Peterborough Savings Bank v. Pierce

Irvine, 0.,

concurring specially.

While concurring in the conclusion reached by the court, I think the reasons upon which that conclusion is chiefly based in the opinion are unsound, and therefore wish to express my own views separately.

To my mind the fact upon which the case should turn, and the only fact leading justly to a conclusion in favor of the appellant, is that at the attachment sale the plaintiff’s mortgage was deducted as a lien prior to the attachment, and that the purchaser at that sale did not obtain the apparent title on which appellee now relies. The sale did not purport to convey the title discharged from the mortgage lien. One who buys at an execution sale of land, where the appraisement shows that a particular lien has been deducted in order to reach the value of the debtor’s interest, is thereafter estopped to deny the validity of that lien. (Koch v. Losch, 31 Neb. 625; Nye v. Fahrenholz, 49 Neb. 276.) Smith, when he purchased at the attachment sale, was charged with notice of the appraisement. (Norton v. Nebraska Loan & Trust Co., 35 Neb. 466, 40 Neb. 394.) He was charged, therefore, with notice that he was obtaining only the equity of redemption, and that the mortgage lien had been deducted in such a manner as to estop him from questioning its validity or existence. This was of record, and his grantees, in searching his title, would obtain the *722same notice and were also charged therewith. This consideration is suAcient to dispose of the case. Regarding all other matters unnecessary to a decision, I regret that the court has deemed it necessary to consider them, because, in my opinion, outside of the feature just discussed, there is nothing to charge the purchaser with notice.

When Smith searched the records, preparatory to bidding at the attachment sale, he found a mortgage to the investment company, the record of a foreclosure suit, where all parties the record disclosed to be interested were before the court, a decree foreclosing a junior-mortgage- and establishing the investment company's mortgage as a senior lien, a sale under that decree, duly confirmed, and a deed to the purchaser duly recorded. He found a deed whereby that purchaser conveyed the property to the investment company. He thus found, so far as the records disclosed, a mortgagee buying and receiving a conveyance of the equity of redemption, without any other estate intervening. Was he not then justified in assuming that the two estates had merged? It is conceded that under such circumstances merger occurs unless by intention of the parties, or by intervening equities, such a result is prevented. The presumption is in favor of merger, and there was nothing here to rebut that presumption, so far as the records disclosed. It is said that the fact that the conveyance from Patrick to the investment company was subject to the mortgage was sufficient to rebut the presumption, or at least to notify Smith that there might be no merger. Mathews v. Jones, 47 Neb. 616, is cited as applicable to this phase of the case. But the facts are very different. In Mathews v. Jones the deed to the mortgagee recited that the conveyance was subject to the mortgage, which the mortgagee “assumed and agreed to pay.” Of course the mortgagee would not expressly assume and agree to pay a mortgage which he himself then owned. In this case there was no such covenant. On the contrary the deed was one of *723general warranty, except that the grantor, in conveying to the mortgagee, excepted the mortgage from his covenant of warranty. A mortgagor, in conveying to the mortgagee with the intention on the part of both to thereby extinguish the mortgage, would, for the very purpose of effecting that object, avoid covenanting against the existence of a mortgage owned by the grantee himself. There is a vast difference between a covenant by the grantee to pay a mortgage and the refusal of the grantor to covenant against it when it is held by the grantee himself. In the latter case the exception of the mortgage from the covenant, if it has any significance, strengthens the presumption of a merger.

It is also said that it was the duty of Smith to inquire whether there had been in fact a merger. Finding the mortgagee had acquired the remainder of the estate. Smith would know that if no merger had taken place it would be necessary for the owner to begin a suit against himself in order to preserve the estate which he was endeavoring to keep distinct. In that case he would have to allege that he as defendant had made a default against himself as plaintiff, and that by reason of failing to keep his own obligations to himself he was entitled to invoke the aid of the court to enforce his own obligations to himself by selling his own property to discharge them. Is it reasonable to say that Smith was put on inquiry to ascertain whether such an absurd state of affairs existed? The writer can recall only one instance where any person has been said to have actually pursued so cautious a policy, and that is the case of the worthy Lord Chancellor, immortalized by Gilbert & Sullivan, who considered seriously whether he should fine himself for contempt of: his own court in marrying his own ward without his own consent.

By our statute all deeds, mortgages, and other instruments which are required to be recorded are void as to subsequent purchasers without notice whose deeds, *724mortgages, or other instruments shall be first recorded. (Compiled Statutes, ch. 73, sec. 16.) Here Smith’s deed was recorded before the assignment of the mortgage was recorded. By section 1 of the same chapter “deeds of 'real estate” shall be recorded. Section 46 provides: “The term ‘deed,’ as used in this chapter, shall be construed to embrace every instrument in writing, by which any real estate or interest therein is created, aliened, mortgaged, or assigned, or by which the title to any real estate may be affected in law or equity, except last wills, and leases for one year or for a less time.” Certainly assignments of mortgages are within this provision. This court has gone to perhaps an extreme in protecting secret assignments of mortgages, but in no case have we repealed the recording act by giving effect to an unrecorded assignment, as against a purchaser without notice whose muniments of title were actually recorded before the assignment. True, the lien of an attachment extends only to the interest of the defendant in attachment, but the cases where that principle is announced state as a qualification that for its application the deed under the attachment sale must not be recorded before that creating the secret equity. (Mansfield v. Gregory, 8 Neb. 432; Harral v. Gray, 10 Neb. 186; Mansfield v. Gregory, 11 Neb. 297; Hargreaves v. Menken, 45 Neb. 668; Sheasley v. Keens, 48 Neb. 57.) Per contra, a purchaser at such sale, if he buy without notice of the outstanding equity and place his deed on record prior to the record of the instrument creating such equity, is entitled to the protection of the recording act. (Uhl v. May, 5 Neb. 157; Hubbart v. Walker, 19 Neb. 94.) Tested by these principles Smith acquired a good title, except for the notice imparted by and the legal effect of, the deduction of plaintiff’s mortgage in appraising the land for sale under the attachment.

Stjllivan, J., and Ryan, C., concur in the foregoing opinion of Irvine, C.