Pamela Borksey Vickers v. Williard Houston Vickers

• Court: Louisiana Court of Appeal
• Decided: November 18, 2009
• Docket: CA-0009-0280
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

09-280

PAMELA BORSKEY VICKERS

VERSUS

WILLIARD HOUSTON VICKERS

********** APPEAL FROM THE TWENTY-EIGHTH JUDICIAL DISTRICT COURT PARISH OF LASALLE, NO. 35,650 HONORABLE JOHN PHILIP MAUFFRAY, JR., DISTRICT JUDGE

**********

ULYSSES GENE THIBODEAUX CHIEF JUDGE

Court composed of Ulysses Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, Marc T. Amy, Michael G. Sullivan, and Shannon J. Gremillion, Judges.

AMY, J., dissents and assigns reasons.

SULLIVAN, J., concurs and assigns written reasons.

REVERSED AND RENDERED.

Walter E. Dorroh, Jr. Dorroh & Kendrick, a PLC P. O. Box 1889 Jena, LA 71342 Telephone: (318) 992-4107 COUNSEL FOR: Intervenor/Appellee - Homeland Federal Savings Bank

Clayton M. Perkins, Jr. Perkins & Dupré 19929 Old Scenic Highway Zachary, LA 70791 Telephone: (225) 658-9602 COUNSEL FOR: Plaintiff/Appellant - Pamela Borskey Vickers Donald D. McKeithen, Jr. P. O. Box 1919 Columbia, LA 71418 Telephone: (318) 649-6862 COUNSEL FOR: Intervenor/Appellee - Homeland Federal Savings Bank THIBODEAUX, Chief Judge.

Pamela Borskey Vickers appeals the trial court judgment which granted

Homeland Federal Savings Bank’s previously-filed collateral mortgage priority over

her judgment, despite the fact the collateral mortgage listed an incorrect mortgagor

at the time it was recorded in the parish mortgage records. For the following reasons,

we reverse and render.

I.

ISSUE

Does the error of listing an incorrect owner of immovable property in a

recorded collateral mortgage constitute a substantive error that prevents the date of

its correction from being given retroactive effect to the date the collateral mortgage

was originally recorded?

II.

FACTUAL BACKGROUND

Mr. and Mrs. Vickers obtained a divorce in 2001. Their community

property settlement remained unresolved. In 2005, Mr. Vickers granted to a financial

institution, Homeland, a collateral mortgage on immovable property separately-

owned by him. The collateral mortgage served to secure Mr. Vickers’ debt to

Homeland. Homeland recorded the collateral mortgage in the LaSalle Parish

mortgage records on July 20, 2005. The collateral mortgage, however, incorrectly

identified the mortgagor of the immovable property as Automotive Trucks &

Tractors, L.L.C., a company that Mr. Vickers solely-owned and in which he served

as President. Mr. Vickers signed the collateral mortgage on behalf of Automotive

Trucks & Tractors, L.L.C., as its President. On January 13, 2006, Mrs. Vickers was awarded $92,000.00, in addition

to the payment of her attorneys’ fees, as full and final settlement of her community

property claims. She recorded that judgment in the LaSalle Parish mortgage records

on October 16, 2006.

A few months later in 2007, Homeland’s collateral mortgage was

amended by a notarial act of correction to change the name of the mortgagor from

“Automotive Trucks & Tractors, L.L.C.” to “Willard Houston Vickers.” Mr. Vickers

and the notary acknowledged the error in the act of correction, describing it as a

“clerical error.” It was alleged therein that the collateral mortgage “incorrectly

showed that [Mr. Vickers] was signing said Collateral Mortgage as President of

Automotive Trucks & Tractors, L.L.C. when in truth and in fact, [Mr. Vickers] was

signing said Collateral Mortgage as the Mortgagor, individually, and not as President

of Automotive Trucks & Tractors.” The notarial act purporting to correct the error

was recorded in the LaSalle Parish mortgage records on January 23, 2007.

In May of 2007, Mrs. Vickers moved that her judgment be made

executory and requested that a writ of fieri facias be issued to the LaSalle Parish

Sheriff, ordering him to seize and sell Mr. Vickers’ interest in the immovable

property which was also the subject of Homeland’s collateral mortgage. Mrs.

Vickers’ judgment was made executory and the writ was issued; the Sheriff’s sale was

scheduled to take place in July of 2007. Homeland, however, filed a Petition of

Intervention prior to the sale, asserting itself as a secured creditor of Mr. Vickers,

holding a first mortgage (the collateral mortgage) on the immovable property that was

to be sold. Homeland asserted that its collateral mortgage was superior in rank to

Mrs. Vickers’ judgment and asserted its privilege to be paid first from any proceeds

of the Sheriff’s sale of the immovable property.

2 This matter was decided by the trial court based on the submission of

written briefs, stipulated facts, and stipulated exhibits. The trial court rendered a

judgment in favor of Homeland, stating therein that it found the collateral mortgage,

recorded on July 20, 2005, ranked ahead of and primed the money judgment of Mrs.

Vickers’ later-recorded judgment.

Mrs. Vickers filed this appeal, alleging the trial court’s judgment was

erroneous for multiple reasons. She argued the erroneous listing of the mortgagor

was a substantive error in the collateral mortgage that, when corrected and

subsequently recorded, resulted in the collateral mortgage losing its status as first-

ranked. She argues that the collateral mortgage was then ranked according to the

recordation date of the notarial act of correction. She adds that because of the

incorrect mortgagor, the collateral mortgage should not have been recognized as

having a higher rank than hers because it was not an “established” mortgage, pursuant

to La.Civ.Code art. 3292,1 when originally recorded. Finally, Mrs. Vickers contends

that since Mr. Vickers’ ownership interest in the property was not made a part of the

public records because of the error that existed when the collateral mortgage was

originally filed, the public records doctrine protects her as a third-party.

Homeland argues that the error listing the limited liability company as

the mortgagor of Mr. Vickers’ immovable property was not a substantive error. It

was, instead, a “clerical” error, resulting from inadvertence that occurred during the

physical preparation of the mortgage document. Therefore, according to Homeland,

La.R.S. 35:2.1(B), a statute that is relevant to notarial acts of correction, is applicable.

According to La.R.S. 35:2.1(B), the effective date of the notarial act of correction will

relate back to the original recording date of the collateral mortgage if the error being

1 This article states that a special mortgage over property a mortgagor does not own is established when the property is acquired by the mortgagor.

3 corrected is “clerical.” Therefore, Homeland argues it maintained its status as the

holder of the first-recorded security interest, despite the existence of the error in the

original document.

Homeland also refutes Mrs. Vickers’ argument that the collateral

mortgage was not an “established” mortgage when it was originally recorded.

Homeland contends the mortgage was, in fact, established due to the mutual intent

of the parties—itself and Mr. Vickers—to create a collateral mortgage on the

immovable property. Finally, Homeland asserts that Mrs. Vickers’ reliance on the

public records doctrine is misplaced because of the lack of any evidence presented

to the trial court that she reasonably relied on the original collateral mortgage.

III.

LAW AND ANALYSIS

The primary issue raised by this appeal is the effect of the error, and its

subsequent correction by notarial act, on the rank of the collateral mortgage as a

secured interest in Mr. Vickers’ property. Specifically, La.R.S. 35:2.1(A) and (B)

state the following about notarial acts of correction:

A. A clerical error in a notarial act affecting movable or immovable property or any other rights, corporeal or incorporeal, may be corrected by an act of correction executed by the notary or one of the notaries before whom the act was passed, or by the notary who actually prepared the act containing the error. The act of correction shall be executed by the notary before two witnesses and another notary public.

B. The act of correction executed in compliance with this Section shall be given retroactive effect to the date of recordation of the original act. However, the act of correction shall not prejudice the rights acquired by any third person before the act of correction is recorded where the third person reasonably relied on the original act. The act of correction shall not alter the true agreement and intent of the parties.

4 (Emphasis added).

The first question to be resolved is whether the notarial act of correction

served to correct a clerical or substantive error. If the error was clerical, then the

notarial act of correction that sought to amend the collateral mortgage is to be given

retroactive effect to the date of recordation of the original act. La.R.S. 35:2.1(B).

This would preserve the primacy in rank of Homeland’s collateral mortgage.

Here, the notarial act of correction substituted the immovable property’s

true owner, Mr. Vickers, for the erroneously-stated owner, Automotive Trucks &

Tractors, L.L.C. Homeland stipulated that at no time did the limited liability-

company own the immovable property; however, no explanation was offered as to

why this error was made.

We find that the error at issue does not constitute a clerical error, but is

a substantive one. Black’s Law Dictionary, (8th ed.), provides, in part, that a clerical

error is “[a]n error resulting from a minor mistake or inadvertence, esp. in writing or

copying something on the record, and not from judicial reasoning or determination.”

In this case, there were repeated references to the limited liability company as the

mortgagor throughout the multiple pages of the collateral mortgage. Also, as stated

earlier, Mr. Vickers signed the collateral mortgage expressly on behalf of the

company in his capacity as its President. These references evidence an express

determination by those involved with the creation of the collateral mortgage,

including Mr. Vickers, that the limited liability company be recognized as the

mortgagor of the property at issue.

Although the parties to the collateral mortgage admitted the

misidentification was an erroneous assertion, that alone does not justify classifying

such an error as “clerical” in nature. Rather, this was a substantive error because

5 there is no evidence to suggest that it was an error that resulted from a minor mistake

or inadvertence during the document preparation process. See, e.g., In re Huber Oil

of Louisiana, Inc., 311 B.R. 440 (Bankr. W.D. La. May 21, 2004). It was a deliberate

and repetitive error that even the owner of the company, Mr. Vickers, expressly

acknowledged by signing the collateral mortgage in his capacity as the company’s

President. This suggests that there was a reasoned belief by those entering into the

agreement that the limited liability company was the owner/mortgagor of the property

at issue. This does not constitute a clerical error.

Homeland desired the collateral mortgage on the immovable property to

secure Mr. Vickers’ debt. Louisiana Civil Code Article 3290 provides that to

establish a conventional mortgage, the individual must have the power to alienate the

property. Here, Automotive Trucks & Tractors, LLC did not own the piece of

immovable property and, therefore, did not have the power to alienate it. The name

of the mortgagor was not merely incorrectly spelled, nor was the description of the

property incorrectly copied; rather, the incorrect owner of the immovable property

was recorded as the mortgagor. An error of ownership rights does not constitute a

minor mistake in writing or copying within the meaning of a clerical error. The error

was substantive.

Consequently, we find that the trial court erred in finding that Homeland

held a superior security interest in the immovable property at issue. The error in

naming the limited liability company as the mortgagor is a substantive error;

therefore, La.R.S. 35:2.1 does not apply and the filing date of the notarial act of

correction does not relate back to the original date on which the collateral mortgage

was recorded. Because of this finding, we do not reach the additional issues asserted

by Mrs. Vickers in this appeal.

6 IV.

CONCLUSION

The judgment of the trial court is reversed.

Costs of this appeal are assessed to Homeland Federal Savings Bank.

7 NUMBER 09-280

COURT OF APPEAL, THIRD CIRCUIT

STATE OF LOUISIANA

AMY, J., dissenting.

I respectfully disagree with the majority that, in the factual context of this case,

the type of error at issue is a deliberate and willful one. Neither do I find that the

correction made reflects a change in intent of the parties.

The record establishes that there was intent to mortgage the property now at

issue. Mr. Vickers demonstrated his intent in the Act of Correction which reads as

follows:

(1) Page 1 of the above described Collateral Mortgage incorrectly showed the Mortgagor as Automotive Trucks & Tractors, L.L.C., when in truth and in fact, Page 1 should have shown the Mortgagor to be WILLARD HOUSTON VICKERS;

(2) Page 13 of the above described Collateral Mortgage incorrectly showed the Mortgagor to be Automotive Trucks & Tractors, L.L.C., when in truth and in fact, the Mortgagor should have been shown to be WILLARD HOUSTON VICKERS; and

(3) Page 14 of the above described Collateral Mortgage incorrectly showed that WILLARD HOUSTON VICKERS was signing said Collateral Mortgage as President of Automotive Trucks & Tractors, L.L.C. when in truth and in fact, WILLIARD HOUSTON VICKERS was signing said Collateral Mortgage as the Mortgagor, individually, and not as President of Automotive Trucks & Tractors, L.L.C.

Homeland affirmed its intent to take a mortgage on the property in its petition for

intervention and the joint stipulation of facts. Its intent to mortgage the property is

also evidenced in the fact that the bank loaned Mr. Vickers $150,000.00. Ms. Vickers also acknowledges that intent in the joint stipulation of facts,

which reads:

[The mortgage] was intended by the mortgagor and mortgagee to collateralize the debt owed to HOMELAND FEDERAL SAVINGS BANK set out in paragraph 2 of the original Petition for Intervention. However, at the time the Mortgage was executed and recorded, the mortgagor, Automotive Trucks & Tractors, was not the record owner of the property. The property was actually owned by WILLARD HOUSTON VICKERS individually. The Mortgage of July 20, 2005, was subsequently amended by notarial act which acknowledged the clerical errors and purported to correct the clerical errors with said Notarial Act of Correction[.]

In light of the clear understanding evidenced between all of the parties, and stipulated

on the record, I find that the trial court’s determination that this was a correction of

a clerical error is supported by the record.

I also find that the trial court’s determination is consistent with In re Huber Oil

of Louisiana, 311 B.R. 440 (Bkrtcy. W.D. La., 2004), wherein the court was faced

with the question of whether an error was clerical or substantive. In that case, the

error was related to a property description. The property description contained in the

deed and a subsequent mortgage did not include certain property described in the

purchase agreement. Ultimately, the Huber court reasoned that the record clearly

reflected an intent between the parties to transfer the omitted portion and thus the

error was clerical because it did not result from any conscious or reasoned decision

to exclude the property. The court found that the transfer and mortgage documents,

in addition to, affidavits of the parties were “uncontroverted evidence [that] clearly

establishes that the error was one occurring in the physical preparation of the

documents and was not the result of any reasoning, determination or thought process-

not one of the interested parties conscious and reasoned decision[.]” Id. at 444.

Accordingly I find that La.R.S. 35:2.1’s retroactive effect applies and the

collateral mortgage primes Ms. Vickers judicial mortgage unless the retroactive effect

2 will “prejudice the rights acquired by any third person [here, Ms. Vickers] before the

act of correction [was] recorded where the third person reasonably relied on the

original act.” La.R.S. 35:2.1(B). Ms. Vickers asserts in brief that when she recorded

her “judgment in the LaSalle Parish public records on 10/16/2006, there was no entry

in the mortgage records showing Mr. Vickers had a collateral mortgage on his

immovable.” However, apart from this assertion, there is no evidence in the record

that Ms. Vickers relied on the original collateral mortgage.

For these reasons, I believe an affirmation is warranted.

3 STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT

SULLIVAN, J., concurring.

I agree with the result reached by Chief Judge Thibodeaux but for different

reasons. The Notarial Act Acknowledging Clerical Errors and Correcting Clerical

Errors (Notarial Act) was executed by the notary who notarized the mortgage and

Mr. Vickers. It simply “acknowledged” that “clerical errors were committed in the

Collateral Mortgage” and that the “Collateral Mortgage contained the following

clerical errors which should be corrected.” The affidavit then itemized three errors

which are the use of a corporate name, rather than Mr. Vickers’ name individually,

in three places in the mortgage. One of those errors is the signature which has

Mr. Vickers appearing as corporate representative.

In In re Huber Oil of Louisiana, Inc., 311 B.R. 440 (Bankr. W.D. La. 2004),

the court determined that the exclusion of property from a property description in a

cash sale and the mortgage which secured the purchase of the property was a clerical

error by considering the affidavits of the parties to the transactions. While the Huber

opinion does not clearly specify who executed affidavits and what each affiant

averred therein, it indicates that the affidavits therein say more than the Notarial Act

submitted by Homeland Federal Savings Bank (Homeland). The opinion states: The affidavits of all parties involved, including [the closing attorney], lead to the inescapable conclusion that the exclusion of the Omitted Property occurred during the physical preparation of the documents and that no reasoning or thought process was involved. The entire record of this proceeding clearly reflects an intent for Huber to transfer and Nelson to receive the Omitted Property. The court therefore finds that the inclusion of the Omitted Property in the less and except clause was a clerical error and the correction of such error is within the reach of LSA-R.S. 35:2.1.

Id. at 444.

The Notarial Act does not address the intent of the parties with regard to the

mortgage, i.e., was it intended to secure a corporate loan or a personal loan to

Mr. Vickers. A review of the mortgage itself does not lead to an answer because,

while the title and the signature line of the document indicates that it is a corporate

loan, the description of the appearer within the body of the mortgage is Mr. Vickers

individually, not the corporation represented by Mr. Vickers. This supports

Homeland’s claim that a clerical error occurred in the preparation of the mortgage.

Furthermore, while the Petition for Intervention itemizes the indebtedness of

Mr. Vickers to Homeland, no promissory notes evidencing the alleged indebtedness

are attached to the Petition. The indebtedness could be Mr. Vickers’ personal debt.

However, it could also be a corporate debt, as it is not unusual for the principal of a

small corporation to be required to guarantee corporate loans and use personal

property as collateral for such loans.

In conclusion, I find that the evidence does not establish that Homeland carried

its burden of proof of establishing that the “error” sought to be corrected by the

Notarial Act is a “clerical error” and would reverse the judgment of the trial court.