Barton v. Cannon

P.2d 1021 BARTON, Jean Executrix the Estate Penard, Plaintiff-Appellant, B. J.

v. CANNON, known as sometimes

Francis R. al., Cannon et F. R. Defendants. HART, in Intervention

Elizabeth Plaintiff Respondent, BARTON, the Estate of

Jean Executrix of Penard, al., Defendants in In J. et B. Appellants. tervention and

No. 10582.

Supreme Court of Idaho.

Oct. 1971. Home, McLaughlin,

Robert F. Mountain appellants. for Boise, Southcombe, Cosho, Humphrey & Hart. respondent Elizabeth SHEPARD, Justice. is- original matters

All F. Defendant sue here are now deceased. Cannon, deceased, mort- executed R. now real piece of covering and one one B. both to J. mortgage was Mabel Nelson. subse- in time but quent Nelson in time to the in default July mortgage and, purpose avoiding covering poration, warranty deed P.2d gage, agree- and (1967); 56(e) (f). Nelson. Their I.R.C.P. property Mrs. of the upon delivery that provided ment principal argu Plaintiff-appellant’s would and note deed Nelson appeal that ment is to the effect and deemed cancelled. be satisfied warranty deed when Cannon executed the verbally that represented to Nelson also Nelson, equitable interest of any en- was free and clear of merged legal Nelson was only the Nelson excepting cumbrances de title the Nelson was thus mortgage. stroyed. Plaintiff-appellant asserts that brought was This action for foreclosure powerless that trial court was to relieve Elizabeth original mortgage. and reinstate the Hart, the Nelson successor in interest Plaintiff-appellant fact points also complaint filed a in- was recorded summary Hart then moved for tervention. interim between the warranty contending judgment, execution should be set deed Cannon to Nelson warranty deed. aside and reinstated the Nelson It is stated: priority. in its original was That motion granted, summary judgment en- was question merger “The interests plaintiff tered in favor of interven- as in- and his tion, appeal and this follows. mortgagor terests transferee primarily intention, Barton, Plaintiff-appellant (Jean held take Penard) executrix of the estate of B. J. place there is an intention to contends that there were of fact re issues estates, merge the two maining to be determined the trial court an where there is relating to the intents of Nelson and Can alive. This has non in executing the deed regarded prevailing whether such agreement, summary judgment and that ** * implied. tention is was improper. reject therefore We Analysis contention. inten shows expression “In the absence an tions of the execution mortgagee at tention on the Cannon-Nelson deed were not the criteria acquires the time he the interest of used to determine aside a whether set mortgagor mortgaged property, Therefore, deed and merger. the resultant mortgage rule is that the no factual issues as to are involved intent merged if is not to the interest of herein. Plaintiff-appellant argues further merged. to have that the element of case, fraud remained to it must determined issue of fact. ele intended to do that which ment amply of fraud set himself, forth advantageous most and if raised in the affidavits submitted merge, is that the two estates shall plaintiff-in-intervention. No affidavits place. will take This countering conclusive; controverting however, those asser sumption, is not tions by plain were made or introduced tiff-appellant. plaintiff-appellant by While jury finding warrant that a proper might agreed introduction of affidavits had been well have raised the mortgagee’s issue fraud as a conduct and action were controverted and genuine material issue fairly such as be ascribed bar, fact in merge.” the case at no such affidavits an intention to 55 Am.Jur.2d summary judgment made prop 1260. See §§ er. Prather Industrial Investment Cor- 95 A.L.R. 628 and 148 A.L.R. 816. The record herein the parties indicates to that first mort- extinguish intent, gage. exists, where it Actual debt, adequate cancel the the the basis for result. legitimate Cannon and Nelson stated that inter- creditor has cancelled, protect against the note was to be no eleva- of est to himself By bringing further force or tion of the effect that the mort- later interest. discharged.” they would be “satisfied and in which action joined Therefore, language if the defendant the above constitut- theory ed the of upon sole have free and clear which relief could been sold against merger plaintiff- bought their interests he could granted, be However, appellant it re- prevail. Acquisition in that would where state. way not demption other or other any liens interests have intervened should during to prejudice position respect time his between the with intend merger, junior asserted such if he did not a different rule has interests duty it to evolved: do so and not under a to result. acts which have that do would “Turning to cases in which the courts interest, junior of owner hold that the first mortgage pre- will be circumstances, object cannot served or reinstated as interven- kept put position being or back into his ing interest, encumbrances some of bargained rear in the because he never them clearly indi- creditor him for advancement that come to would cated keep his intention to the first mortgage. destruction first ** mortgage in *. existence In a may be But the decisions more large number of cases in which there is justified grounds unjust on enrich- no evidence of ment, implicit rationale doctrine alive, other than it that effect mort- giving of fairness would be interest of appears. gage creditor’s intent when it so, to do creditor it is held there By mort- the destruction of no merger. But go beyond courts gage, the later lien or interest is elevated hold, spite undisputed paid priority its owner to a for which intent part on the credi- is, pure nothing and hence as to tor discharge mortgage, first at the ex- windfall. And is a it windfall he nevertheless use it for foreclo- *** prior mortgagee. pense sure purposes against interests. So, too, in- of the later if he know didn’t This is the almost uniform result where terest and so didn’t know ignorant creditor was first respect his action intervening Although lien. there to confer this advan- would be authority negligence that his in not ignorance or mis- tage on it. That the discovering the existence of the later part negligence was due terest in mistakenly relying on its not only make no should difference. being prevent enforced will him it using con- negligence consequence of the subsequent claimant, other lienors or the later fer benefit and, believed, authority it is better holds away, which, if taken other claimants contrary. Indeed the rule position no worse leave them broadly laid that, except down the occurrence. were before two cases stated at the outset of this sec- disad- put does them Since [basically knowledge with actual loss, it should vantage cause them express subjugation taking prevent the first op- tervening interests] reinstat- being position restored to his permit erate a later encumbrance And, it believed ing his position priority elevated to a over restitution to that this mortgage regardless fate first its the views above justifiably enrichment can unjust vent ruled trial herein are court in which to include all extended cases logical better reasoned. We respect to more is no intent with there actual out, however, point decision our there no the later And interest. case at the facts bar is to limited to ground re- automatic herein, part Indeed, on the fraud gardless intent. whether gagor-grantor, way analyse courts it in mortgagee-grantee of other in- not, justifi- to be the best would seem tervening liens or interests and cation their reiterated statements jun- resultant effect lies in express the absence of speak ior and lienors. We do not senior part his intention para- are outside these cases whose facts will accordance with meters, equi- may for therein lie different Osborne, Mortgages, interests.” 1951 concepts. table ed., pp. (Emphasis added) 773-75. judgment The summary the trial appears It also be the respond- court is Costs affirmed. representations fraud and false ents. acceptance for motivation conveyance proper- McQUADE, J., and McFADDEN and C.

ty, merger does not take even to DONALDSON, JJ., concur. mortgage might extent have been thereof SPEAR, (dissenting). Justice 1029, 55 surrendered. Mort- 95 A.L.R. 628. I dissent. It has also held that where as here principal reason for this dissent is by examining pub- Nelson interests reasoning because applied major lic records of the Pen- learned ity opinion necessarily results in an abro intervening interests,

ard’s absence ac- gation of the effectiveness of the record tual permit relief still from ing statutes of the State of Idaho relative the merger. Mortgages, Osborne on 1951 to the conveyances or transfers of real ed.; Carter, Fowler Bros. v. 77 N.M. property. pertinent statutes are: I.C. Holzmeyer P.2d (1967); v. Van 55-811,1 55-8122 §§ and 55-813.3 These Doren, 172 Or. (1943), 139 P.2d 778 statutory provisions hardly can classed It appears that this is a of first for, “newcomers” Idaho law impression and, in the State of Idaho while exception, one have been a split authority, there is some we believe thereof since exception 1864. The one Every 1.§ Record as 55-811. conveyance 2. § notice. — 55-812. Unrecorded void conveyance property acknowledged of real subsequent purchasers. Every— proved, certified, conveyance property real other than a prescribed law, time it exceeding year, lease for a term one record, filed recorder for is con- any pur- subsequent is void as structive notice of the contents thereof property, chaser or of the same subsequent purchasers and mort- any part thereof, good faith and gagee) es. consideration, for a valuable whose con- Every conveyance property veyance duly real ac- is first recorded.” knowledged proved, certified, Conveyance 3. § 55-813. defined. —The prescribed by law, recorded as and which “conveyance” chap- term as used in this is executed one who thereafter ac- ter, every writing embraces instrument quires property intei’est said real which estate or real interest which is constructive property created, mortgaged alienated, is, aforesaid, notice as from the time such encumbered, which the title conveyance is filed with the record- latter except affected, real record, er constructive notice wills. purchasers subsequent thereof to contents mortgagees.” 55-811, paragraph the second of I.C. has specifically Idaho recognized this which was added to that section in 1941. and held that one who furnishes material for the improve construction of key words these statutes are lands, ments on the record title of notice,” the inter- person in a other than ordering the one pretation thereof lies solution to the improvements, is bound to take notice cause at bar. Payette record. Boise Lumber v.Co. pointed Jurispru- It is out in American Bickel, Idaho 245 P. 45 A.L.R. dence that: 575 (1926). specifically The court “The doctrine of constructive notice out that the actual owners at all times rests persons idea all been in possession of their land learn actually know that of which additionally held : gives law notice implies knowl- record, “Their title ap- of which edge. imparted The notice the due pellant was bound to take notice.” and proper instrument, record of al- page page P. at though notice, called a constructive just as protection effectual for the For interesting concerning case rights parties as an no- interpretation and effectiveness records mouth, tice word of or otherwise.” law, and recording see Eckland v. Jan (emphasis supplied) (45 page Am.Jur. al., 263, 342, kowski et Ill. 22 95 N.E.2d 407 468, Record Recording 86.) Laws § A.L.R.2d A.L. 1102 and cases noted at 22 In this same section of American Juris- R.2d 1121. prudence it is out that the oft-re- notice Constructive has also been defined peated phrase properly regularly that a or legal legal as a presumption inference or a recorded gives instrument notice all “to disputed notice not be or (cid:127)world” really open means the record is controverted; imputed notice which is to all and is parties. notice to interested fact, point law. of literal construc- only The record of an instrument is notice knowledge, tive notice is neither notice nor to those who are bound to search for it. which, promo- is a for the fiction who, by Thus those the terms of legal purpose, policy or sound laws, recording charged are with the con- rights and interests structive notice record of an instru- or though treated notice had actual are, ment affecting therefore, land those knowledge. applied The term is sometimes who are bound to search the records indiscriminately both to notice particular .that instrument. susceptible being explained or authority page same may be, but seems to that which more continues the discussion appropriately applicable the former kind subject as follows: distinguished “implied of notice as laws, general, “In the recording under presumption notice” on a which is based recording of a deed or fact. of constructive notice One kind (cid:127)other entitled instrument notice from a record which results (cid:127)is purchasers constructive notice statutes, recording imputed which is who, subsequent (cid:127)encumbrancers notice which is other is recording, acquire right some interest or has person fact that a because of the grantor knowledge facts which should certain subsequent (cid:127)mortgagor. A encumbrancer impart lead him n purchaser notice must know or take course, are, of of the ultimate facts. We n ofthe condition up the record title case concerned the former creating the time of the encumbrance or see general principles, at bar. For these making sale, duty for it is his to ex- 6, pp. 639-640. Notice amine the record.” C.J.S. e., accept conclusion, gage, suggested proper that a Cannon that Nelson i. agreement mort deed with the regular of a chattel 1, anyone April promissory note conclusive notice becomes nor dealing chattel, reached “cancelled” and no further force later “of April Sage, Bell 60 effect” and that the court in a California discharged.” Cal.App. (Cal.1922 1963 would be 212 P. 404 “satisfied — D.C. agreement (emphasis added) This dist., denied, rehearing hearing de App.3d made and the deed from Cannon 13, 1923). nied Feb. The court S.Ct. July executed on wife Nelson was holding as follows: summarized its 1965; (4) represented Nel- “ * * * bearing the decisions While son, writing, orally both and in directly upon under consid- premises were and clear of encum- free text-writ- eration are not numerous and at the brances time of the the discussion ers have omitted July the execution of the thereof, that the conclusion it is believed the record is not (5) clear reason supported both reached whether, fact, authority. In the absence weight satisfied and as a matter of statutory provison, the record of record. not constitute chattel terms Thus it any purpose. will be seen notice for When with, time, being complied was first in of the statute are notice, 10, 1961, February compared often record becomes conclusive ” * * * April contrary P. 1963 date fact. However, mortgage p. the Nelson was 406) first, April 17, recorded on no- Thus, my opinion, compared September 1964 for the of provided paragraph first

tice” the Penard by regular the due and I.C. 55—811 § court, recording of Idaho It was contended in trial of the 55-813, property, again appeal a as defined in I.C. this contention is asserted on therein, by mortgage being representatives is tanta- the inter- included of the Penard ests, any subsequent instigated litiga- incidentally mount to this actual notice who purchaser mortgagee. commencing an action to foreclose mortgage, acceptance the defaulted that the interpretation of applicability of this coupled the of deed recording at bar is our statutes to the case with the that the note can- .be readily the considers discernable when one celled and that be satisfied facts, pertinent portions of which merger a constituted of Penard loaned Cannon (1) as follows: fee; mortgage interest the interest in promissory note a as evidenced $5000 which therefore on property secured a real always prior had been in time to the Nel- action, in this cause of premises involved duly son had and which February executed on which was merger consti- recorded date September until recorded premises. tuted an lien enforceable 1964; loaned Cannon (2) opinion recognizes majority note and by promissory $13,000 evidenced a correctly quotes merger principle and by real secured a merger general question of rule that the of premises involved April mortgagee that of the interests mortgage, by Cannon on (3) the title in fee transfer holder of April 1963 and expenses mortgagor primarily is necessarily thereof escape the attendant princi- question general intention. The of the Nelson action pies aptly applicable involved are stated in American is not which here. One Jurisprudence, emphasized portions as follows: quotation of Osborne question majority opinion contained in

“The the inter- serves to my point ests of a illustrate wherein it is stated: mortga- his interests as transferee of the go beyond hold, “But the courts this and intention, gor primarily spite an undisputed intent on will be held part of the mortgage creditor to dis- place take where is an there charge mortgage, the first that neverthe- estates, merge take the two and not to pur- less he use it for foreclosure where there is an intention to poses against interests. This has been alive. This result the almost uniform regarded prevailing whether such mortgage creditor ignorant implied.” tention is intervening lien." supplied) (emphasis (Osborne, Mortgages Ed.) 773-74 ' expression “In the absence of an previously beginning As discussed at the mortgagee at intention on the dissent, it my opinion that under acquires he interest time construc- statutes property, mortgagor mortgaged provided tive notice therein is tantamount is that the notice; to actual and that merged if-it not to the interest igno- (Nelson) creditor here cannot claim merged. to have intervening rance lien so-called case, that the must be been regularly recorded for sev- to do that which intended acceptance eral months to her himself, advantageous most and if warranty deed from Cannon. merge, is that the two estates shall Secondly, there is still serious doubt place. This my mind whether facts in this under the however, conclusive; sumption, is not Penard mortgage case the accurate- can be that would lien,” ly described be- “intervening jury finding warrant a cause it must be that the Pen- remembered agreed had been expressly ard in time to the Nelson mortgagee’s conduct and action although later. fairly ascribed as could my opinion equities Thus lie with merge.” an intention to Am.Jur.2d appellant Barton insofar Penard recorded Nelson of principles, quoting general After these is concerned. majority opinion concedes “[t]he opinion relies on majority record herein indicates an false general that “where fraud rule extinguish the cancel for ac- debt, representations are the motivation ceptance the note stated that property, a does cancelled, no further and of the extent that the even to force or effect and that ” the evi- might But have been discharged.’ would be ‘satisfied and authori- surrendered.” these dence thereof majority then rationalizes Mort- 1265 of are 55 instance ties cited principles do not in this govern find do not I A.L.R. 628. because impelling in view these authorities circumstances tended a given interpretation obviously such here involved when Addition- recording statute. in our notice” be for best interests. would not her citation ally, A.L.R. theory authorities is Os- authority relied for this in some Too, facts split. are divided Mortgages, basic borne knowl- appear to had taken his on their face be who them which previous- being ap- edge As senior accord with out, ly plied by opinion read- the Penard majority here are the Nel- ily instance, years prior in How- two distinguishable. For Clark, It is dif- son in the case at bar. ard A.L. 71 Vt. 45 A. perceive how the fraud ficult for me to although appeared thát the first R. and not accept eq- Cannon unknown intended to deed of participated by, constitute uity redemption can in consideration of grounds denying the enforcement discharge mortgage debt, neverthe- against the Penard lien less it was held that induced where he was accept mortgagor’s the deed volved. representation premises fraudulent my opinion the trial court committed encumbered, equity were not otherwise respondent’s error in granting motion for would relieve from the him unconscionable summary judgment. The cause should position mortgagor’s in which the fraud remanded for trial on the merits with placed by reinstating him in his mortgage given priority a lien rights under his and the note se- thereby, taking cured the fee repre- existed before the title of the Nelson sentatives.

Case Details

Case Name: Barton v. Cannon

Court Name: Idaho Supreme Court

Date Published: Oct 20, 1971

Citation: 489 P.2d 1021

Docket Number: 10582

Court Abbreviation: Idaho