160 P. 517 | Or. | 1916
Lead Opinion
delivered the opimon of the court.
It is contended by defendant B. L. Sabin that he is an innocent third party, that the acknowledgment of the mortgage did not entitle the same to be recorded, and that therefore the recordation imparted no notice to the trustee, and that the latter took the title to the property unaffected by the plaintiff’s mortgage.
Under our statute there is no specific requirement that the name of a grantor or mortgagor shall be contained in the certificate of acknowledgment. Section 7109, L. O. L., directs that:
“The officer taking such acknowledgment shall indorse thereon a certificate of the acknowledgment thereof, and the true date of making the same, under his hand.”
If the certificate shows that such officer knows that “the person making such acknowledgment is the individual described in and who executed such conveyance, ’ ’ the identification is complete according to Section 7119, L. O. L. No other description or
“"Whenever substance is found, obvious clerical errors and technical omissions or defects will be disregarded.”
In 1 C. J., p. 848, § 190, the rule is thus laid down:
“Where, from an inspection of the whole instrument, it appears with reasonable certainty that the person who acknowledged was the one who executed it, the clerical error in stating the name of the grantor will not invalidate-the instrument.”
The following principle is briefly stated in the case of Platt v. Rowand, 54 Fla. 237 (45 South. 32):
“The declared and settled policy of the law as construed by this court is ‘to uphold certificates of acknowledgment of deeds, and wherever substance is found obvious, clerical errors and all technical omissions will be disregarded.’ ”
Any interest that the trustee in bankruptcy may have in the premises is subordinate to the lien of plaintiff’s mortgage.
Bankruptcy Act of July 1, 1898, Chapter 541, Section 47, subdivision “a,” clause 2, 30 Stat. 557 (U. S.
“whatever rights creditors under state law would have had had they been ‘armed with process,’ whether actually so ‘armed’ or not; the trustee being deemed a levying creditor, so far as property in the custody of the bankruptcy court is concerned, and a creditor armed with an execution returned unsatisfied as to property not in such custody”: 2 Remington, Bankruptcy, § 1207.
In Collier on Bankruptcy, page 660, it is stated:
“The purpose of Congress was to embrace within these words every class of creditors with liens by legal or equitable proceedings favored by the varying registration laws of each of the states.”
Assuming that the rights of the trustee are equal to those of an attaching creditor under our statute, and considering the case first from such standpoint, it is the settled law in this state that a trustee having the right of an attaching creditor is not ipso facto a bona fide purchaser for value. That one is such a
Section 7129, L. O. L., provides thus:
“Every conveyance of real property within this state hereafter made, which shall not be recorded as provided in this title within five days thereafter shall be void against any subsequent purchaser in good faith and for a valuable consideration of the same real property, or any portion thereof, whose conveyance shall be first duly recorded. ’ ’
Equity will exercise its jurisdiction for the correction or reformation of a written instrument on the ground of mutual mistake, and for this purpose will receive parol testimony: Jones, Ev., § 437.
Reformation of a written instrument on the ground of mutual mistake will be decreed in a court of equity
“In cases of mistake in written contracts equity may interfere, not only as between the original parties, but those claiming under them in privity,' such as personal representatives, heirs, assignees and the like. * * However, reformation will not be granted where intervening rights of bona fide purchasers for value will be prejudiced, and it has been held that this protection will be extended to the grantee of a bona fide purchaser, even though he had notice of the mistake.”
In Zartman v. First Nat. Bank, 216 U. S. 134 (54 L. Ed. 418, 30 Sup. Ct. Rep. 368), which was a suit to reform a written contract, it was held that the jurisdiction which equity has to decree correction of errors in written contracts caused by mutual mistake is not suspended by the bankruptcy law; and the trustee takes property as the debtor had it at the time of the petition subject to all valid claims, liens and equities, including the power of a court of equity to correct a manifest error by mutual mistake in an agreement made prior to the petition.
Was the note due when this suit was instituted? In order that this may be shown, it is necessary to reform the note to conform to the agreement of the parties as they intended the same to be executed. The defendant demurred to the complaint and supplemen
“Comes now E. L. Sabin, trustee in bankruptcy, one of defendants herein, and demurs to plaintiff’s amended complaint for the reason that the same does not state facts sufficient to constitute a cause of action: I. That the note set forth in said complaint shows upon its face that the same is not due, and consequently that there has been no default in the payment of interest, and nothing is set forth in said complaint to modify or change the rule that a written instrument cannot be varied by parol evidence. II. That the mortgage, copy of which is set forth in said complaint, and foreclosure of which is prayed, is not a valid mortgage as against the trustee in bankruptcy, same showing upon its face that it was not acknowledged by the makers thereof as prescribed by law. III. That said complaint does not show that permission of the District Court of the United States for the District of Oregon was obtained before suit was instituted- against E. L. Sabin, who is an officer of said court.”
In Sellwood v. Henneman, 36 Or. 575, at page 577 (60 Pac. 12, at page 13), Mr. Justice Moore states the rule as follows:
“It has been repeatedly held by this court that, in a suit to reform a deed or written contract on the ground of mistake,' the complaint should distinctly show the original agreement of the parties, and point out with clearness and precision wherein there was a mistake.”
See, also, Ramsey v. Loomis, 6 Or. 367; Hyland v. Hyland, 19 Or. 51 (23 Pac. 811); Hughey v. Smith, 65 Or. 323 (133 Pac. 68); and cases to which those opinions refer.
The particular circumstances constituting the mistake should be pleaded: 14 Ency. PI. & Pr., pp. 43, 45, and notes; 18 Ency. PI. & Pr., p. 824.
The decree of the lower court, therefore, will be reversed, and the cause remanded for such further proceedings as may be deemed proper, not inconsistent herewith. A default decree was rendered against the trustee defendant. He failed to ask the trial court to set the same aside. To have this done appears to be the main purpose of this appeal: See Section 103, L. O. L.; White v. Northwest Stage Co., 5 Or. 99; Bailey v. Williams, 6 Or. 71; Mayer v. Mayer, 27 Or. 133 (39 Pac. 1002). It is doubtful if the specifications of the demurrer directed the attention of the trial court to the point now urged against the complaint. Neither party, therefore, should recover costs upon this appeal. Reversed.
Dissenting Opinion
delivered the following dissenting opinion:
On January 2, 1913, Chester A. Smith and Otis S. Smith executed and delivered to the plaintiff their
“$1,621. Portland, Oregon, January 2, 1913.
“Five years after date, without grace, we promise to pay to the order of Catherine Coates sixteen hundred and twenty-one dollars, for value received, with interest after date at rate of 7 per cent per annum until paid. Principal and interest payable in U. S. gold coin at Sunnyside, Portland, Oregon, and in case suit or action is instituted to collect this note, or any portion thereof, we promise to pay such sum as the court may adjudge reasonable as attorney’s fees in said suit or action. There may be paid on any interest-bearing date any amount in even hundreds dol^arS"
“Chester A. Smith.
“Otis S. Smith.”
At the same time they mortgaged to her certain real property in the usual form, conditioned that, if the money due upon the note should be paid, the mortgage should be void, but in case default should be made in payment of the principal and interest, as provided in the note, then she might sell the premises in the manner prescribed by law, etc. Appended to this mortgage was an acknowledgment in the following form:
“State of Oregon,
County of Multnomah—ss:
“On the second day of January, A. D. 1913, personally came before me, a notary public in and for said county and state, the within named Samuel H. Smith and Adora L. Smith, his wife, to me personally known to be the identical persons described in and who executed the foregoing instrument, and acknowledged to me that they executed the same freely for the uses and purposes therein mentioned.
“la witness whereof I have hereunto set my hand and seal the day and year last above written.
“E. C. Minor,
“Notary Public for Oregon.”
“And that at the time the said note was executed, and subsequent to the date of its execution, the said defendants Chester A. Smith and Otis S. Smith orally promised and agreed to pay the said interest provided for in said note yearly, that is, to pay the interest on the principal sum of said note on or about the second day of January of each year, after the time of. the execution of said note, but that the scrivener who drew up the said note neglected to state in said note that the interest made payable thereby should be paid annually; that at the time of the execution of said note it was and now is the custom to pay the interest on promissory notes annually when the time of payment of said note is not stated in said note, and the said custom was known to the plaintiff and the defendants at the time of the execution of said note.”
The execution of the mortgage is averred and a complete transcript of it is written into the amended complaint. Concerning the acknowledgment this averment appears:
“That at the time of the execution of said note and mortgage the said E. C. Minor, who acknowledged the same as notary public, erroneously inserted in the acknowledgment of said, mortgage the names of Samuel H. Smith and Adora L. Smith, wife of said Samuel H. Smith, in place and in stead of the names of the makers of said mortgage, and that the insertion of said names of said Samuel H. Smith and Adora L. Smith was through the error, inadvertence and mistake of said E. C. Minor, and that the said defendants Chester A. Smith and Otis S. Smith were present at the execution thereof, and in the presence of said notary public acknowledged the execution of said document, and that it was the intention of said scrivener or notary public to insert the names of said Chester A.*573 Smith and Otis S. Smith in the said acknowledgment instead of the names of said Samnel EL Smith and Adora L.' Smith.”
About the defendant Sabin the complaint says:
“That subsequent to the date of the execution of said mortgage, to wit, on or about the - day of May, 1914, the said mortgagors were declared bankrupt, and thereafter, and on or about the twenty-eighth day of May, 1914, the said E. L. Sabin, one of the defendants herein, was elected by the creditors of said mortgagors trustee in bankruptcy for said mortgagors, and said defendant has qualified as such trustee.”
On the ground that the interest had not been paid annually, the plaintiff prays for a correction of the note and mortgage and for a decree foreclosing the latter as corrected with personal judgment against the makers of the note for the principal and interest, and $175 attorneys’ fees. The defendant Sabin, as trustee in bankruptcy, demurred to this amended complaint on the ground that it does not state facts sufficient to constitute a cause of action; that the note set forth in the complaint shows upon its face that the same is not due, and nothing is pleaded to modify or change the rule that a written instrument cannot be varied by parol evidence; that the mortgage copied at large into the plaintiff’s pleading is not valid as against the trustee, the same showing upon its face that it was not acknowledged by the -makers thereof as prescribed by law; and that the complaint does not show that permission of the District Court of the United States for the District of Oregon was obtained before suit was instituted against Sabin, who was an officer of such court. This demurrer was overruled. Subsequently, upon leave obtained, there was filed what was denominated a supplemental complaint, but
This case comes to us to test the validity of the complaint as against a demurrer to the same. In such a state of the pleadings the rule of construction is that the allegations of the complaint are to be taken most strongly against the pleader; for the validity of his statement is challenged at the outset while there is yet opportunity for him to amend. Concerning the-alleged mistake in the note, we observe that it is said that the makers thereof- orally promised and agreed to pay the interest annually, but that the scrivener who drew up that instrument neglected to state that provision therein. On its face the pleading avers two separate agreements, one written in the note, and the other expressed orally by the makers. It is not stated that they intended or agreed that this latter stipulation should- be included in the note. There is no allegation- anywhere in the complaint indicating in the least that the alleged mistake was mutual between the parties or that it occurred through the inadvertence
“The rule is settled in this state that, in a suit to reform a written instrument on the ground of misapprehension of the facts involved, the complaint must distinctly allege what the original agreement of the parties was, or point out with clearness and precision wherein there was a misunderstanding, and that such mistake was mutual and did not arise from the gross negligence of the plaintiff, or that his misconception originated in the fraud of the defendant.”
See Evarts v. Steger, 5 Or. 147; Lewis v. Lewis, 5 Or. 169; Stephens v. Murton, 6 Or. 193; McCoy v. Bayley, 8 Or. 196; Foster v. Schmeer, 15 Or. 363 (15 Pac. 626); Hyland v. Hyland, 19 Or. 51 (23 Pac. 811); Meier v. Kelly, 20 Or. 86 (25 Pac. 73); Epstein v. State Ins. Co., 21 Or. 179 (27 Pac. 1045); Kleinsorge v. Rohse, 25 Or. 51 (34 Pac. 874); Osborn v. Ketchum, 25 Or. 352 (35 Pac. 972); Thornton v. Krimbel, 28 Or. 271 (42 Pac. 995); Mitchell v. Holman, 30 Or. 280 (47 Pac. 616); Sellwood v. Henneman, 36 Or. 575 (60 Pac. 12); Stein v. Phillips, 47 Or. 545 (84 Pac. 793); Bower v. Bowser, 49 Or. 182 (88 Pac. 1104); Smith v. Interior Warehouse Co., 51 Or. 578 (94 Pac. 508, 95 Pac. 499); Howard v. Tettelbaum, 61 Or. 144 (120 Pac. 373).
It is also declared in the same substance in Suksdorf v. Spokane, P. & S. Ry. Co., 72 Or. 398 (143 Pac. 1104).
The allegation of the custom to pay interest annually on promissory notes does not help the matter,
“When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except * # where a mistake or imperfection of the writing is put in issue by the pleadings.”
As we have shown by the .authority of Hughey v. Smith, 65 Or. 323 (133 Pac. 68), the statements of the complaint are not sufficient to raise the issue of mistake. The agreement of the Smiths made subsequent to the execution of the note to pay the interest annually cannot affect the case, because there is no consideration pleaded, for the subsequent agreement, and the mortgage does not purport to secure anything but the note. It does not assure -the performance of the alleged oral agreement, whether contemporaneous with
As to the alleged mistake in the acknowledgment of the mortgage, it is sufficient to say that, if Samuel H. Smith and Adora L. Smith, his wife, were indeed the identical persons described in and who executed the mortgage as the notary certifies, then the interest of Chester A. and Otis S. Smith was not affected by the mortgage. On the other hand, if Chester A. and Otis S. Smith were really the persons who executed the instrument, then is the acknowledgment insufficient to authorize the recording of the mortgage so as to charge the trustee in bankruptcy with notice of its contents. There are many cases where a mere clerical error in the spelling of a name has been disregarded by the court in construing the acknowledgment. Such a case is Rodes v. St. Anthony & Dakota Elevator Co., 49 Minn. 370 (52 N. W. 27), where the maker of the mortgage was “Wm. Sehrieber” and the certificate of the acknowledgment alluded to him as “Wm. Strieber,” whom the notary declared “to be the person above named.” In Paxton v. Ross, 89 Iowa, 661 (57 N. W. 428), there was a deed to “M. Thompson, of Washington City, D. C. ” The next conveyance in chain of title was from “Michael Thompson, widower, now of Honolulu, Sandwich Islands.” It was signed “M. Thompson.” The certificate of acknowledgment referred to him as “Michael Thompson,” known by the officer to be the person who executed the deed. These differences were disregarded by the court in construing the effect of the conveyances. Many other such cases might be cited; but others, like Boothroyd v. Engles, 23 Mich. 19, Stephens v. Motl, 81 Tex. 115 (16 S. W. 731), Carleton v. Lombardi, 81 Tex. 355 (16 S. W. 1081), Heil v. Redden, 38 Kan. 255 (16 Pac. 743),
In cases such as Larson v. Elsner, 93 Minn. 303 (101 N. W. 307, 2 Ann. Cas. 989), Wilcoxon v. Osborn, 77 Mo. 621, and Milner v. Nelson, 86 Iowa, 452 (53 N. W. 405, 41 Am. St. Rep. 506, 19 L. R. A. 279), cited in support of the acknowledgment in question, the name of the grantor was left blank in the certificate, but in each instance the officer certified that “personally appeared before me-, to me personally known to be the identical person described in and who executed the foregoing instrument, and acknowledged that he executed the same for the purpose therein named,” or employed words substantially the same. These were held good on the principle that the officer certifies that someone described, not by name, but as the person who executed the deed, appeared and acknowledged the execution. There are other cases like Smith v. Hunt, 13 Ohio, 260 (42 Am. Dec. 201), Stanton v. Button, 2 Conn. 527, and Hayden v. Westcott, 11 Conn. 129, where the certificate recited substantially that “Personally appeared-and acknowledged that he did sign,” where the acknowledgment was deemed bad because it did not appear who had executed or acknowledged the instrument. The acknowledgment was held void in Buell v. Irwin, 24 Mich. 145, where the certificate recited that “personally appeared be
“Personally appeared before me, George Crockett, clerk of tbe probate court in and for said county, whose name is subscribed to tbe within deed, as such, wbo acknowledged that be signed, sealed, and delivered tbe same, as bis act and deed, on the day and year therein mentioned, and for tbe purposes therein contained. "Witness my band and seal of office this 3d day of August, 1841.
“[Signed] George Crockett, Clerk.”
It will be noted that tbe acknowledging officer put bis own name into tbe blank which should have been filled with the name of tbe sheriff. This deed was issued in pursuance of a sale under a judgment against one Ratliff, dated February 24, 1838, and was offered in evidence by tbe plaintiff in ejectment in support of his claim. He also read in evidence another deed for tbe same land by tbe sheriff under.an execution on a judgment against a defendant named Hawley rendered November 25,1836, which was properly acknowledged. In discussing tbe quoted certificate tbe court merely said:
“It is believed that tbe certificate of tbe clerk is very nearly, if not entirely, to tbe effect required. But suppose it should be insufficient; does that alter tbe case? Tbe land claimed was purchased by tbe Planters Bank, under two different executions, and separate deeds taken, and if either be good, it is sufficient.”
International Kaolin Co. v. Vause, 55 Fla. 641 (46 South. 3), relates to the acknowledgment of a deed by the corporation’s president, under a special statute of that state. Summer v. Mitchell, 29 Fla. 179 (10 South. 562, 30 Am. St. Rep. 106, 14 L. R. A. 815), treats of the abbreviation of the officer’s title. The decision was referable to the principle that the court will take judicial notice of “the true significance of all English words and phrases and all legal expressions”: Section 729, L. O. L.; 16 Cyc. 875. Rackleff v. Norton, 19 Me. 274, was a case in which the acknowledgment is not quoted, but the objection was that no venue was laid. The court held that this was not required, and that, the authority of the officer being conceded, it would be presumed that he acted where he had a right to act. King v. Merritt, 67 Mich. 194 (34 N. W. 689), disclosed that the certificate stated that the wife ac
“State of Tennessee, Greene County.
“January Sessions, 1807, Tuesday, 27th.
“Then was the execution of the within conveyance duly acknowledged in open court by Seymour Catching, the grantor therein named, and admitted to record. Let it be registered.
“Teste: Val. Sevier, Clerk.”
The objection was that neither the name of the grantor nor the quantity of land appeared in the certificate quoted. The court held, however, that these faults were cured by reference to the deed upon which it was indorsed. This case is criticised by the same court in Yerger v. Young, 9 Yerg. (Tenn.) 38, showing it not to be in accord with the current of authority. It is not applicable to the present contention. Blake v. Hollandsworth, 71 W. Va. 387 (76 S. E. 814, 43
There is no objection to the doctrine that we may look to the whole deed in construing its validity whether of execution or acknowledgment. The principle is that one part may aid, but not dispute the other. This, however, does not support the acknowledgment in question. Instead of being aided by reference to the body of the mortgage it is contradicted. If we are to believe the officer’s certificate, it appears that the names of two single men have been appended to a deed by a man and his wife who then acknowledge it as their own act, and not that of those named as grantors. If, indeed, as the officer’s statement says, the married couple did execute the mortgage, it cannot bind the estate of the bankrupts without further showing of authority, as by power of attorney or the like. On the other hand, if the bankrupts in fact signed the mortgage, then the acknowledgment is manifestly untrue, and does not entitle the instrument
If the allegations of the complaint were sufficient to authorize the correction of a mutual error, the plaintiff might obtain relief under the doctrine of Meier v. Kelly, 22 Or. 136 (29 Pac. 265), where it is held thus:
“A judgment lien attaches only to the actual, and not to the apparent, interest of the judgment debtor in land, and is subject to any equitable estate therein hostile to the judgment debtor existing at the time the judgment was rendered, whether known to the judgment creditor or not; and for the purpose of protecting such equitable estate, courts of equity will correct a mistake in a mortgage upon which the equitable estate depends, and, as corrected, give it priority over a subsequently acquired judgment, so that the judgment lien will be confined to the actual interest of the judgment debtor in the land.”
The national bankrupt law provides that:
Trustees in bankruptcy, “as to all property in the custody or coming into the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon”: U. S. Comp. Stats. Supp. 1911, p. 1500 (U. S. Comp. Stats. 1913, § 9631).
In Section 70, on page 1511 of the same compilation (U. S. Comp. Stats. 1913, § 9654), it is provided that the trustee of the estate of a bankrupt, upon his appointment and qualification, shall be vested by operation of law with the title of the bankrupt, as of the
For these reasons, I dissent from the opinion of Mr. Justice Bean in respect to the sufficiency of the acknowledgment of the execution of the mortgage in question.