Simonson v. Wenzel

Decision Date05 June 1914
Citation27 N.D. 638,147 N.W. 804
PartiesSIMONSON v. WENZEL et al.
CourtNorth Dakota Supreme Court
Syllabus by the Court.

W., who held an unrecorded executory contract for the purchase from D. of certain real property, under which he was in possession, executed and delivered to plaintiff a mortgage thereon, which was recorded. Subsequently W. assigned his interest under such contract to K. for a valuable consideration, who in good faith paid the consideration, including the amount due to D., the vendor, under such executory contract, and procured a deed from such vendor without actual knowledge of the existence of such mortgage. In an action by plaintiff to foreclose his mortgage, held: (1) That W. had a mortgageable interest in the property.

That the mortgage of his equitable interest to plaintiff constituted a “conveyance,” within the meaning of our recording act.

That the record of such mortgage operated as constructive notice to K., who, with actual knowledge of W.'s equities, purchased an assignment of his contract for deed.

That to the extent of the amount paid by K. to D., with interest, he has an equity superior to plaintiff's claim which should be recognized and protected by the decree.

Appeal from District Court, McHenry County; A. G. Burr, Judge.

Action by A. P. Simonson against Carl F. Wenzel and others. From judgment for plaintiff, defendants M. C. Krupp and another appeal. Modified and affirmed.Christianson and Weber, of Towner, for appellants. C. W. Hookway, of Granville, and D. J. O'Connell, of Towner, for respondent.


This is an appeal from a judgment of the district court of McHenry county, decreeing the foreclosure of a real estate mortgage in plaintiff's favor. The appeal is upon the judgment roll proper; appellants' contention being that the conclusions of the trial court are not warranted by the findings of fact. Such findings of fact are in substance as follows:

(1) That on and prior to March 20, 1906, the defendant Dakota Development Company was the owner in fee of the real estate in controversy, as disclosed by the public records in the office of the register of deeds. On such date this company entered into an executory contract with defendant Carl F. Wenzel, in the usual form, whereby, for a stated consideration of $100, $35 of which was paid in cash and the balance to be paid in equal installments on March 20, 1907, and March 20, 1908, with interest, it promised and agreed to sell and convey such premises to the said Wenzel, such contract obligating the purchaser to pay all taxes and assessments levied, assessed, or imposed upon the premises in each year, and also contained a stipulation that “no assignment or transfer of any interest in and to this agreement or the lands described, less than the whole thereof, will be recognized by said vendor under any circumstances or in any event whatever, and no assignment shall be binding upon the vendor unless approved by its president.” It also contained a stipulation “that time is to be the very essence of this agreement.” Such contract also contained other stipulations relative to the vendor's right to declare a forfeiture in case the vendee failed in any respect to comply with his part of the contract, but we deem it unnecessary to set such provisions out in extenso.

(2) Defendant Wenzel entered into the possession of the premises and constructed a dwelling house thereon which he and his family occupied as their homestead until about January 20, 1908, when he sold and assigned such contract to defendant M. C. Krupp.

(3) On April 17, 1907, Wenzel and wife, for a valuable consideration, executed and delivered to plaintiff their promissory note for the sum of $914.70, payable on November 1st thereafter, with interest at the rate of 8 per cent. per annum, and to secure the payment thereof they executed and delivered to plaintiff a mortgage on the land in controversy which was filed in the office of the register of deeds of McHenry county on April 18, 1907, and recorded in Book 31 of Mortgages, at page 516.

(4) That such note and mortgage have not been paid, and plaintiff is the present owner and holder thereof.

(5) That Carl F. Wenzel paid to the Dakota Development Company the sum of $35 at the time of the execution of the contract for deed, but made default in the payment due March 20, 1907, and the same was not paid until after the assignment of such contract to defendant Krupp, as hereinafter set forth. That such contract for deed was at no time recorded or filed for record in the office of the register of deeds of McHenry county, and the record title of the premises at all times up to January 29, 1908, remained in the Dakota Development Company.

(6) On or about January 20, 1908, Wenzel, while in possession of said land as his homestead, entered into negotiations with defendant Krupp for the sale to him of the contract for deed aforesaid, and the premises therein described, upon the terms that such contract was to be assigned to Krupp, who was to receive a warranty deed of the premises direct from the development company. Wenzel and wife thereupon assigned their interest in such contract to Krupp, and the latter paid to the development company the amount then remaining due upon said contract ($65 and interest), and Krupp also paid to Wenzel the agreed consideration of $1,000, less the payment aforesaid to the development company, and the development company did not, nor did its president or any one of its authorized officials, have any knowledge or actual notice of the execution or delivery of the mortgage to the plaintiff aforesaid.

(7) That defendant Krupp purchased Wenzel's interest in such contract in good faith and without any actual notice or knowledge of the existence of plaintiff's mortgage, and he had no intent to cheat or defraud the plaintiff but acted in absolute good faith in the making of said purchase, and purchased and paid for the same in utter ignorance of the plaintiff's mortgage, but he knew that Wenzel and family were living on and occupying said premises, but had no notice or knowledge of such mortgage other than that imparted by the record thereof.

(8) On January 24, 1908, the development company duly executed and delivered to Krupp a warranty deed in the usual form, conveying the premises to him, which deed contained the usual covenants, and which was duly filed for record on January 29, 1908.

(9) The trial court also found that the defendant Wenzel was on March 3, 1910, adjudged a bankrupt in the federal court, and on June 22, 1910, that court, in due form, discharged him from all debts and provable claims; the notes held by plaintiff being scheduled in such bankruptcy court.

Upon such findings of fact the district court made conclusions of law favorable to plaintiff, adjudging a foreclosure of his mortgage.

Among other conclusions, the trial court found that, at the time of the execution of the mortgage by Wenzel, he had a mortgageable interest in and to the said premises by virtue of the contract for deed, and that the recording of such mortgage was due and legal notice to all the world of the rights of the plaintiff as mortgagee, and that defendant Krupp therefore had constructive notice of such mortgage at the time he purchased the assignment of the contract for deed to the said premises, and the conveyance of the premises to him by the development company was subject to the lien of plaintiff's mortgage.

[1] From the above it is apparent that the crucial question for decision is whether appellant Krupp, who, as the trial court found, in good faith and for value purchased an assignment of the Wenzel contract and a deed of the premises from its codefendant, the development company, without any actual knowledge of the plaintiff's mortgage, was nevertheless affected with constructive notice thereof so as to confer upon plaintiff a lien under his mortgage superior and paramount to the rights of such defendant? In answering this question we must bear in mind the fact, as found by the trial court, that the contract for deed executed and delivered by the development company to Wenzel was not entitled to record, nor was the same disclosed in any way by the public records, and, as far as such records disclosed, Wenzel had no interest whatever in the property in controversy, but the same stood in the name of and was owned exclusively by the development company. It is no doubt true that Wenzel, by such executory contract of purchase which gave him possession, acquired an equitable interest in such property which he might sell or mortgage (Cummings v. Duncan, 22 N. D. 534, 134 N. W. 712), and it is likewise no doubt true that his possession under the contract operated to convey notice to the world of his equities thereunder. But Wenzel's interest under such contract was cognizable merely in equity, not in law. Miller v. Shelburn, 15 N. D. 182, 107 N. W. 51; Cummings v. Duncan, supra. His possession under such executory contract operated, no doubt, as notice to the world of his equities thereunder. It is, however, quite a different proposition to say that such possession constituted notice of the rights of persons claiming to hold as assignees, vendees, or mortgagees of such equitable interest.

Was appellant Krupp, under the facts, charged with constructive notice of plaintiff's mortgage? As stated by appellant's counsel, this suggests two main inquiries: First, was the mortgage a conveyance within the meaning of the recording laws? Second, was it a conveyance in the chain of title?

[2] Plaintiff's right to recover depends upon an affirmative answer to both of these questions. Counsel for appellant assert, with apparent confidence in the correctness of their position, that both of such questions must receive a negative answer, and they have presented a very able and ingenious argument in support of their contention. They apparently concede that under the general statutory rule in other states,...

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12 cases
  • Lewis v. Gray
    • United States
    • Missouri Supreme Court
    • 21 April 1947
    ...Gray of the interest of the plaintiff in the land in controversy. Sec. 3427, R.S. 1939; Digman v. McCollum, 47 Mo. 372; Simonson v. Wenzel, 147 N.W. 804; Garrett Wiltse, 252 Mo. 568, 161 S.W. 694; Case v. Goodman, 250 Mo. 46, 156 S.W. 694; Patterson v. Booth, 103 Mo. 402, 15 S.W. 543; Dicke......
  • Knauss v. Miles Homes, Inc.
    • United States
    • North Dakota Supreme Court
    • 31 December 1969
    ...had in the land. This court has held that the interest of a holder of a contract for deed is a mortgageable interest. Simonson v. Wenzel, 24 N.D. 638, 147 N.W. 804, L.R.A.1918C, 780 (1914). In the action to quiet title against Miles, the defendant, by counterclaim, sought to foreclose its m......
  • Simonson v. Wenzel
    • United States
    • North Dakota Supreme Court
    • 5 June 1914
  • Rolette County Bank of St. John v. Hanlyn
    • United States
    • North Dakota Supreme Court
    • 18 May 1921
    ... ... executory contract has a mortgageable interest [48 N.D. 77] ... and that a mortgage given by him is within the recording ... statutes. Simonson v. Wenzel, 27 N.D. 638, 147 N.W ... 804. The statutes relating to mortgages make specific ... provision for the recording of assignments. §§ ... ...
  • Request a trial to view additional results

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