Mutual of Omaha Bank v. Watson
297 Neb. 479
| Neb. | 2017Background
- In 2009 Robert and Shona Watson purchased a home that became their homestead; Community Bank funded the purchase by two notes secured by a primary and secondary deed of trust on the same property.
- The primary deed of trust’s notary certificate showed only Robert’s acknowledgment; the secondary deed’s certificate showed both spouses acknowledged. A later undated "corrective" certificate attempted to state both had acknowledged the primary deed.
- Community Bank assigned the primary deed to TierOne, which later assigned it to Mutual of Omaha Bank; Mutual sued in 2013 for judicial foreclosure after Watson defaulted.
- District court granted Mutual summary judgment, ruling the primary deed had first priority (reading the two deeds together and/or on equitable subrogation) and dismissed Watson’s counterclaims related to title insurance and collusion.
- On appeal, Nebraska Supreme Court reviewed de novo and framed the primary legal question as whether homestead-acknowledgment statutes voided enforcement of the primary deed of trust.
Issues
| Issue | Plaintiff's Argument (Mutual) | Defendant's Argument (Watson) | Held |
|---|---|---|---|
| Validity of primary deed given missing spouse acknowledgment | Instrument enforceable because extrinsic evidence shows both spouses voluntarily acknowledged; corrective certificate and related documents cure or prove acknowledgment | Primary deed is void under homestead statute because acknowledgment of both spouses must appear on instrument face | Court held primary deed enforceable as a purchase-money security interest: purchasers had no homestead until they executed the security, so §40-104 did not bar the lien |
| Whether primary and secondary deeds should be read together | Deeds executed same day, same parties, same transaction; read together to reflect intent and cure defective acknowledgment | Reading them together improperly validates a deed that lacks requisite face acknowledgment | Court agreed instruments were part of same transaction but rested decision on purchase-money mortgage rule rather than solely on construing documents together |
| Whether court lacked jurisdiction / Mutual must join title insurer | Mutual not required to join title insurer to determine priority of deed; insurer not a necessary party to foreclosure | Failure to join title insurer deprived court of jurisdiction to grant declaratory relief regarding priority | Court found joinder issue moot because primary deed valid; earlier dismissal of Watson’s claims against insurer stood and did not bar foreclosure |
| Dismissal of Watson’s counterclaims (title insurance, collusion, setoff) | Title policy insured Mutual only; Mutual permitted to seek insurer’s assistance; counterclaims fail as matter of law | Watson argued he paid premiums/is entitled to policy benefits or setoff and insurer/Multi colluded to foreclose despite defect | Court affirmed dismissal: Watson not insured under policy and foreclosure was enforcement of debt, not a claim for title defects |
Key Cases Cited
- Prout v. Burke, 51 Neb. 24, 70 N.W. 512 (1897) (mortgage delivered at time of purchase is not invalid for lack of spouse acknowledgment because deed and mortgage are treated as simultaneous purchase-money instruments)
- Commerce Savings Lincoln v. Robinson, 213 Neb. 596, 331 N.W.2d 495 (1983) (purchase-money mortgage treated as contemporaneous with deed and may take precedence over other liens)
- In re Estate of West, 252 Neb. 166, 560 N.W.2d 810 (1997) (instruments executed at same time by same parties for same transaction may be construed together)
- Blum v. Poppenhagen, 142 Neb. 5, 5 N.W.2d 99 (1942) (deed valid between parties though not properly acknowledged except as to homestead of grantor)