193 N.W. 45 | N.D. | 1923
This is an appeal from the judgment dismissing plaintiffs’ cause of action with prejudice and for taxable costs in favor of defendants. A concise statement of the facts will disclose the issues. One, Oien was engaged in the lumber and hardware business at Yenlq in Hansom county. He first conducted the business in the name of A. P. Oien and later as the Venlo Lumber Company. Later he became indebted to both the plaintiffs and the defendants. On January 13, 1921, he gave a note for $1,925, to the plaintiffs. He attempted to secure this note by a mortgage upon certain real estate and on a stock of lumber and hardware then in the yards of the Venlo Lumber Company, at Venlo. Oien was the owner of the Venlo Lumber Company. On the 17th day of May 1920, Oien desiring to purchase a quantity of lumber for retail, procured the defendants to sign an agreement to indemnify the Farmers State Bank of Anselm for any sum advanced him for the purchase of lumber. In pursuance of that agreement the defendants signed notes in the sum of $1,317.21. During the month of August 1920, Oien delivered to defendant Sullivan a bill of sale of the lumber purchased with the proceeds of the notes. The bill of sale was not witnessed, acknowledged, nor filed but was retained by Sullivan among his papers. On May 10th, 1921, defendants entered into a written agreement with Oien (Exhibit “6”) whereby they took the lumber in satisfaction of their claim against him.
Defendants took possession of the personal property, sold it and applied it to the discharge of the debt which Oien owed them. It is the
Section 6763, Comp. Laws provides:
“A mortgage of personal property must be signed by the mortgagor in the presence of two witnesses who must sign the same as witnesses thereto, or acknowledge the execution of the same before some official qualified to take acknowledgments. And every mortgagee must surrender to the mortgagor at the time of the execution of the mortgage a correct copy of the original mortgage, so signed, with witnesses or acknowledgment shown thereon. And the mortgagor must surrender to the mortgagee a receipt which shall be attached to the original mortgage showing that the mortgagee has surrendered to him a copy of such mortgage, and said receipt must accompany the mortgage when presented to the register of deeds and filed therewith. Otherwise said mortgage shall not be filed as a chattel mortgage by the register of deeds.”
The concluding paragraph of the body of the mortgage is as 'follows:
“And the said party of the first part does hereby acknowledge the receipt of a true and correct copy of the foregoing mortgage from the said mortgagee the day and date above written.
“In witness whereof the said party of the first part has hereunto set his hand the day and date first above mentioned.”
Immediately following the language quoted and at the end of the body of the instrument is affixed the signature of A. P. Oien. He signed at no other place.
The sole question in this case is whether the language quoted above, the concluding paragraph of the body of the mortgage, and the inclusion of this receipt in the body of the mortgage is a sufficient compliance with § 6763, which required that the receipt for the copy “shall
Section 6763 was enacted in 1913 and it is evident that the primary purpose of the law was to prevent fraud or imposition upon the mortgagor, in the description or inclusion of property, or otherwise. It seems that the legislature designedly required the receipt to be “attached” to the mortgage rather than, by the use of apt language, permitting the receipt to be included in the body of the instrument. It was probably supposed that if the mortgagor executed a receipt, either separately or attached to the original mortgage, but signed separately, at the time of the execution thereof, it would call to his attention his right to a copy and tend to insure that the mortgagee, in compliance with the statute, would deliver the copy. On the other hand, if the receipt were incorporated within the body of the instrument, which is seldom read in detail by the mortgagor, then, in all probability, nothing would ever come to his attention apprising him of his right to a copy of the instrument, and he might not receive the copy, thereby enabling the mortgagee to frustrate, in fact, the purpose of the legislature. In this ease, furthermore, it is impossible that the mortgagor could have received a copy of the mortgage on the 13th of January, because it was not completed by appending an acknowledgment thereto until more than a month afterwards. Neither was the alternative requirement of two witnesses complied with. If, at the time he signed the mortgage containing this receipt, he received a copy thereof,, it was a mortgage in form binding as between himself and the mortgagee, but not entitled to record, and therefore of no effect against third parties without actual knowledge.
It is significant that the legislature required the receipt to be “attached” to the original; if the legislature contemplated that it would be sufficient to incorporate the receipt in the body of the instrument, it would of course have been a part of the copy delivered as well. It is clear that the mortgagee is not required to deliver to the mortgagor a copy of the mortgage with a copy of the receipt attached; the receipt need be attached only to the original mortgage which is filed in the office of the Register of Deeds. In our opinion this is indicative of a legislative intent that the receipt should not appear in the body of the instrument.
The statute prohibits the register of deeds from filing the mortgage unless it has “attached” to it the mortgagor’s receipt. There being no receipt attached to the mortgage in this case, and the incorporation of a receipt within the body of the instrument not being in compliance with the statute, the register of deeds was without authority to file this instrument as a chattel mortgage.
The authorities are substantially unanimous that an instrument in the form of a chattel mortgage, but which for some reason appearing upon the face thereof, is not entitled to be filed or recorded, does not constitute constructive notice to subsequent purchasers or incumbrancers for value without actual knowledge. This rule has been announced many times by this court. Pease v. Magill, 17 N. D. 166, 115 N. W. 260; Davis v. Caldwell, 37 N. D. 1, 6, 163 N. W. 275.
It may be contended that the receipt is not a part of the mortgage, but is a sort of appendage thereto, and that the mortgage itself, being-regular and complete in form, is sufficient to impart constructive notice, and that, therefore, this case is distinguishable from the line of authorities where, because of defect upon the face of the instrument, it was not entitled to record. We are unable to perceive any force in this argument. The execution and filing of the receipt are specifically required by the statute and the register of deeds is directed not to file the mort
The statutes of the state of Michigan require that the mortgagor must execute an affidavit and annex the same to the mortgage before filing it, setting forth certain facts. If such affidavit be not attached and filed, the mortgage is void as against creditors, etc. The statute further provides that the mortgage shall not be filed by any officer until such affidavit is made and annexed to the mortgage. In People use of Esper v. Burns, 161 Mich. 169, 137 Am. St. Hep. 466, 125 N. W. 740, the court held that when a mortgage was filed without such an affidavit as was required by the statute above described, the filing of the instrument would not give constructive notice to anyone. In that case the mortgage was complete upon its face, but the affidavit was not legal, not having had the necessary jurat- affixed, though the affidavit was signed and sworn to in fact, by the person required to malee it. The receipt of the mortgagor, required under our statute, is as much an integral part of the execution of the mortgage as is the affidavit required by the Michigan statute. The consequences following upon omission to file the one or the other, in the statutory form and manner, as far as constructive notice is concerned, should be the same.
The appellant cites the case of Foss v. Van Wagenen, 20 S. D. 39, 104 N. W. 605. An examination of this case discloses the fact that it is not in point. The South Dakota statute, which was before the court in that case, is substantially different from the North Dakota statute. It provides that every chattel mortgage shall be void “unless it appeal's upon the mortgage instrument over the signature of the mortgagor that a true copy of the same has been delivered to and received by the mortgagor.” This is § 2 of chapter 95, Session Laws of 1897. In the Foss Case, supra, the chattel mortgage contained in the body thereof a receipt and this was over the signature of the mortgagor. Of course, this was held to be a sufficient compliance with the statute.
The South Dakota statute was modified by the codifiers, and the modification was accepted by the legislature of 1903. Section 2092 S. D. Revised Code 1903, which appears in S. D. Revised Code, 1919 as § 1579, provides:
“No register of deeds shall receive or file .any chattel mortgage which does not contain a receipt over the signature of the mortgagor to the effect that a copy of such mortgage has been received by him, and every chattel mortgage not containing such receipt shall be null and void.”
While this statute has been many times either cited or considered by the South Dakota supreme court, no decision thereunder throws any light upon the issues in the case at bar. Under the South Dakota stat-
This opinion was Avritten after a rehearing and is the only opinion published.
The judgment of the trial court is affirmed.