Exeter Banking Co. v. Sleeper

87 A.2d 151, 97 N.H. 321, 1952 N.H. LEXIS 23, 42 A.F.T.R. (P-H) 165

• Court: Supreme Court of New Hampshire
• Decided: March 10, 1952
• Docket: 4099
• Status: Published

Opinions

Blandin, J.

The parties agree the issue here is whether a valid mortgage lien existed on the property in question in favor of the defendant Sleeper prior to the creation of the tax liens of the claimant, the United States of America. If such a lien did exist, then Sleeper must prevail. United States v. Sampsell, 153 F. (2d) 731; note 174 A. L. R. 1387. This is true here whether or not the authority of the Sampsell case, so far as it applies to inchoate liens, has been affected by the decision in United States v. Savings Bank, 340 U. S. 47. See also, anno. 95 L. ed. 59, 65, 67. The claimant has no lien except that given it by statute. Flack v. Agency, 96 N. H. 335, and authorities cited. In this case, the federal statute expressly provides that the lien created by 26 U. S. C. A. s. 3670 “shall not be valid as against any mortgagee” until certain notices are filed. 26 U. S. C. A. s. 3672 (a) (2). Admittedly, the required notices were not filed until long after the mortgage was executed and recorded. It appears that the claimant, who concededly derives all its rights from Lessard, has none superior to those of the defendant Sleeper. The latter executed a substantial part of his agreement in that he gave Lessard exclusive possession and use of all the properties mortgaged, both real and personal, from the date of the contract until the fall of 1948. Considering that they consisted of a hotel, camps, barracks so-called, and furnishings, it is obvious that the defendant might sustain substantial damage from Lessard’s failure to perform — and this fact was recognized in our previous opinion. Lessard v. Sleeper, 96 N. H. 268. So far as the record indicates, his only means of satisfying such damages are from the disputed fund. ■

In his original petition Lessard prayed that the mortgage foreclosure by Sleeper be enjoined and the mortgage declared null and void. The master filed a report recommending that this be done, but the Superior Court disallowed the report, ruled the mortgage valid and ordered the bill dismissed. In this situation our previous opinion recognized, as it was forced to do, that unless the Superior Court’s order was reversed, Sleeper could go ahead with the foreclosure sale. This it appears is the reasonable construction of our statement that “outstanding in the hands of the defendant the mortgage constitutes .... a constant threat of foreclosure by power of sale.” Lessard v. Sleeper, 96 N. H. 268, 272. Regardless of the earlier language in the opinion which might suggest a different conclusion, the plain purpose and effect of our order “Bill dismissed nisi” was to confirm the order and ruling of the Superior Court holding the mortgage not null and void but leaving it valid and uncancelled on the record to protect Sleeper in the event Lessard did not pay such damages as might be assessed against him for his breach. This was not inequitable since Sleeper had substantially performed by permitting Lessard to use all the property from August 29, 1946, to the fall of 1948. See Rutherford Nat. Bank v. Bogle & Co., 114 N. J. Eq. 571, and authorities cited; Tancred v. Beppler, 15 N. J. Super. 394.

The claimant was put on notice of the situation by the mortgage recorded on September 13, 1946, long prior to the inception of any of the liens. See Hargett v. Hargett, 201 Ala. 511. In this respect the case is clearly distinguishable from such decisions as Butler v. Wheeler, 73 N. H. 156, where the attaching creditors had no notice, actual or constructive, of other claims. It follows that since Sleeper had a valid mortgage which takes precedence over the Government liens, his assignee is entitled to the fund.

Judgment for the defendant, William H. Sleeper, Jr.

Kenison and Duncan, JJ., dissented: the others concurred.