Hanson v. Johnson

177 N.W. 452, 42 N.D. 431, 1918 N.D. LEXIS 176

• Court: North Dakota Supreme Court
• Decided: November 22, 1918
• Status: Published

Opinion

Grace, J.

Appeal from the district court of Oliver county, North Dakota, Honorable J. M. Hanley, Judge.

This action is brought upon a promissory note, dated November 26, 1912, for $3,100, with interest after date at the rate of 8 per cent per annum, and for the foreclosure of a real estate mortgage securing said note and bearing even date with said note, a lien against the N.| of section 11, township 142, range 87, Oliver county, North Dakota. The note and mortgage were each executed and delivered by M. J. J ohnson and Clara J ohnson, who were then the owners of the land in question. to the First International Bank of South Bend, Washington. Neither of the Johnsons interposed a defense.

The Forest City National Bank claims a lien on the same land by reason of a deed executed by the Johnsons to it on the 13th day of May, 1910, at which time the Forest City National Bank claimed the Johnsons were indebted to them for $5,412.40. The Forest City National Bank, in its answer, in substance alleged that though the deed in effect was absolute in form, it was intended and agreed to be security for said indebtedness and obligations of the said Johnsons to said bank. Defendant further in substance alleges that said deed was deposited on the 2d day of April, 1912, in the office of the register of deeds of Oliver county, and on the same day was duly presented to the county auditor for certification as to delinquent taxes, and that said county auditor officially certified and indorsed upon said deed that all delinquent taxes were paid and transfer of said premises was entered in his office; and that owing to the neglect and default of the register of deeds, such deed was not recorded at length in the office of said register of deeds on the day it was filed for record, but, on the 19th day of May, 1914, was recorded in the office of the register of deeds of Oliver county in book 10 of warranty deeds on page 280. The answer further alleged that the First International Bank of South Bend, Washington, prior to November 26, 1912, had actual notice or knowledge of the existence of said deed to the Forest City National Bank, in addition to the constructive notice imported by the records of Oliver county, and took the mortgage which plaintiff is seeking to foreclose with full knowledge of the Forest City National Bank’s interest and rights in and lien upon the said premises, and subject to such lien of the Forest City National Bank. The note upon which plaintiff maintains this suit is set out in full in his complaint, and is a note payable on demand.

The Johnsons were the owners of the land in question on the 13th day of May, 1910, at the time said deed was executed and delivered to the Forest City National Bank.

It appears that the deed was taken from the Johnsons to the Forest City National Bank as security, and therefore, though a deed in form, it is in fact a mortgage, and will he considered as such in further reference to it, and the only consideration for it was the antecedent debts owing from the Johnsons to the Forest City National Bank. The demaud note for $3,100 and the mortgage securing the same also had no other consideration than the antecedent debts owing from the Johnsons to the First International Bank of South Bend, Washington.

The mortgage given to the First International Bank of South Bend, Washington, was duly and fully récorded on the 10th day of December, 1912, in the office of register of deeds of Oliver county, North Dakota, It thus appears that the mortgage to it was actually recorded more than a year and four months prior to the time of the recording of the mortgage in question to the Forest City National Bank.

Section 5594, Compiled Laws 1913, in part is as follows: “Every conveyance by deed, mortgage or otherwise, of real estate within this state, shall be recorded in the office of the register of deeds of the county where such real estate is situated, and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith, and for a valuable consideration, of the same real estate, or any part or portion thereof, whose conveyance, whether in the form of a warranty deed or deed of bargain and sale, deed of quitclaim and release, of the form in common use or otherwise, is first duly recorded

Section 5595, Compiled Laws 1913, defines the term “conveyance” and the word “purchaser.” The section reads as follows: “The term ■‘conveyance,’ as used in the last section, embraces every instrument in writing by which any estate or interest in real property is created, aliened, mortgaged or encumbered, or by which the title to any real property may be affected, except wills and powers of attorney. The word ‘purchaser’ as used shall embrace every person to whom any estate or interest in real estate is conveyed for a valuable consideration, and also every assignee of a mortgage, lease or other conditional estate.”

The deed from Johnson to the Forest City National Bank was dated May 13, 1910, and deposited for record with the register of deeds of Oliver county on the 2d day of April, 1912, and, on the last date, certified as to delinquent taxes to the county auditor of said county to the ■effect that all delinquent taxes were paid and transfer of the premises was entered in his office. The fees for the recording of the deed were not paid in advance at the time of depositing it for record, but were paid on the 19th day of May, 1914. The mortgage to the First International Bank of South Bend was fully recorded on the 10th day of December, 1912. Which, then, of the two conveyances is a prior lien on the land in question ?

The answer to this question presents two propositions the disposition of which is decisive of the case. First proposition is: Under a law which provides, in effect, that the fees for recording an instrument must be paid in advance, may an instrument, which is entitled to be recorded, be said to be of record when the same is delivered to and left with the register of deeds for record unaccompanied with the recording fee ? The second proposition is: Is either of the mortgages based upon a valuable consideration so that the holder thereof is in the position of a purchaser for value?

Considering the first of the propositions, we are of the opinion that an instrument required to be recorded in the office of the register of deeds is recorded when it is deposited and left with the register of deeds for the purpose of record, and, when so deposited, is accompanied by the x-equisite fee for spreading the same at length upon the records. This view, we believe, is in harmony with the law relative to the x-ecox-ding of instruments such as those we are considering as expressed in §§• 5557, 5558, 3548, and 3509 of the Compiled Laws of 1913.

Under our law, § 3508, Compiled Laws 1913, the register of deeds receives a salary based upon the assessed valuation of the px-operty assessable within the county. He no longer receives a recording fee individually and as part of his own compensation, but he receives it as a representative of the couxity, and as such he must keep a fee book which is provided for him by the county, and in it enter each item of fees for sex-vices rendered. He must, within three days after the, close of each calendar month and at the end of his term of office, file with the county auditor a statement, under oath, showing the fees which he has received as such officer since the date of his last report, and also, within .the three days, deposit with the county treasux-er the total sum of such fees. He must also indorse the amount of the fees on the instrument recorded. He may in all cases require the party for whom any service is to be rendered, to pay the fee in advance for the rendition of such service or to give security for the same.

Section 5558, Compiled Laws 1913, is as follows: “An instrument is deemed to be recorded when, being duly acknowledged or proved and certified, it is deposited in the register’s office with the proper officer for record.”

Construing the foregoing sections together in their application to an instrument deposited for record without the payment of the recording fee at the time of depositing for record, and where the instrument deposited for record has not in fact been recorded by being entered in the reception book or spread at length upon the record, it is held that such instrument is not recorded, and is no constructive notice to subsequent purchasers for value. If the instrument is deposited for record and at that time the required recording fee is not paid, and the instrument is recorded by being entered in the reception book or spread at length upon the record, it will be constructive notice to subsequent purchasers for value even though the recording fee is not paid at the time of depositing the instrument for record. In the case at bar, after the register of deeds received the mortgage to the Forest City National Bank on April 2, 1912, he sent a notice to the bank that it would be necessary to receive the fees before he could record the mortgage. The notice was sent on the regular printed form or statement. The fees were not paid until the 19th day of May, 1914, which is two years or more after the time the deed was received by him., It is clear, under these circumstances, that the mortgage to the Forest City National Bank, which, as we have seen, was in the form of a deed, was never in fact of record until the 19th day of May, 1914.

Considering the second proposition, we are of the opinion that the mortgage from Johnson to the First International Bank of South Bend, Washington, is based upon the valuable consideration, and the; holder thereof is in the position of, and is' entitled to, the rights and protection of a purchaser for value. It is true that the $3,100 is the aggregate of certain antecedent debts owing from Johnson to the First International Bank. Antecedent debts, however, under some circumstances, are a sufficient consideration to support a simple contract. This is true where the antecedent indebtedness is included in an instrument, such as a promissory note or a mortgage, payable on demand or at a future time. In this case, the antecedent indebtedness of Johnson to the First International Bank was placed in the form of a demand note which was secured by mortgage on the land in question, and this, as we view it, afforded a valuable consideration for such note and mortgage, and affords the First International Bank all the rights of a purchaser for value.

Section 6910, Compiled Laws 1913, reads thus: “Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time.”

The rule would be different if the antecedent or pre-existing indebtedness, which forms consideration of an instrument, were past due and there were no extension of the time of payment thereof, no surrender of security for the same debt, no instrument payable on demand or at a future time, the consideration of which is the antecedent indebtedness. In such case the instrument could not be said to be based upon a valuable consideration and would come within the rule laid down in the case of Horton v. Wright, B. & S. Co. 36 N. D. 622, 162 N. W. 939. As above pointed out, our statute makes antecedent or pre-existing indebtedness a valuable consideration for an instrument payable on demand or at a future time. The note and mortgage from Johnson to the First International Bank are instruments payable on demand and come within the terms of § 6910. The record does not clearly show in what manner the indebtedness of Johnson to the Forest City National Bank was to be paid, whether on demand or at some future time.

The following question was asked Mr. Isaacs:

Q. Can you now state what Mr. Johnson was owing to the Forest City National Bank from the 13th day of May, 1910, the amount, and in what form it was ?

A. After refreshing my memory from the books, I find that he was owing at that time notes as follows: One for $250, one for $572.40, one for $2,000, one for $950, one for $700, and one for $1,000; total $5,472.40.

The total amount represented the face of the notes and did not include any interest, and it would appear from such testimony that the notes must have been due or past due.

R. W. Stephenson, who was vice president of the Forest City National Bank during 1912, 1913, and 1914, testified as follows:

Q. Mr. Stephenson, what can you say of your own knowledge as an officer of the bank as to whether or not M. J. Johnson was owing the Forest City National Bank during the time you were one of the officers thereof ?

A. He was indebted to the bank during all of the time that I was one of the officers.

Q. And in about what amount as near as you can recollect ?

A. That was about $5,500.

Q. While you were an officer of the bank did you take renewals of notes from Mr. Johnson? ' *

A. Yes, sir. I did.

Q. I will ask you to examine the papers marked by the numbered exhibits, numbers 2, 3, 4, 5, 6, 7, and 8, and ask you to state what they are.

A. These are notes representing Mr. M. J. Johnson’s indebtedness to the Forest City National Bank, February 24, 1915.

Q. Do you know, Mr. Stephenson, how the particular notes represented by these exhibits came to be taken ?

A. Note marked exhibit 2 was taken in renewal of a similar note executed by M. J. Johnson owing to the bank, which note bore Emil Johnson’s indorsement. Exhibits 3 to 8 inclusive were taken in renewal of M. J. Johnson’s indebtedness to the bank, including accrued interest.

Q. What do you say, Mr. Stephenson, with reference to the indebtedness of Mr. M. J. Johnson to the Forest City National Bank on the 24th day of February, 1915, as being represented by exhibits numbered 2 to 8 inclusive ? Did that represent all of his indebtedness or not, as you recollect? ............. * ~ ’ ------.....

A. It did.

Q. What do you say, Mr. Stephenson, as to the notes marked exhibits 2 to 8 inclusive ? Were they or were they not taken in renewal of previous indebtedness by deed, exhibit 7 ?

A. They were.

In all this testimony, there is nothing to show but that all the indebtedness from Johnson to the Forest City National Bank was past due at the time of the delivery of the deed given to secure such indebt•edness. There is testimony tending to show that renewals of such indebtedness were taken from time to time, and there are several of such notes in evidence; one note for $1,000 bearing the date, January 24, 1913, and four notes for $1,000 each bearing date February 24, 1915, and two other small notes of the same date, one for $248.95 and one for ■$321.28. From all of the testimony on behalf of the Forest City National Bank, it does not appear that any new note or notes payable on demand or at a future time were executed and delivered by Johnson to the Forest City National Bank at the time of the execution of the deed ■or mortgage to it, nor does it appear that such indebtedness was not then past due. All of such testimony rather tends to show that the ■deed or mortgage to the Forest City National Bank was talien to secure indebtedness to it, then past due. Johnson gave this bank a mortgage which, as we view it, had no other consideration than the past-due antecedent and pre-existing indebtedness from Johnson to this bank. They took no instrument representing such past due indebtedness payable on demand or at a future time, and it has not brought itself within the provisions of 6910. It would thus appear the Forest City National Bank is not a purchaser for value, and is not entitled to protection as .a purchaser for value* The Forest City National Bank took the •deed, which was in fact a mortgage, from Johnson to secure the in■debtedness to it, and there is nothing to show an extension of time of payment, no new instrument payable on demand or at a future time, nnd it is not a purchaser for value, and its mortgage is subordinate to that of the First International Bank of South Bend, Washington. If it were conceded, however, that the Forest City National Bank was ■& purchaser for value, and that, at the time of the execution of the mortgage to it, the indebtedness from Johnson to it was not then due, ■or if new notes were taken from Johnson for the indebtedness due to it at the time it received the deed, this mortgage would nevertheless remain subordinate to that of the First International Bank, for the mortgage to the Forest City National Bank did not legally become of record until the 19th day of May, 1914, as we have above shown, while the mortgage to the First International Bank was fully recorded ■on the 10th day of December, 1912, and from that time became a valid and subsisting lien against the land in question and entitled the holder of such mortgage to all the rights and privileges of a purchaser for value. The trial court found, and we think properly, that at the time the First International Bank received its mortgage from Johnson, it did not have actual notice or knowledge of the prior mortgage or deed in favor of, the Forest City National Bank. The mortgage to the First International Bank of South Bend, Washington, while a contract entered into between Johnson and the bank in the state of Washington, is a contract affecting and relating to real property within this state; and, as we view it, should be construed in accordance with the laws of this state relative thereto.

It is held that that part of the trial court’s 7th finding of fact, which finds to the effect that the register of deeds accepted the deed in question for record, intending to waive his right to have his fee paid in advance of recording the deed, is erroneous, and not justified by the evidence.

Judgment appealed from is reversed, and the case is remanded t<v the lower court for further proceedings in harmony with this opinion. Appellant is allowed statutory costs on appeal.

Christianson and Robinson, JJ., concur in the result.