wood case:

The final written judgment which was filed is exactly in accord with the ruling appealed from. We cannot see that the defendant was put to any disadvantage or that his rights were adversely affected by the irregularity of procedure here.

Wood v. Turner, supra at 231-32, 419 P.2d at 635. Accord Lemke v. United States, 346 U.S. 325, 74 S.Ct. 1, 98 L.Ed. 3 (1953). Our holding is further buttressed by policy considerations which recognize the difficulty of knowing when a judgment is executed and docketed. Under Utah law, the court has no obligation to inform the parties or their counsel when execution and docketing have occurred. We are of the opinion that the ends of justice will best be served by hearing the case on the merits. ¹

II.

The State urges that the trial court erred in declaring that the plaintiffs' lien was entitled to a priority superior to the State's judgment lien. The State contends that a judgment lien docketed pursuant to the Public Support of Children Act, U.C.A., 1953, §§ 78-45b-1 to -22 (1977 & Interim Supp.1983) takes priority over and is superior to all other liens, including a purchase money mortgage. See Gray v. Kappos, 90 Utah 300, 61 P.2d 613 (1937) (defining a purchase money mortgage). We disagree.

The overwhelming weight of authority recognizes the special priority accorded a vendor's purchase money mortgage. ² This Court has also acknowledged that priority. See Kemp v. Zions First National Bank, 24 Utah 2d 288, 470 P.2d 390 (1970). In addition, the Utah Legislature has by statute granted a special priority to certain purchase money interests. See, e.g., U.C.A., 1953, §§ 70A-9-107, -312 & -313 (giving special protection and priority to a purchase money security interest).

Whether a vendor's security interest is represented by a trust deed or a mortgage is irrelevant to the applicability of the general rule:

A change in the form of the security for the purchase-money, as from a mortgage to a deed of trust, will not change the character of the debt. The consideration continues to be purchase-money.

1 L. Jones, supra note 2, § 584 at 798 (citations omitted). See also 8A G. Thompson supra note 2, § 4423 at 204. Thus, for the sake of simplicity, we refer to the term "purchase money mortgage" as encompassing both mortgages and trust deeds which are given by a vendee to secure a purchase price or unpaid balance.

The general rule has been stated as follows:

In most states, if the purchaser of land, upon receiving a conveyance thereof, as part of the same transaction executes a mortgage to the vendor to secure a part or the whole of the purchase price, such mortgage, to the extent to which it actually secures purchase money, is entitled to priority over any preexisting claims, which may be asserted in favor of another person against such land as the property of the purchaser, at least in the absence of an agreement between the parties subordinating the purchase money mortgage to other liens or claims. The vendor is under no obligation to examine the records to discover such claims ...

5 H. Tiffany, supra note 2, § 1462 at 460-61 (citations omitted). A leading treatise likewise states:

It is familiar learning that a purchase money mortgage, executed at the same time as the deed of purchase of land, or in pursuance of agreement as part of one continuous transaction, takes precedence over any other claim or lien attaching to the property through the vendee-mortgagor. This is so even though the claim antedates the execution of the mortgage to the seller....

One of the frequent and important instances of its superiority is over liens arising under judgments against the grantee-mortgagor under a judgment obtained and docketed or recorded before the purchase money mortgage is executed.

IV American Law of Property, supra note 2, § 16.106E at 220-21 (citations omitted). Another leading authority comments as follows:

This rule, of course, is not confined to judgments and attachments; on the contrary, it extends to all liens legal or equitable, that otherwise might clasp the land at and...