Troyer v. Mundy, 9459.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation60 F.2d 818
Docket NumberNo. 9459.,9459.
Decision Date07 September 1932

Alfred C. Munger, of Omaha, Neb. (Rodney S. Dunlap and Earl J. Lee, both of Fremont, Neb., Crossman, Munger & Barton, of Omaha, Neb., and Abbott, Dunlap & Corbett, and Courtright, Sidner, Lee & Gunderson, all of Fremont, Neb., on the brief), for appellant.

Joseph E. Daly, of Fremont, Neb., for appellee.

Before GARDNER and SANBORN, Circuit Judges, and NORDBYE, District Judge.

GARDNER, Circuit Judge.

This is a suit in equity brought by the appellant as trustee in bankruptcy of Peter Mundy, bankrupt, against appellee, Anise Mundy, to set aside a warranty deed executed and delivered to Anise Mundy by Peter Mundy on January 11, 1928, which conveyed to her eighty acres of farm land in Dodge county, Neb., and also to set aside a mortgage upon the same property given by Peter Mundy to Anise Mundy, dated October 20, 1925, and recorded in the office of the register of deeds of Dodge county, Neb., on October 29, 1925. The parties will be referred to as they were designated in the lower court.

The land involved was purchased by Peter Mundy from the father of Anise Mundy, the defendant, in 1918 for the sum of $14,000, $3,000 of which was paid in cash and $11,000 of which was secured by purchase-money mortgage. Anise Mundy at the time of all the transactions involved in this action was and now is the wife of Peter Mundy. The father of Mrs. Mundy died, leaving as a part of his estate the $11,000 mortgage. Mrs. Mundy's share in this mortgage as a beneficiary under her father's will and as a creditor of the estate amounted to $6,800, and the share of her sister to $3,700. In order to effect a distribution of the estate and a proper division between the sisters, they released the original $11,000 mortgage, and in lieu thereof took back two mortgages of equal priority, one to the sister in the sum of $3,700, and one to Mrs. Mundy for $6,800. In 1925 the sister found a party by the name of Robert Scott, who was willing to advance to her the amount of her mortgage, if it could be made a first mortgage, and, in order to accomplish this purpose, the two sisters released of record the liens of their respective mortgages, and Peter Mundy then renewed them, executing a first mortgage to Scott for $3,700, and a second mortgage to Anise Mundy for the amount then due her, which was $8,500. This mortgage for $8,500 is the mortgage which plaintiff seeks to set aside in this suit.

On January 11, 1928, Peter Mundy executed and delivered to Anise Mundy warranty deed for the eighty acres of land, which deed was recorded on the day of its date. On February 23, 1928, he was adjudged bankrupt. In the bankruptcy proceedings there were filed and allowed as unsecured claims the claim of the First State Bank of North Bend, Neb., in the sum of $7,719.43, and the claim of the First National Bank of North Bend, Neb., in the sum of $8,010. These claims were based upon promissory notes given by Peter Mundy to these respective banks. The record does not clearly disclose when the indebtedness upon which these claims are based first arose, but in each instance it was in existence some time prior to 1928.

The bankrupt and his family lived on this farm land until February, 1927, and from 1918 until 1927 it was without doubt the homestead of the family; and, although the family moved in 1927 to a house in North Bend, Neb., defendant contends, and the lower court found, that there was no abandonment of the homestead.

The mortgage last given to the defendant, and here in question, was signed alone by Peter Mundy. The acknowledgment of the execution of the mortgage recites that Anise Mundy appeared and acknowledged the execution of the instrument, but does not recite any appearance nor acknowledgment by Peter Mundy, the mortgagor. Parol evidence was introduced in the lower court to show that this recital in the certificate of acknowledgment was an error of the notary preparing the mortgage, and that Peter Mundy actually acknowledged the instrument before the notary public.

The deed of January 11, 1928, by Peter Mundy to Anise Mundy was without any present consideration.

The lower court sustained the mortgage to Anise Mundy, and held that the mortgaged property did not exceed in value the amount of the first mortgage and the mortgage to Anise Mundy; and it is conceded that, if the $8,500 mortgage to Anise Mundy is valid, there is no equity in the property to which the rights of creditors through the plaintiff might attach. The court entered decree dismissing the suit of the trustee because there was no equity in the property above the liens of the two mentioned mortgages. From this decree the trustee has appealed and seeks reversal on the grounds that (1) the $8,500 mortgage was not executed and acknowledged as required by the laws of Nebraska pertaining to the execution and acknowledgment of instruments affecting the homestead, and hence is void; (2) the recording of the mortgage did not operate as constructive notice; (3) the certificate of acknowledgment showing acknowledgment by the mortgagee and not by the mortgagor was fatally defective; (4) the homestead was abandoned in 1927; (5) Anise Mundy is not entitled to protection as the owner of a purchase-money mortgage; and (6) the trustee is vested with the rights of a judgment creditor holding an execution returned unsatisfied.

It is conceded that at and prior to the time of the execution of the $8,500 mortgage the land constituted the homestead of Peter Mundy and his wife, Anise Mundy. In construing the homestead statute of Nebraska (section 40-104, Comp. St. Neb. 1929), the Supreme Court of that state has held that, while the homestead cannot be conveyed or incumbered, except by a deed executed and acknowledged by both the husband and wife, yet a conveyance of the homestead from one spouse to the other does not require that they both execute and acknowledge the instrument. Storz v. Clarke, 117 Neb. 488, 221 N. W. 101; Ambler v. Jones, 102 Neb. 40, 165 N. W. 886; Anderson v. Schertz, 94 Neb. 390, 143 N. W. 238; Anderson v. Cusack, 115 Neb. 643, 214 N. W. 73; Interstate Savings & Loan Ass'n v. Strine, 58 Neb. 133, 78 N. W. 377; Furrow v. Athey, 21 Neb. 671, 33 N. W. 208, 59 Am. Rep. 867; Cizek v. Cizek, 69 Neb. 797, 96 N. W. 657, 99 N. W. 28, 5 Ann. Cas. 464.

The Nebraska statutes (section 76-213) provide that: "Every officer, who shall take the acknowledgment or proof of any deed, shall indorse a certificate thereof signed by himself on the deed, and in such certificate shall truly and specifically set forth the matters hereinbefore required to be done, known or proved, on such acknowledgment or proof, together with the names of the witnesses examined before such officer, and their places of residence, and the substance of the evidence by them given."

Section 76-216, Comp. St. Nebraska 1929, provides that the certificate of proof of acknowledgment and the certificate of the genuineness of the signature of any officer, in cases where such is required, must be recorded together with the deed so proved or acknowledged, and, unless the certificates be recorded, neither the deed nor a transcript thereof shall be read or received in evidence.

Section 76-219 provides that, unless previously acknowledged or proven in the manner prescribed, the conveyance shall not be deemed lawfully recorded.

The lower court, in a conclusion of law entered at the close of all the evidence, held that parol evidence was not admissible to prove the fact that the mortgage had been properly acknowledged by the mortgagor, and that the recitals contained in the notary's certificate of acknowledgment were not subject to impeachment by such evidence. In so holding the court was clearly correct. Solt v. Anderson, 71 Neb. 826, 99 N. W. 678; Keeling v. Hoyt, 31 Neb. 453, 48 N. W. 66; Elliott v. Peirsol, 1 Pet. 328, 7 L. Ed. 164.

The filing and recording of a mortgage is not constructive notice to a trustee in bankruptcy, unless there has been a substantial compliance with the requirements of the state statute as to acknowledgment. Hauser v. Callaway (C. C. A.) 36 F.(2d) 667; Bank of Hampton v. Wright (C. C. A.) 35 F.(2d) 321; Albert Pick & Co. v. Wilson (C. C. A.) 19 F.(2d) 18. Where, as in the instant case, the acknowledgment not only failed to show an appearance and an acknowledgment of the execution of the instrument by the grantor or mortgagor, but affirmatively showed an appearance and an acknowledgment of the execution of the instrument by the grantee or mortgagee, there was clearly not a substantial compliance with the requirements of the Nebraska statute, and the acknowledgment was therefore fatally defective, and the Nebraska Supreme Court has so held. Maxwell v. Higgins, 38 Neb. 671, 57 N. W. 388.

If, therefore, defendant must rely upon the constructive notice afforded by the recording or attempted recording of her mortgage, it seems clear that her mortgage cannot be sustained. She contends, however, that the two creditors whose claims were proved and allowed, and who were the only creditors proving claims, had actual notice of her rights in the property, and hence the question of constructive notice becomes immaterial.

Conceding, without deciding, defendant's contention as to the effect of actual notice, we do not believe the evidence sustains the finding of the court to the effect that these creditors had such actual notice. As to this question the defendant had the burden of proof. Mr. Cusak, called as a witness, testified that he had been with the First National Bank of North Bend, Neb., for twenty-five years, but did not testify in what capacity; that Robert Scott, the owner of the $3,700 mortgage, was his uncle, and that the mortgage was made in the bank; that he knew about Mrs. Mundy's sister's mortgage being released and the other mortgage to Robert Scott being made. He...

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