First National Bank v. Gutensohn

This action was brought to foreclose a real estate mortgage. The defendants Peter G. Gutensohn and Mary M. Gutensohn, his wife, executed and delivered the mortgage to the plaintiff to secure the payment of certain promissory notes. The mortgage was recorded on January 19, 1922. The notes matured one year after date. The mortgagors made and delivered to plaintiff renewal notes dated October 14, 1924, and May 14, 1926. These renewal notes evidenced the original indebtedness and were secured by the original mortgage. Defendant Peter G. Gutensohn on January 14, 1918, was indebted[1] to Mary E. Gutensohn, who died prior to the commencement of this action. Defendant E.F. Dickinson was appointed administrator of her estate on May 7, 1930. On June 7, 1930, Dickinson brought action against Peter G. Gutensohn to recover on the indebtedness owing by him to Mary E. Gutensohn, deceased, and on October 31, 1930, recovered *Page 455 a judgment in that action for the sum of $6,541. Thereafter, on December 27, 1930, the defendant Peter G. Gutensohn and others, "in lieu of said judgment," executed certain promissory notes of various maturities, and a real estate mortgage describing the lands contained in the mortgage of the plaintiff bank to Dickinson as administrator, which mortgage was recorded on May 14, 1931. Plaintiff brought this action to foreclose its mortgage. The complaint is in the usual form for the foreclosure of a real estate mortgage. Dickinson, as administrator, was made a party defendant. He appeared by answer and, after setting forth the above facts with reference to the mortgage held by him and the indebtedness secured thereby, alleged that plaintiff's mortgage was invalid as against him, by reason of the failure of plaintiff to file an affidavit of renewal within the time and in the manner required by section 8267, Revised Codes 1921. It is conceded that no such affidavit was filed by the plaintiff bank. The case was tried before the court without a jury. Findings of fact were requested by the plaintiff; they were adopted in part and rejected in part by the trial court. The plaintiff sought to have the court find that its mortgage was prior and superior to that of the defendant Dickinson. The court found that the mortgage of plaintiff was subordinate and inferior to that of Dickinson. Conclusions of law were made in accordance with this finding. Judgment and decree of foreclosure was in accordance with the finding of the court. It is unnecessary to note the other findings, as they are not challenged by any of the parties. It is, however, well to note that the trial court found that the indebtedness originally secured by plaintiff's mortgage was renewed, so that no question arises as to the indebtedness secured by the mortgage being barred by the general statute of limitations. Plaintiff has appealed from the judgment. By numerous appropriate specifications of error plaintiff challenges the correctness of the court's finding to the effect that the mortgage of the defendant Dickinson is superior to its *Page 456 own, and the judgment in accordance therewith. The facts in the case are not in dispute. The plaintiff contends that its mortgage is a valid one as against the defendant administrator. The administrator asserts, in accordance with the finding of the trial court, that plaintiff's mortgage is invalid by reason of the provisions of section 8267, supra, in that no affidavit of renewal thereof was filed as therein provided. The pertinent portion of that section provides as follows: "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, * * * within sixty days after the expiration of said eight years, file * * *, an affidavit" setting forth certain facts. This statute has frequently been before this court for interpretation. It will be noted that under the facts in this case the mortgage to defendant Dickinson, as administrator, was executed and delivered within eight years subsequent to the maturity of the debt secured by plaintiff's mortgage. This action was brought in the year 1931, but subsequent to the expiration of eight years and sixty days after the maturity of the debt secured by and as provided in plaintiff's mortgage. Plaintiff contends that under the decisions of this court interpreting the statute which will presently be noted, the trial court was in error. Defendant Dickinson asserts these decisions are not controlling, and that this case is governed by this court's decision in Morrison v. Farmers Traders' StateBank, 70 Mont. 146, 225 P. 123. There, in August, 1907, one Birely and wife executed a note and mortgage maturing three years after date. In 1915 the mortgaged property was sold to one Lapp, subject to the mortgage, and he in turn soon conveyed the property to Morrison, who in 1920 instituted a suit to quiet title against the holder of the Birely mortgage. *Page 457 No affidavit of renewal of the Birely mortgage had been filed. It was there held that the lien of the Birely mortgage had expired and that Morrison held title to the mortgaged property free from the mortgage lien. Subsequently this court held that where the mortgagor and mortgagee had extended or renewed a mortgage by written agreement within eight years subsequent to the maturity of the mortgage, it was good and valid as against a purchaser of the mortgaged property where he acquired title to the mortgaged property after the execution and recording of the extension agreement but within such period (O.M. Corwin Co. v. Brainard, 80 Mont. 318,260 P. 706); also where the purchaser acquired title to the mortgaged property subsequent to the execution and recording of the extension agreement but within eight years after maturity of the obligation (Vitt v. Rogers, 81 Mont. 120, 262 P. 164); and where the extension agreement was made within the eight-year period and the purchaser acquired his interest within the same period of time but the extension agreement was not recorded until following the expiration of the period and the purchaser failed to record his conveyance until after the recording of the extension agreement. (Hastings v. Wise, 91 Mont. 430, 8 P.2d 636.) In the Corwin and Vitt Cases, supra, the court expressly declined to follow the doctrine of the Morrison Case, supra, as applied to the facts before it in those cases, and declared that the pronouncement in the Morrison Case applied only to the facts there before the court. In the case of Turner v. Powell, 85 Mont. 241,278 P. 512, Powell and wife on June 30, 1914, executed and delivered a mortgage securing a note maturing two years after date. On September 20, 1918, the mortgagors conveyed the property, subject to the mortgage, to one Frank. The mortgagee assigned her interest on April 21, 1927, to Turner, the plaintiff in the action, which was brought for the foreclosure of the mortgage. This court there treated the case as though no affidavit of renewal had been filed, and held that the mortgage could be foreclosed as against Frank, the purchaser of the mortgaged *Page 458 property, although more than eight years and sixty days had elapsed following the maturity of the debt secured by the mortgage, and no affidavit of renewal had been filed as required by section 8267. Again, this court in the case of Reed v. Richardson,94 Mont. 34, 20 P.2d 1054, where a purchaser during the eight-year period following the maturity of a real estate mortgage acquired the mortgaged property, held that the purchaser could not successfully assert the invalidity of the mortgage by reason of the failure to file the affidavit of renewal provided for in section 8267 in the foreclosure action brought after the expiration of the statutory period, following its decision in theTurner Case, supra. Clearly the decision in this case is ruled by our decisions in the cases of Turner v. Powell and Reed v. Richardson, supra, unless the court desires again to change its position, recede from the pronouncements therein made, and return to the doctrine of the Morrison Case, or unless the case is distinguishable upon the facts. As to the first proposition, it is desirable that the law, particularly with reference to property and property rights, be stable, and that persons desiring to invest therein may do so relying upon the decisions of this court. Lawyers should be able to advise their clients as to the state or condition of a title definitely and with assurance that this court will not depart from the confines of its past decisions. Whatever it may be argued was the intention of the legislature in the enactment of section 8267, or the meaning of the section, this court has heretofore, as pointed out above, given its interpretation of the statute. It is indeed difficult to imagine a case where there would be more reasons for the application of the doctrine ofstare decisis than are here present. Defendant attempts to distinguish this case from others herein referred to, by asserting that he was a creditor before the mortgage was given, and proceeds to argue that he, being once a creditor, is always a creditor, and that this court's former decisions all relate to either purchasers or encumbrancers. *Page 459 It is true that defendant Dickinson's claim was that of a creditor only in the first instance, but within the eight-year period following the maturity of the debt secured by the mortgage sought to be foreclosed, by the affirmative act of this defendant his status was changed from that of a general creditor to that of a mortgagee. In the case of State ex rel. Malott v. Board of CountyCommissioners, 89 Mont. 37, 296 P. 1, this court said: "An encumbrance is a burden or charge upon property; a claim or a lien upon an estate which may diminish its value; a burden or claim upon the property; a mortgage; any right to lands which may subsist in third persons to the diminution of the value of the estate." When the defendant Dickinson secured the mortgage upon the lands in question, he became an encumbrancer; and, having acquired this encumbrance upon the lands while plaintiff's mortgage was a valid and subsisting mortgage as against creditors and subsequent encumbrancers, he was, on the authority ofTurner v. Powell and Reed v. Richardson, supra, in no position to assert the invalidity of plaintiff's mortgage here. This action was commenced prior to the enactment of Chapter 104, Laws of 1933, which is an amendment to section 8267. The parties to this appeal do not assert that this amendment has any application here. The cause is remanded to the district court with directions to modify the findings of fact, conclusions of law, and judgment and decree in accordance with the views herein expressed. The plaintiff will recover its costs on this appeal. ASSOCIATE JUSTICES MATTHEWS and STEWART concur.