First National Bank v. Big Bend Land Co., 164 N.W. 322

First National Bank v. Big Bend Land Co.

164 N.W. 322 | N.D. | 1917

Lead Opinion

Eobinson, J.

This case presents an appeal from a judgment in favor of the bank for $1,000, and interest from April 2, 1910. The plaintiff brought suit as the assignee of one John Brodie. Brodie had paid the defendant $1,000 on a kind of land contract by which defendant agreed to try to perfect title to certain lands and then to convey the same to Brodie, and, in case of failure to perfect title, to repay Brodie the $1,000. It failed to perfect title, and so it became indebted to Brodie in the sum of $1,000.

On June 5, 1911, Brodie made an assignment of his contract to the bank. It was acknowledged. Then on March 30, 1912, the contract and the assignment were recorded in the office of the proper register of deeds. On March 22, 1912, an action against Brodie was commenced in circuit court of Dane county, Wisconsin, and on March 24, 1912, the Big Bend Land Company and Brodie were duly served with garnishee process.

On April 29, 1912, judgment was given against Brodie for $5,000. The garnishee filed a written answer admitting an indebtedness to *37Brodie of $1,000, and paid the same to the clerk of court, and by order of the court it was paid to the plaintiff in said garnishee action on the judgment against Brodie. The Big Bend Land Company had notice in regard to the assignment of its contract with Brodie, except such constructive notice as imputed from the recording of the contract and the assignment.

By statute the recording of deeds and mortgages and instruments affecting title to real property is constructive notice to all purchasers and encumbrancers subsequent to the recording. It is not a notice to a prior purchaser, and the recording of a mere obligation to pay money is not notice to anyone. The defendant was not a subsequent purchaser or encumbrancer, and hence the recording was not notice to the Big Bend Land Company, and without notice of the assignment it had a perfect right to pay the $1,000 to Brodie, or to pay it into court when garnisheed, and such payment was a discharge of its liability. It also appears that when the contract was assigned to the bank it was merely an obligation to repay the $1,000. It was a personal obligation of the defendant, and the plaintiff brings this suit and recovered judgment against the defendant on its mere personal obligation to repay Brodie $1,000; and as defendant paid the same into court in good faith and without notice, of course it is not liable in this action.

Judgment reversed and action dismissed.

Concurrence Opinion

Christianson, J.

(concurring specially) : I concur fully in the result reached, and in the principle announced in the majority opinion prepared by Mr. Justice Bobinson, to the effect that the recording of deeds, mortgages, or other instruments affecting title to real property, is constructive notice only to purchasers and encumbrancers subsequent to such recording, and is not notice to prior purchasers or encum-. brancers. This rule was declared in the early history of this court in Sarles v. McGee, 1 N. D. 365, 26 Am. St. Rep. 633, 48 N. W. 231, and the correctness thereof has never been questioned.

*38While as between an assignee and a garnishing creditor, no notice to the garnishee is necessary, and the assignment will prevail over the subsequent garnishment even though the garnishee knew nothing of the assignment, a different rule applies as between the assignee and the garnishee. As between these parties, in the absence of a qualifying statute, there is generally no question but that an assignee must give notice to a garnishee of the assignment before final judgment is rend"’ed in the garnishment proceeding, or at least before the garnishee has in good faith satisfied the judgment. See note in L.R.A.1916E, 86, 20 Cyc. 1148. The function of such notice is to protect the debtor garnishee, and prevent him from paying the funds to someone not entitled thereto.

As the recording of the assignment in the case at bar. did not impart any notice to the defendant, the payment of the judgment rendered against it as garnishee will protect the defendant from liability for a second payment of the debt so paid, and may be pleaded as a defense. Ibid. Defendant has paid the claim upon which plaintiff’s cause of action is based, and cannot be required to pay it a second time. If the plaintiff has any remedy, it is against the party to whom the defendant paid the moneys under the judgment rendered against it as garnishee. Note in L.R.A.1916E, 86.

Concurrence Opinion

Bruce, Ch. J.

I concur in the above opinion, though I prefer to express no opinion on the questions whether the contract was a mere personal obligation and as such not entitled to record, nor do I deem it necessary to do so.