805 N.W.2d 279
Minn. Ct. App.2011Background
- RTS River Bluff, LLC borrowed $2,300,000 from RiverBank on December 12, 2003 to purchase and develop real property in Chisago County for a residential community.
- RTS River Bluff purchased one parcel from Linn and Helen Slattengren on December 22, 2003, and Slattengren received a mortgage to secure part of the price; the mortgage was later assigned to Slattengren & Sons.
- Burnet Title recorded both mortgages in Chisago County on December 31, 2003 at 4:15 p.m.; RiverBank’s mortgage was recorded as A-420873 and Slattengren’s mortgage as A-420875.
- RTS River Bluff defaulted on both mortgages; RiverBank foreclosed its mortgage in August 2008 and Slattengren & Sons began foreclosure proceedings in June 2009.
- The district court held both mortgages to be purchase-money mortgages, but determined Slattengren’s mortgage was senior to RiverBank’s due to vendor status and lack of notice; RiverBank appeals arguing priority arises from order of recording and simultaneous attachment.
- The appellate court reverses, holding that when two purchase-money mortgages arise in the same transaction, priority is determined by the order of recording, since no vendor superiority exists here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a vendor’s purchase-money mortgage has priority over a third-party lender’s in the same transaction. | RiverBank contends its purchase-money mortgage and Slattengren’s mortgage arise simultaneously; priority lies in recording order. | Slattengren argues vendor-purchase-money priority applies, as in Schoch v. Birdsall. | No vendor priority; priority is determined by simultaneous arising and recording order; RiverBank first recorded thus superior. |
| What governs priority when two purchase-money mortgages arise in the same transaction? | RiverBank asserts the recording order governs priority in simultaneous attachments. | Slattengren asserts priority may follow vendor status absent notice under Schoch framework. | Priority set by recording order for simultaneous purchase-money mortgages; RiverBank superior. |
| Whether notice affects priority between simultaneous purchase-money mortgages. | RiverBank had no notice of a superior mortgage at the time of its recording. | District court relied on lack of notice to grant Slattengren priority. | Notice is not controlling when the mortgages arise simultaneously; order of recording governs. |
Key Cases Cited
- Olson v. Olson, 203 Minn. 199 (Minn. 1938) (vendor and third-party purchase-money mortgages; priority considerations)
- Schoch v. Birdsall, 48 Minn. 441 (Minn. 1892) (vendor priority not controlling when simultaneous interests not addressed)
- Kloster-Madsen, Inc. v. Tafi’s, Inc., 303 Minn. 59 (Minn. 1975) (instantaneous seisin; title encumbered at transfer)
- Olson v. Olson, 203 Minn. 199 (Minn. 1938) (purchase-money mortgage equities; recording priorities)
- Wash. Mut. Bank, F.A. v. Elfelt, 756 N.W.2d 501 (Minn. App. 2008) (recording act; priority defeated by notice)
- Gores v. Schultz, 777 N.W.2d 522 (Minn. App. 2009) (definition of purchase-money mortgage; concurrent interests)
- Wells Fargo Home Mortg., Inc. v. Newton, 646 N.W.2d 888 (Minn. App. 2002) (definition of purchase-money mortgage; priority considerations)
- In re Ocwen Fin. Servs., Inc., 649 N.W.2d 854 (Minn. App. 2002) (recording and priority considerations)
- Mid-Country Bank v. Krueger, 782 N.W.2d 238 (Minn. 2010) (mortgage definition; general principle about recording)