Mutual of Omaha Bank v. Watson
297 Neb. 479
| Neb. | 2017Background
- Robert W. Watson and his then‑wife Shona purchased a home in October 2009 that became their homestead; Community Bank financed the purchase with two promissory notes secured by a primary and a secondary deed of trust.
- Both spouses signed both deeds of trust, but the notary certificate on the primary deed of trust recited only Watson’s acknowledgment; the secondary deed of trust’s certificate recited acknowledgments by both.
- Community Bank paid off the builder’s prior lender and recorded the primary deed of trust (later assigned to TierOne, then to Mutual of Omaha Bank). Watson defaulted and Mutual sued for judicial foreclosure.
- Watson argued the primary deed of trust was void under Nebraska homestead statutes because Shona’s acknowledgment did not appear on its face; he also asserted counterclaims based on title insurance and alleged collusion.
- The district court granted summary judgment for Mutual, treating the two deeds as one transaction and finding the primary deed of trust a first‑priority lien; the Supreme Court affirmed on de novo review, holding the homestead‑acknowledgment rule did not defeat a purchase‑money security interest given as part of the acquisition transaction.
Issues
| Issue | Plaintiff's Argument (Mutual) | Defendant's Argument (Watson) | Held |
|---|---|---|---|
| Validity of primary deed of trust under homestead statutes | The primary deed is valid; read with the secondary deed and shown to be part of the purchase transaction | The primary deed is void because the notary certificate did not show Shona’s acknowledgment on its face as § 40‑104 requires | The deed is enforceable: where the security was a purchase‑money instrument given to acquire title, no homestead right attached before the encumbrance; deed and mortgage treated as simultaneous. |
| Whether the two deeds should be construed together | They were executed and delivered in the same transaction and thus must be read together | They are separate, and the defective acknowledgment on the primary is fatal | Read together; the instruments were part of the same transaction, supporting enforceability. |
| Effect of corrective (post‑recording) acknowledgment statement by notary | Corrective certification supports the primary deed’s validity | A unilateral corrective certificate cannot cure a facial statutory defect required for homestead conveyance | Court rejected unilateral corrective certification as sole basis but did not need to rely on it because purchase‑money doctrine controls. |
| Dismissal of Watson’s counterclaims (title insurance / collusion) | Title policy insured Mutual, not Watson; insurer’s involvement does not bar foreclosure | Watson paid premiums and claims insurer duties/right to relief; alleges collusion with insurer | Counterclaims dismissed: Watson was not the insured under the policy and foreclosure was for loan default, not an insured claim; dismissal moot after finding deed valid. |
Key Cases Cited
- Prout v. Burke, 51 Neb. 24, 70 N.W. 512 (1897) (purchase‑money mortgage delivered at time of purchase precedes homestead claim)
- Commerce Sav. Lincoln v. Robinson, 213 Neb. 596, 331 N.W.2d 495 (1983) (purchase‑money mortgage treated as executed with deed; priority rules)
- Blum v. Poppenhagen, 142 Neb. 5, 5 N.W.2d 99 (1942) (deed valid between parties but homestead exception requires proper acknowledgment)
- In re Estate of West, 252 Neb. 166, 560 N.W.2d 810 (1997) (instruments executed contemporaneously for same transaction may be construed together)