Neslin v. Wells

• Decision Date: 01 October 1881
• Citation: 26 L.Ed. 802,104 U.S. 428
• Parties: NESLIN v. WELLS
• Court: U.S. Supreme Court

104 U.S. 428

104 U.S. 428

26 L.Ed. 802

NESLIN v. WELLS.

October Term, 1881

APPEAL from the Supreme Court of the Territory of Utah.

The facts are stated in the opinion of the court.

J. G. Sutherland and J. R. McBride for the appellant.

Mr. Samuel Shellabarger and Mr. Jeremiah M. Wilson for the appellees.

MR. JUSTICE MATTHEWS delivered the opinion of the court.

This is a suit of an equitable nature, brought by Wells, Fargo, & Co., against Neslin and Smith, in the District Court of the Third Judicial District of the Territory of Utah, to foreclose a mortgage of real estate, made by Smith to Kerr, and by the latter assigned to them. Neslin claimed to be a prior mortgagee of the same land, and to be entitled to a lien preferable to that of the complainants.

A decree for the complainants was rendered in the District Court, establishing their mortgage as the first and best lien. A motion for a new trial was made by Neslin. On that motion, a statement in writing, agreed upon as correct, was signed by the attorneys for both parties, and filed and made part of the record. It embraces the proceedings on the trial, including all the testimony, and also the findings of the court, as to matters of fact, and its conclusions of law, specially and separately stated, together with the decree.

The motion for a new trial was overruled, and Neslin appealed to the Supreme Court of the Territory, from the order overruling the motion and from the decree. The Supreme Court affirmed the decree, to reverse which Neslin prosecutes this appeal.

Under the second section of the act of Congress of April 7, 1874, c. 80 (18 Stat., pt. 3, p. 27), concerning the practice in territorial courts and appeals therefrom, as explained in Stringfellow v. Cain (99 U. S. 610), the present appeal rightly brings into review the decree of the Territorial Supreme Court, affirming the decree of the District Court; but we are not at liberty to consider anything as embraced in the statement of facts, required by the statute, except the special findings of the District Court, adopted by the Supreme Court in its general judgment of affirmance. This excludes the consideration of the exceptions taken in the District Court in the course of the trial, and noted in the statement filed in that court as the basis of the motion for a new trial, and leaves as the sole question for determination here, whether the facts as found justify the decree sought to be reversed.

The facts thus found and stated are as follows: Smith being indebted to Wells, Fargo, & Co. in the sum of $17,107.10, executed and delivered to them his promissory note for that amount, dated July 5, 1873, having, upon an agreement to indemnify John W. Kerr, procured him to indorse the note as surety. In pursuance of that agreement Smith made and delivered to Kerr, Sept. 27, 1873, his promissory note for $13,000, secured by mortgage on land in Salt Lake City, and Kerr assigned it to Wells, Fargo, & Co. as collateral security for the note of Smith held by them. In consideration whereof, Wells, Fargo, & Co. gave to Kerr additional time for payment of the note. It was then overdue, and no part of it has been paid. Neither Kerr nor Wells, Fargo, & Co. had any notice, actual or constructive, of any prior liens on the land at the time when they respectively received the mortgage. It was recorded in the records of Salt Lake County, Sept. 29, 1873, at 8 o'clock, A.M.

On July 5, 1873, and prior thereto, Smith was in possession of the mortgaged premises. He continued in possession until after the maturity of the note for $13,000, when he surrendered them to the complainants.

On Nov. 27, 1872, Smith executed and delivered to Neslin a note for $7,000, and a mortgage to secure the same on the same premises described in the mortgage to Kerr, being for the unpaid purchase-money therefor, the same having been sold and conveyed by Neslin to Smith by deed duly executed and delivered. This mortgage to Neslin was recorded in the records of Salt Lake County, on Sept. 29, 1873, at twenty-five minutes past noon. No part of this mortgage debt has been paid.

As a conclusion of law, the court found that the lien of the mortgage to Kerr was entitled to priority over that of the mortgage to Neslin.

This conclusion, which is assigned as error, we are now to examine.

It presents the single question whether, under the laws of Utah in force at the time of the transaction, a junior mortgage taken without notice of a prior mortgage, actual or constructive, and first recorded, is to be preferred in its lien to a mortgage prior in execution but subsequently recorded.

Prior to the organization of the territorial government of Utah, which was effected by an act of Congress approved Sept. 9, 1850, the people dwelling there, who had set up a government under the name of the State of Deseret, passed an ordinance providing for the election of county recorders. It made it their duty to provide themselves with good and well-bound books, suitable for the purposes, and record therein all transfers or conveyances of land or tenements, and all other instruments of riting and documents suitable, necessary, and proper to be recorded, in a fair and legible manner; and also books for the purpose of recording town and city plats, and plats of all surveys of land, roads, and surveys of public works, whenever the same shall be permanently located; and these books of record were required to be indexed in alphabetical order, and were declared to be 'free to the examination of all persons,' and upon the filing of any paper for record the recorder was required to indorse upon the back thereof the time of receiving it. Comp. Laws of Utah, 130.

A law on the same subject and in similar terms was passed by the territorial legislature Jan. 19, 1855. Comp. Laws of Utah, 131.

The settlement of the Territory by inhabitants having preceded the establishment by Congress of the legal organization of the territorial government, and the survey and opening to sale of the public lands, early provision was made for ascertaining and defining the possessory rights of those who, unable to obtain title as against the government, nevertheless had appropriated and improved portions of land. By a territorial law passed June 18, 1855 (Laws of Utah, 1851-70, p. 93), a form was prescribed for the transfer and conveyance of these land claims, as they were called, and it was declared that, to be valid, a transfer must be witnessed by two or more competent persons; be acknowledged before some person authorized to take acknowledgments; be recorded, and the record, page and book, be certified thereon by the recorder in the county where the property is located. It is also therein provided that other property than land claims, when disposed of by gift, must be transferred substantially in the same manner, and by specification of kind and number or amount, but unless required the details may be omitted.

The Civil Practice Act of Feb. 17, 1870, sects. 272 and 273, provides that on the hearing of a case for the partition of real property the plaintiff shall produce to the court the certificate of the recorder of the county where the property is situated, showing whether there were or not any outstanding liens of record upon the property, or any part thereof, at the time of the commencement of the action; and if by such certificate, or by the verified statement of any person who may have searched the records, that there were such liens of record at the time of the commencement of the action, and the persons holding them have not been made parties thereto, it is made the duty of the court either to order such persons to be made parties, by an amendment to the pleadings, or to appoint a referee to ascertain whether such liens or incumbrances have been paid, or if not, what amount remains due thereon, and the order in which they are severally held by such persons and the parties to the action. Those two become parties, if they claim a lien by mortgage, judgment, or otherwise, are required to set forth among other particulars the amount and date of the same; and provision is made for notice to those not made parties to appear before the referee and make proof of their claims. It is also provided that no persons who have or claim any liens upon the property, by mortgage, judgment, or otherwise, need be made parties to the action, unless such liens be matters of record; and immediately after filing his complaint the plaintiff is required to file with the recorder of the county a notice of the pendency of the action, containing the names of the parties, the object of the action, and a description of the property to be affected thereby, which, from the time of the filing, it is declared shall be deemed notice to all persons. In case of a sale for purposes of partition, it is also provided (sect. 299) that the conveyance shall be recorded in the county where the premises are situated, and that it shall be a bar against all persons interested, parties to the action.

These are all the statutory provisions in force within the Territory at the time of the transaction involved in this suit; and they cont nued so to be until the passage of an act on Feb. 20, 1874, concerning conveyances, which regulates the whole subject, and specifically provides 'that every conveyance of real estate within this Territory hereafter made, which shall not be recorded as provided in this act, shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate, or any portion thereof, when his own conveyance shall be first duly recorded.' This, however, cannot affect the rights of the parties in this controversy, for they had been fixed by the law previously in force.

The legislation on the subject prior to 1874, it will be observed, did not require that a mortgage should be recorded in order to be valid, and did not in terms declare what should be the...