I dissent. This case is a demonstration of what may result from following an erroneous precedent, and what is almost sure to happen when a court pays more attention to its opinions construing a statute than it does to the statute itself. As a result of either fault, the court will be fortunate if it escapes the barbed shafts of just criticism. *Page 460
The governing statute is section 8267, Revised Codes 1921, and it is couched in language "so plain, simple and direct that it would appear to construe itself," as Mr. Justice Holloway said inMorrison v. Farmers' Traders' State Bank, 70 Mont. 146,225 P. 123. The title of the Act under which section 8267 became a law, reads: "An Act defining the duration of liens of mortgages upon real estate and the manner of the extension thereof," and here is the statute: "Every mortgage of real property made, acknowledged, and recorded, as provided by the laws of this state, is thereupon good and valid as against the creditors of the mortgagor or owner of the land mortgaged, or subsequent purchasers or encumbrancers, from the time it is so recorded until eight years after the maturity of the entire debt or obligation secured thereby, and no longer, unless the mortgagee, his heirs, executors, administrators, representatives, successors, or assigns, shall, within sixty days after the expiration of said eight years, file in the office of the county clerk and recorder where said mortgage is recorded, an affidavit, setting forth the date of said mortgage, when and where recorded, the amount of the debt secured thereby, and the amount remaining unpaid, and that the said mortgage is not renewed for the purpose of hindering, delaying, or defrauding creditors of the mortgagor or owner of the land, and upon the filing of said affidavit, the said mortgage shall be valid against all persons for a further period of eight years; * * *."
In the Morrison Case it was said that the purchaser of real property subject to a mortgage does not assume any personal liability for the debt secured thereby. The statement is indubitably correct; he does not assume liability for the debt unless he agrees to do so.
The facts are simple. The bank's mortgage was given on January 14, 1922, to secure the payment of one promissory note for $600, and five in the sum of $1,000 each, all dated January 14, 1922, due one year from date, and bearing interest from date at the rate of ten per cent. per annum. On October 14, 1924, the mortgagors Gutensohn and wife executed to *Page 461 the bank a note for $600 due on or before six months from date, with interest at ten per cent. per annum, and on May 14, 1926, they executed to the bank a note for $4,412.50, due on or before six months after date, bearing interest from date at eight per cent. per annum. The record made by filing the mortgage on January 19, 1922, remained unchanged. While it appears in the evidence that the note dated October 14, 1924, was a renewal of the original $600 note, and the note of May 14, 1926, was a renewal of the balance due upon the five $1,000 notes, no notice of the fact was given to the public or others interested. In other words, so far as third parties were concerned, the mortgage secured the original notes and none other.
Mary E. Gutensohn was a creditor of Peter G. Gutensohn, one of the mortgagors, when the mortgage was given and continued to be. On October 31, 1930, her administrator obtained judgment against P.G. Gutensohn for $6,541. On December 27, 1930, Peter G. Gutensohn, signing his name P.G. Gutensohn, Mary M. Gutensohn, his wife, and Agnes M. Gutensohn, in lieu of the judgment executed and delivered to Dickinson, as administrator, promissory notes aggregating the amount of the judgment with accumulated interest, and executed and delivered to Dickinson, administrator, a real estate mortgage, which was filed for record in the office of the county clerk on May 14, 1931. The amount of the indebtedness upon this mortgage at the time of the trial was wholly unpaid except the sum of $390.
Construing section 8267 in the Morrison Case, Mr. Justice Holloway declared it a statute of limitations and not a part of the general recording statutes or in pari materia with them. None of these declarations have ever been denied in any decision of this court, save impliedly in Reed v. Richardson, post, which will be referred to later on in this opinion.
At all times section 8264, providing for the extension of a mortgage by joint act of the parties "pursuing the formalities required in the case of a grant of real property" was in effect. In O.M. Corwin Co. v. Brainard, 80 Mont. 318, 260 P. 706, *Page 462 it was held that the method prescribed by section 8267 for extending the liability of a real mortgage by the filing of an affidavit by the mortgagee is not exclusive, but that under section 8264 an extension may be effected by agreement between the parties to the mortgage by pursuing the formalities in the case of a grant of real property where the rights of third parties had not intervened. The correctness of the decision in the Morrison Case was not questioned.
In Vitt v. Rogers, 81 Mont. 120, 262 P. 164, the application of sections 8264 and 8267 was under consideration and there was an attempt to harmonize the two. It was there expressly held that "section 8267 is in effect a statute of limitations operating as an amendment of section 8243, as was said in theMorrison Case; the purpose of the legislature in enacting it was to fix a definite time when the lien of a mortgage can be no longer said to exist; that time is reached when eight years have elapsed from the maturity of the debt as shown by the record, and no renewal or extension has been filed."
In the Morrison, Corwin and Vitt Cases the reasons which caused the enactment of section 8267 were explained in more or less detail, with especial reference to that provision of the section which requires the mortgagee "to state in the renewal affidavit the date of the mortgage, when and where recorded, the amount of the debt renewed thereby, and the amount remaining unpaid, and that the mortgage is not renewed for the purpose of hindering creditors of the mortgagor or owner of the land." Note the special reference to creditors.
We declared unequivocally in Pereira v. Wulf, 83 Mont. 343,272 P. 532, that "the record discloses that the period of the lien of the mortgage expired prior to the commencement of the action (sec. 8267, Rev. Codes 1921), the mortgage being dated September 27, 1917, and given to secure a note maturing two years after that date, by reason of the failure of the mortgagee to file the affidavit required by section 8267 within sixty days after September 27, 1927, and the land, which had passed to a subsequent purchaser, was freed from the burden of paying the mortgage debt," citing the Morrison and Vitt Cases. *Page 463
In Skillen v. Harris, 85 Mont. 73, 277 P. 803, it was held that unless the affidavit of renewal of a recorded real estate mortgage is filed within sixty days after maturity of the debt as security for which it was given, by the mortgagee, his heirs, representatives, or assigns as required by section 8267, it becomes unenforceable after the lapse of eight years from the maturity of the debt as against the creditors of the mortgagor or subsequent purchasers or encumbrancers, but that as between the mortgagor and mortgagee the mortgage lien is good so long as the debt is not barred by the statute of limitations irrespective of whether or not the affidavit provided in section 8267 be filed.
This obvious point was adverted to in Turner v. Powell,85 Mont. 241, 278 P. 512. In that case one Frank had purchased the property subject to the mortgage, while the lien was valid and subsisting, and had made payments on the debt. It was said that "the term `subsequent purchasers' as used in section 8267 does not embrace one who takes the property while the lien of the mortgage is subsisting and who expressly takes it subject to the mortgage." (Italics mine.) This language was not sufficiently guarded. It was used upon the theory that by his actions Frank had assumed the debt. He had made payments upon it. The MorrisonCase was not mentioned in Turner v. Powell, and there was no intention to overrule it, and to contend otherwise is wholly unwarranted.
In Hastings v. Wise, 89 Mont. 325, 297 P. 482, it was held that where third persons are not affected thereby, a mortgagor of land may, under section 8264, Revised Codes 1921, by agreement with a mortgagee executed as provided therein, in effect procure a renewal of the mortgage by an extension of the time of payment of the debt secured by it, regardless of the provisions of section 8267, relative to the filing of a renewal affidavit. The court followed the doctrine of O.W. Corwin Co. v. Brainard, differentiating the case upon the facts, from those in the Morrison Case. There was not the slightest reflection upon the Morrison Case, and what was said *Page 464 respecting notice, or the recording statutes, had no reference thereto.
The second case of Hastings v. Wise, 91 Mont. 430, 8 P.2d 636, followed the first, upon the theory that a real estate mortgage extension agreement executed as provided by section 8264, supra, is a conveyance within the meaning of section 6938, Id., and held that a real estate mortgage extension agreement executed under section 8264, although not recorded until after the period of extension had expired, was superior to a deed given by the mortgagors subject to the mortgage, it being declared that, as the extension agreement was recorded before Keller's deed was placed of record, it took precedence over the deed. There was no intention, implied or otherwise, in the twoHastings Cases to overrule the doctrine of the Morrison Case. On the contrary, there was an attempt to maintain the integrity of section 8264 without reference to section 8267, which is a statute of limitations, unaffected by the recording statutes.
Jones v. Hall, 90 Mont. 69, 300 P. 232, has no bearing upon the case here. In that case it was held that section 8267, limiting the validity of a mortgage, unless renewed, to eight years after maturity of the debt which it was given to secure, affects merely the lien of the mortgage and does not extend the life of the debt, and to that extent amends section 8243, which provides that a lien is extinguished by the lapse of time within which an action can be brought upon the principal obligation; hence, where the debt dies, the mortgage dies with it.
In Reed v. Richardson, 94 Mont. 34, 20 P.2d 1054, the facts are widely at variance with the facts in the case at bar and it is not authority here. It makes the erroneous statement that the Morrison Case "was to all intents and purposes overruled by later cases, and particularly that of Turner v.Powell supra." (In addition to the foregoing analysis of the cases, see dissenting opinion in Reed v. Richardson, supra.)
On the contrary, upon the vital point in question here, the doctrine of the Morrison Case that section 8267 is a statute of limitations, is not a part of the general recording statutes, *Page 465 and is not even in pari materia with them, stands unchallenged and indisputably is a correct construction of section 8267. Not in any case before this court, until now, have the rights of "creditors" been involved. Upon the lapse of eight years and sixty days after the maturity of the debt, secured by the mortgage of record, the property is subject to the demands of a creditor, unless the affidavit of extension under section 8267 has been filed, and no court has any right to declare the contrary in the face of this valid statute, which is plain and unequivocal upon its face. As to creditors the mortgage is good for eight years and sixty days and no longer, unless the required affidavit be made.
If the mortgagee does renew the mortgage it is imperative that the affidavit shall show the amount remaining unpaid. He must let the world know how much of the indebtedness has been paid and how much the mortgage secures. Moreover, he must show that the mortgage is not renewed for the purpose of hindering, delaying or defrauding creditors of the mortgagor or owner of the land.
At any time a creditor may cease to be a general and become a special creditor by following the ordinary processes of the law. He may secure his debt by a judgment which, when docketed, becomes a lien upon the real property. The judgment lien, over which he has control and which he can foreclose by execution as soon as the mortgage is at an end, is not in anywise affected by actual or constructive notice of the mortgage. He does not weaken his position by extending the debtor further time by accepting a mortgage upon the property, for notice does not affect his status.
At this point, what are the facts? Dickinson, as administrator, had judgment on October 31, 1930. The lien of the bank's mortgage expired on January 14, 1931, unless vitalized by the affidavit required by section 8267, on or before March 15, 1931. The bank did not file the affidavit. Within the sixty-day period Dickinson took a mortgage in lieu of the judgment lien. This mortgage was not placed of record until May 22, 1931. The bank's mortgage was then dead, except *Page 466 as between the immediate parties thereto. But on the very day the administrator filed his mortgage of record the bank brought this suit. Can it be possible that while notice was immaterial to the administrator while he held his vantage point as a judgment creditor, he lost it when he indulgently extended the debtor more time by accepting a mortgage upon the land instead of holding his judgment lien, and this upon the hypothesis that notice, immaterial while he was a judgment creditor, became material when he took the mortgage? If this be true, the administrator's acceptance of a mortgage from the judgment debtor made the bank's moribund mortgage superior to the administrator's for all time, regardless of action by the bank. A mere statement of the facts reduces the majority opinion to an absurdity.
The statute plainly controls the case and demands an affirmance of the judgment. The erroneous precedents, if politeness requires they be called precedents, should be disregarded.