450 B.R. 711
Bankr. S.D. Ohio2011Background
- Paynes owned real property in Perry County, Ohio, and executed a mortgage in Huntington's favor before petition date.
- Mortgage defined Borrower as Todd S. Payne only; Mrs. Payne signed but is not identified as Borrower in the body.
- Co-signers provision in Paragraph 13 states co-signers do not incur personal liability and may be treated separately from the Note.
- Trustee seeks to avoid or limit Huntington’s lien on Mrs. Payne’s undivided one-half interest in the Property.
- Court applies Ohio contract interpretation and state-law principles to determine the extent of the mortgage interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Mortgage encumber Mrs. Payne's interest? | Trustee: co-signer provision makes her a mortgagor. | Huntington: she is a co-signer with mortgage rights. | No; Mortgage does not encumber Mrs. Payne's interest. |
| What is the meaning of Borrower under the Mortgage? | Borrower includes both Paynes due to signing. | Borrower is Todd S. Payne only. | Borrower is Mr. Payne only. |
| Does Mrs. Payne's signature make her a mortgagor or co-signer entitled to mortgage her interest? | Signature indicates agreement to terms; could convey her interest. | Signature does not alter Borrower definition or grant her interest. | Signature does not convert her into a mortgagor. |
| Are Counts II–IV moot given the holding on Count I? | Requests to avoid or preserve liens depend on Count I. | If Count I grants no encumbrance, others are moot. | Counts II–IV moot; dismissed. |
Key Cases Cited
- Smith v. Turpin, 20 Ohio St. 478 (Ohio 1870) (omission to name grantor defeats a deed/mortgage grant)
- Gilchrist v. United Bank & Trust Co., 444 B.R. 343 (Bankr. E.D. Ky. 2010) (third party not named in body cannot be party to mortgage)
- Surti, 434 B.R. 515 (Bankr. M.D. Tenn. 2010) (co-signer without proper Borrower status not a mortgagor)
- Colbert, 434 B.R. 844 (Bankr. S.D. Ohio 2010) (distinguishes Borrower definition and co-signer analysis)
- Wirth, 355 B.R. 60 (N.D. Ill. 2005) (mortgagee’s lien absent borrower’s body-identification not encumbrance)