McAdow v. Black

| Mont. | Jan 15, 1882

Wade, 0. J.

This is an appeal by plaintiff from a judgment in favor of defendants in an action to foreclose a mortgage executed by the defendant Black, by one Z. H. Daniels, his attorney in fact, to the plaintiff, to secure the payment of a certain promissory note for $1,386.12, due in sixty-seven days from date, and dated April 23, 1878.

The defendant Story denies the validity of the mortgage, alleging "that the attorney in fact who executed the same was not legally authorized so to do, and claims title by virtue of a purchase by him at sheriff’s sale upon a judgment subsequent to the mortgage, and also by virtue of a conveyance from Black, the mortgagor, to the defendant Toole, and Toole to Story, which conveyances were subsequent to the mortgage.

The principal question presented by this appeal relates to the authority of the attorney in fact to execute the mortgage aforesaid. If he was not legally authoi’ized, the judgment creditor takes the property free from the mortgage. If he was legally authorized, the property is subject to the prior lien of the mortgage.

For the purpose of showing the authority of Daniels to borrow of the plaintiff the money in the complaint mentioned, and the direction in writing signed by Black to execute the mortgage as his attorney in fact, and that he did so borrow the money and execute the mortgage upon a letter of instructions to him so to do, and after having accounted for the loss of said written instructions, the plaintiff sought to prove the contents of the writing, which was objected to for the reason that it was not shown to comply with the requirements of section 203 of the Revised Statutes of the territory, concerning conveyances of real estate, which objection was sustained. The plaintiff also offered to show that any and all rights of Story were acquired with a full knowledge of all the facts contained in the letter of instructions as well as of the execution of the note and mortgage of Daniels in pursuance of the same. But the court held the testimony incompetent for the reason that it did not comply with the requirements of section 203 aforesaid, and the same was excluded. The note and mortgage were excluded for the same reason, and bills of exception were properly saved.

Sections 2 and 3 (p. 442, Rev. Stat.) of the statute upon which the objection to the testimony was based provides as follows: “Every power of attorney or other instrument in writing, containing the .power to convey any real estate as agent or attorney for the owner thereof, or to execute, as agent or attorney for another, any conveyance, whereby any real estate is conveyed or may be affected, shall be acknowledged or proved, and certified and recorded as other conveyances, whereby any real estate is conveyed or affected, are required to be acknowledged or proved, and certified and recorded.” This section was enacted January 12, 1872, and must be construed in connection with section 1163 of the Revised Statutes, enacted February 3, 1876, which provides as follows: “All conveyances and instruments hereafter executed, which by the common law or the statutes of this territory are required to be executed under seal, shall be as effectual without such seal, to all intents and purposes whatsoever, as if the same had a seal attached thereto, and the same shall be interpreted as if the same were sealed.” Therefore a power of attorney without a seal is just as effectual for any purpose as if executed under seal, and we are required to interpret a power of attorney drawn under section 203 as if under seal, whether such be the fact or not. This section 1163 abrogates the common law in this territory as to seals, and renders seals unnecessary to deeds or powers of attorney. A seal adds nothing to a deed. It adds nothing to the authority or efficacy of a power of attorney. If an attorney in fact, being authorized by a power of attorney, not under seal, should attach a seal to the deed executed in pursuance thereof, the fact would be wholly immaterial. . He would not thereby do an unauthorized act, but an unnecessary ope, without meaning. The fact of a seal in such a cage would not affect the1 deed or his authority. There is no force in the argument that the power of attorney must be under seal, if the deed executed in pursuance thereof is under seal, when the seal has no meaning, and is not necessary to the validity of either instrument. It follows, therefore, that the power of attorney authorizing the attorney in fact to execute the mortgage in question was not rendered invalid because not under seal.

Neither was it necessary that the power of attorney should have been certified, acknowledged and recorded to have made it good as between the mortgagor and mortgagee, in the mortgage executed in pursuance thereof. The mortgage in question might have been enforced against Black, the mortgagor named therein. He 'could not have attacked the power of attorney because not acknowledged or recorded. In the case of Taylor v. Holter, 1 Mont. 712, this court held that “the acknowledgment to a deed is no part of the deed, and, as between the parties to the instrument, a deed is good without acknowledgment, the acknowledgment and record being for the protection of third parties.”

The same rule would apply to powers of attorney. The acknowledgment and record being for the protection of third persons, that is, for the purposes of notice, it follows that, if third persons have actual notice, a deed or power of attorney not acknowledged or recorded would be good as to them in equity. If, then, this mortgage might have been enforced by McAdow, the mortgagee, against Black, the mortgagor, it can be enforced against Story, with full notice and knowledge of the rights and equities of McAdow. If the acts of the attorney in fact, in borrowing the money and in executing the mortgage, had been ratified by Black, by his receiving the money and recognizing the mortgage, then it was a good mortgage as to him. He could not receive the money by virtue of the "mortgage, and at the same time deny its validity. He could not ratify the acts of his attorney in borrowing the money for him, and repudiate his authority to execute the mortgage by virtue of which he received the money. And if Story had knowledge of the acts of the attorney in borrowing and receiving the money, and of his execution of the note and mortgage, and of the fact that he was acting in the premises in pursuance of a power of attorney from his principal, and of the ratification of his acts by his principal in receiving the money and in recognizing the mortgage, such knowledge would charge him with notice of the lien and equities of McAdow, and would validate the mortgage as to him, and any title thereafter acquired by him would be subject to such lien and equities. And we may say, generally, that anything that will validate a mortgage as between the pax-ties will also render the same valid as to third persons with notice.

The testimorxy offered axxd excluded texided to show that Story had knowledge of all the facts necessary to make the mortgage good and valid in equity as between the mortgagor and mortgagee. Proof of such knowledge would have xnade the mortgage good as to Story. The knowledge and notice that this testimony tended to prove that Story was in possession of was as effectual as the constructive notice of a record, and as to him and as to Black, the mortgagor, rendered the power of attorney effectual and gave it efficacy without certificate, acknowledgmexit or record, and made the mortgage execxxted in pursuance thereof valid in equity as to both. A person may be charged with notice of equitable as well as legal rights. He may be charged with notice of an equitable as well as a legal mortgage. If he has knowledge of such a state of facts as makes a defectively executed mortgage good as between the parties, then it is good as to him. If Story had such knowledge, then he stood in no position to attack the validity of the power of attorney to Daxxiels. Before any rights of Story had attached,, knowledge on his part of such a state of facts as would protect the mortgage against Black, the mortgagor, would protect it against him.

An execution creditor with notice takes the propex-ty subject to any lien or equity that might be enforced against the judgment debtor. Therefore, if Story had. actual knowledge and notice of the mortgage and of the rights and equities of McAdow as against Black, then his judgment and title obtained thereby, or any subsequently acquired title, would be subject to such mortgage.

Section 203 of the statutes, which requires every power of attorney or other instrument in writing to be acknowledged, certified and recorded, is a statutory provision that must be complied with in order to give legal validity to the signature of an attorney in fact, notwithstanding, as in this case, the equitable rights of the parties may be ascertained and adjudged without such compliance.

Judgment reversed and cause remanded for a new trial.

Judgment reversed.