Norfolk State Bank v. Murphy

Nor val, C. J. On the 24th day of June, 1890, appellee Fred W. Gray commenced an action in the district court of Douglas county against Martin T. Murphy to recover the amount due on a promissory note executed by Murphy. Summons was duly served upon Murphy on June 26, and at the September, 1890, term of said court, to-wit, on the 3d day of January, 1891, Gray recovered a judgment in said action against Murphy for $1,285.49 and costs. The’September term, 1890, of the district court of the county of Douglas convened on the 22d day of September. After the commencement of said suit, and while the same was pending, on the 29th day of November, 1890, Murphy and his wife gave to appellant, the Norfolk State Bank, a mortgage upon certain real estate in Douglas county to secure the payment of a promissory note for $4,676.70, executed by Murphy to cover his overdrafts on the bank. The property described in the mortgage was owned by Murphy prior to the commencement of the term of court at which the judgment aforesaid was rendered. On the 11th day of September, 1891, the Norfolk State Bank brought its action in the court below to foreclose said mortgage, to which the Murphys, Fred W. Gray, and others were made defendants. Gray filed an answer, setting up said judgment, and — 737 — praying that the same be decreed a lien on the premises included in plaintiff’s mortgage prior to the lien of the mortgage. Upon the trial a decree was entered foreclosing the mortgage, but making the lien thereof junior to the judgment lien of Gray. ‘The sole question to be decided on this appeal is, which lien has priority, the mortgage or judgment? The determination of the question necessitates an examination of section 477 of the Code of Civil Procedure, which reads as follows: “ Sec. 477. The lands and tenements of the debtor within the county where the judgment is entered shall be bound for the satisfaction thereof, from the first day of the term at which judgment is rendered; but judgments by confession, and judgments rendered at the same term at which the action is commenced, shall bind such lands only from the day on which such judgments are rendered. All other lands, as well as goods and chattels of the debtor, shall be bound from the time they shall be seized in execution.” The language just quoted is too plain to admit of more than one construction, and that is, all judgments rendered in a district court in actions brought therein prior to the term, except judgments by confessions, become liens upon the real estate of the judgment debtor situate within the county from the first day of the term. At common law all judgments of a court of record relate back to the first day of the term, and are regarded as rendered on that day, no matter on what day of the term they were actually entered. Our statute is declaratory of the rule of the common law, and places all judgments of a district court, except rendered on confession, or in cases in which actions were instituted .during the term, upon equality in regard to liens. The judgment of Gray has relation to the first day of the term at which the same was recovered, and was a lien upon the lands owned by Murphy within the county from the first day of such term. The same construction was — 738 — placed upon the statute in Miller v. Finn, 1 Neb., 294, and was followed in the case of Colt v. Du Bois, 7 Neb., 391. ■ It is insisted by counsel for plaintiff in error that the-section quoted merely determines the priority of liens of judgment creditors as between themselves; and further, that the lien of a mortgage duly recorded during a term of court,, and before the entry of a judgment at that term, is paramount to the lien of a judgment. We are unable to so-construe the statute. It in express terms declares that “the lands and tenements of the debtor within the county where the judgment is entered shall be bound for the satisfaction thereof, from the first day of the term at which judgment is rendered.” Plainer language could not have been selected. The lien of a judgment does not attach merely to the debtor’s interest in lands when the judgment is obtained, but to whatever interest therein he possessed on the first day of the term at which the same was entered. To hold otherwise would be to make the law, and not simply to apply the same. A judgment being a lien upon real estate from the first day of the term, such lien is superior to the lieu of a mortgage subsequently given by the debtor. To adopt the construction contended for by counsel would be injecting words into the statute by judicial interpretation, which we have no power to do. Had the legislature intended that the doctrine of relation as to lien of judgments should not apply where a mortgage is recorded before the judgment is actually entered, it would have used apt words indicative of such purpose. Our conclusion is that the lien of the mortgage is junior to that of the judgment. The construction we have given the section does not conflict with the prior decisions of this court cited in the brief of counsel, as a cursory examination of the cases will disclose. In Galway v. Malchow, 7 Neb., 285, certain judgments-were recovered against Malehow after the recording of a mortgage given by him to the plaintiffs. By mistake the land intended to be included in the mortgage was described — 739 — as being in section 28 instead of section 33. It was held that the lien of the judgments were subject to the equity of the mortgage. The proposition we have béen discussing was not involved nor passed on in that case. That decision simply affirms the doctrine that a judgment upon real estate is subject to all prior equities existing against the debtor at the time of its becoming a lien. This court did not undertake to decide at what date the lien of a judgment attaches to the lands of the defendant. The rule stated in Galway v. Malchow has been reaffirmed and applied in Metz v. State Bank of Brownville, 7 Neb., 165; Mansfield v. Gregory, 8 Neb., 434, 11 Neb., 297; Leonard v. White Cloud Ferry Co., 11 Neb., 338; Dewey v. Walton, 31 Neb., 819. It is unnecessary to point out the difference between the facts upon which they were decided and those in the case we are considering. It is sufficient to say that in none of the cases mentioned was section 477 of the Code' before the court for consideration, nor was the question' raised by this record discussed therein. Under the above authorities a judgment lien is subject to all prior liens on the land of the defendant; but this principle does not militate against the construction we have given section 477. Had plaintiff’s mortgage been made before the term of court at which Gray’s judgment was entered, although recorded subsequent thereto, the cases would have some bearing here; but it was not so made, hence the judgment lien antedates the mortgage. The effect of the decisions of this court is that a creditor acquires no better right to his debtor’s property than the latter himself has. The lien-of a judgment is subordinate to all equities which existed in favor of third parties when the lien of the judgment attaches. In other words, the lien of a judgment is limited to the actual interest the debtor has in the property. Another decision of this court relied on by the appellant is Horn v. Miller, 20 Neb., 98. It was there ruled that the time within which to perfect an appeal taken from a — 740 — decree of the district court begins to run from the date on which the court formally announces its conclusion and judgment, and not from the date on which the clerk enters the same on the court journal. Horn v. Miller was expressly overruled in Bickel v. Dutcher, 35 Neb., 761, it being there decided that the time within which an appeal may be taken does not commence running until the decree is entered of record. For the purposes of an appeal, the date of a judgment is deemed to be the time it is actually spread upon the records, but that is no reason for holding that the lien of a judgment does not attach until that time. The language of the section relating to the time for perfecting appeals is quite different from the provision on the subject of judgment liens. For the purpose of an appeal the date of a judgment is regarded as having been rendered at one time, while for the purpose of binding the lands of the debtor, by legal fiction, it is considered as having been entered at a date often anterior to the time it was pronounced by the court. The decisions of this court to the effect that a judgment does not become a lien upon the lands of the defendant, as against a subsequent purchaser, without notice, until properly indexed have no application to the case at bar, since plaintiff is not such a purchaser. It is not even a good-faith mortgagee. The bank did not extend credit to Murphy on the strength that the land was free from liens, but the mortgage was given to secure a prior indebtedness of the mortgagor. When the security was taken the officers of the bank knew, or ought to have known, that the records of the district court of Douglas county disclosed that the action was pending against Murphy, and that a judgment might be recovered therein during the term which would be a lien on the land. We are unable to perceive that the statute relating to l is pendens, section 85 of the Code, has any bearing upon the question under consideration, since in actions at law to recover money judgments, merely, — 741 — no notice of their pendency is required to be given to third parties. It is only in a suit brought to affect the title to real property that the statute requires that notice lis pendens shall be given. The pendency of an action to recover a money judgment is of itself notice to any'one purchasing the lands of the defendant during a term of court that before the close of the term the plaintiff may recovéra judgment therein which will be a lien upon said real estate. "We know that text-writers state the general rule to be that judgments do not relate back to the first day of the term so as to create a lien on the real estate of the defendant anterior to their rendition, and such is the trend of decisions of the courts in most of the states. But it should be remembered that all the states, excepting a few, have statutes which in express terms provide that judgments shall become liens upon the lands of the debtor, either from the date on which they are rendered, or the last day of the term. (Black, Judgments, sec. 443.) Such, however, is not the common law rule, nor is it the doctrine in states having statutes similar to our own. Mr. Black, in his treatise on Judgments, at section 441, observes that “it was the rule of the common law (and this rule still obtains in some of the states) that the judgments of a court of record all relate back to the first day of the term, and are considered as rendered on that day; and therefore their lien will attach to the debtor’s realty from the beginning of the term, and will override a conveyance or mortgage made on the second, or any succeeding day, although actually prior to the rendition of the judgment.” True, the sáme author in the next section says that “ as against intervening purchasers it may be regarded as settled that the lien of a subsequent judgment will not attach, justice forbidding that in such a case it should relate back to a time anterior to the conveyance;” citing Morgan v. Sims, 26 Ga., 283; Pope v. Brandon, 2 Stewart [Ala.], 401, 20 Am. Dec., 49. The same doctrine is stated in a note on page 115 of volume 12 — 742 — American & English Encyclopedia of Law, and the following, in addition to the Georgia case above referred to, are pited in support thereof: Skipwith v. Cunningham, 8 Leigh [Va.], 272; Withers v. Carter, 4 Gratt. [Va.], 407; Brockenbrough v. Brockenbrough, 31 Gratt. [Va.], 580. An examination of the foregoing authorities will disclose that all but one fall far short of sustaining the principle they are cited to support. In Withers v. Carter, 4 Gratt. [Va.], 407, a judgment and a decree were rendered at the same term of court, the former eleven days before the latter. The question was whether they were both of equal priority. The court held that the lien of the judgment was superior to that of the decree, inasmuch as the case in which the decree was obtained was not in such a situation as to entitle plaintiff to a final adjudication on the first day of the term. We quote the following from the syllabus of the case: “The fiction of law which gives a judgment relation to the first day of the term applies to all cases in which the judgment might have been rendered on that day, but not to a case in which it could not have been then rendered.” The above case was cited with approval and followed in Yates v. Robertson, 80 Va., 475. Skipwith v. Cunningham, 8 Leigh [Va.], 271, was this: At the October term, 1827, of the superior court of Peters-burg, to-wit, on the 17th day of October, Humbertson Shipwith, executor, recovered a judgnient against one Richard M. Cunningham for $4,187.88. The October term should have commenced on the 15th day of October, but owing to the failure of the judge to attend sooner tiie court did not actually convene until three days later. On the 13th day of October, 1827, Cunningham executed a deed of trust upon his real estate to secure certain creditors, which deed was recorded on October 15. The court adhered to the doctrine laid down in the former decisions in Mutual Assurance Society v. Stanard, 4 Munf. — 743 — [Va.], 539, and Coutts v. Walker, 2 Leigh [Va.], 268, to the effect that a lien of a judgment relates back to the commencement of a term at which it was recovered and has priority over a deed of trust on the land of the defendant executed on or after the first day of the term. The court also held that the day on which the court actually commences its session, and not the day appointed by law for the beginning of the term, should be regarded as the first day of the term. The court in the syllabus say: “It is well settled as a general rule, that the lien of a judgment-upon the land of the debtor relates back to the commencement of the term at which the judgment was obtained, and overreaches a deed of trust on the land executed by the debtor on or after the first day of the term. But the term is not considered as necessarily commencing on the day appointed by law for its commencement. A deed admitted to record on the day appointed for commencing the term, but before the day on which the court actually commences its session, will be unaffected by the lien of the judgment.” In Brockenbrough v. Brockenbrough, 31 Gratt. [Va.], 580, the question arose as to which of the two judgments was the prior lien, both being rendered at the same term of court, one on the first day thereof, and the other on the last day. The court held that both judgments related back to the first day of the term, and that there was no priority between them. Burks, J., observes: “It is further contended that if the judgment is not void the appellant’s judgment has priority as a lien. The latter was a judgment by default in a pending suit, and has relation to the first day of the term of court in which it was rendered. The judgment of Settle was confessed in the same court and on the first, day of the same term. Both must be treated as judgments rendered on the same day, at the same time. Neither has precedence over the other in point of time. In such case the court takes no notice of the fractions of a day;” citing Coutts v. Walker, 2 Leigh [Va.], — 744 — 268; Skipwith v. Cunningham, 8 Leigh [Va.], 271; Withers v. Carter, 4 Gratt. [Va.], 407; Freeman, Judgments, secs. 369, 370. Morgan v. Sims, 26 Ga., 283, was based upon a statute entirely different from section 477 of the Code of this state. In Georgia the statute relating to the liens of judgments provides that the property of the defendant “shall be bound from the signing of the first judgment; but where several judgments shall be of equal date the first execution delivered to the sheriff shall be first satisfied.” (Cobb, Analysis and Forms, 89.) Under such a provision the court very properly held that the judgment was a lien from the time of the signing thereof, and that the doctrine of relation did not apply. In the Alabama case, Pope v. Brandon, 2 Stewart [Ala.], 407, the doctrine contended for by appellant herein was held and applied. Other eases may be found which are inline with Pope v. Brandon, but they are almost wholly influenced by local statutes. The following authorities sustain the construction we have given section 477 of the Code: Urbana Bank v. Baldwin, 3 O., 65; Jackson v. Luce, 14 O., 514; Davis v. Messenger, 17 O. St., 231; Doe v. Bank of Cleveland, 3 McLean [U. S.], 140; Mutual Assurance Society v. Stanard, 4 Munf. [Va.], 539; Coutts v. Walker, 2 Leigh [Va.], 268; Horsley v. Garth, 2 Gratt. [Va.], 474; Kellerman v. Aultman, 30 Fed. Rep., 888; Farley v. Lea, 4 Dev. & Battles Law [N. Car.], 169; Norwood v. Thorp, 64 N. Car., 682; Porter v. Earthman, 4 Yerg. [Tenn.], 358. The case of the Urbana Bank v. Baldwin, 3 O., 65, was this: Josiah Baldwin conveyed to C. and E. B. Cavileer certain real estate in Clark county, the deed bearing date November 21, 1820. The November term, 1820, of the court of common pleas of that county commenced on the 20th day of that month, and on the same day the Urbana Bank commenced a suit against Baldwin and others. — 745 — After service of summons, and on the 25th day of the same month, judgment was rendered against the defendants served upon confession. Subsequently, on September 4, .1826, the real estate conveyed to the Cavileers was levied upon to satisfy the judgment. A motion was made by the purchasers under Baldwin to set aside the levy. The supreme court held that the judgment was a lien upon the land, although it had been sold by the judgment debtor four days prior to the rendition of the judgment, but subsequent to the commencement of the term of court. In Jackson v. Luce, 14 O., 514, the facts were these: At the April term, 1842, of the court of common pleas of Ashtabula county, which commenced on the 10th day of the month, plaintiff recovered a judgment against the defendants for $1,474.37. The judgment was obtained by confession on April 20. On April 7 the defendants executed a mortgage to one Eastman upon certain real estate in the county to secure the sum of $2,300, which mortgage was filed for recording on April 12. In an action brought to settle the priorities of the lien of the judgment and mortgage the court held that the judgment operated as a lien upon the land from the first day of the term, and was superior to the lien of the mortgage. Bank of Cleveland v. Sturges, 2 McLean [U. S.], 341, arose in Ohio. It was a contest between a mortgagee of real estate and a judgment creditor of the mortgagor. The judgment was recovered the second day of the term of court, and the mortgage was recorded the same day. It was ruled that under the statute of Ohio the lien of the judgment was paramount, since it took effect on the first day of the term. To the same effect is Doe v. Bank of Cleveland, 3 McLean [U. S.], 140. It is urged that the two Ohio cases referred to and the decisions reported in 2 and 3 McLean were decided under a statute materially different from the one relating to the liens of judgments in this state. The statute in force in — 746 — Ohio when said cases arose declares “ that the lands and tenements of the debtor shall be bound for the satisfaction of any judgment against such debtor, from the first day of the term at which judgment shall be rendered, in all cases where such lands lie within the county where the judgment is entered, and all other lands, as well as the goods and chattels of the debtor, shall be bound from the time they are seized in execution.” (Laws of Ohio, 1824, p. 108; Swan’s Ohio Statutes, 1841, p. 467; 3 Chase’s Statutes, 1709.) The only difference between the foregoing provision and our section 477 is this: Under the Ohio statute, all judgments, whether by confession or not, become liens from the first day of the term at which they are entered, while under ours, judgments by confession and judgments rendered at the same term at which the actions are commenced become liens from date of rendition. All other judgments in this state relate back to the first day of the term, and are liens from that date. It requires no argument to show that the Ohio decisions, to which reference have been made, are entitled to great weight in construing our statute; in fact, the statutory provisions of the two states being so nearly alike, and ours having been adopted in 1858, after the highest court of Ohio had construed the section above quoted, the precedents are almost, if not quite, conclusive upon the question under consideration. Our section 477 is precisely the same as section 421 of the present Code of Ohio, which was enacted in that state in 1853. (Swan’s Statutes, 1854, p. 675.) After the legislature of Ohio had adopted the statute relating to liens of judgments, of which ours is a literal copy,.the supreme court of that state in 1867, in Davis v. Messenger, 17 O. St., 231, held that a judgment operates as a lien upon the lands of the defendant from the first day of the term, and is superior to a mortgage recorded during the same term, although prior to the date of the judgment. In that case the plaintiff recovered a judgment against Joseph — 747 — Johnston in the court of common pleas of Union county at the May term, 1859, of said court, which began at 12 o’clock noon on the 9th day of said month. The judges of said court, under and in pursuance of the statute of that state, issued an order specifying that the term would commence at 10 o’clock on said day, which order was spread upon the journal of the court, as required by said law. Johnston executed a mortgage to the defendant Messenger on one hundred and twenty acres of land situated in said county, and owned by Johnston, which mortgage was delivered for record on the 9th day of May, 1859, at 11 o’clock A. M. The trial court held that the lien of the judgment did not attach until the court actually commenced, and that the lien of the judgment was junior to that of the mortgage. On error to the supreme court the judgment was reversed, the court holding that the judgment lien had priority over that of the mortgage. This case is precisely in point. A construction has been placed on section 477 of the Code in Kellerman v. Aultman, 30 Fed. Rep., 888, which arose in the circuit court of the United States for this district. On the 4th day of February, 1883, the defendants recovered a judgment against one Van Slyke in a suit commenced in October, 1882. The judgment was rendered at the January term, 1883, the term commencing on the first Monday in January. On January 17,1883, but prior to the entry of the judgment, Van Slyke conveyed the lands in controversy, which he had owned for several years, to the plaintiff’s grantor. Execution was issued and levied upon said lands under said judgment, and plaintiff brought an action to restrain the sale thereunder. Judge Brewer, after citing section 477 of the Code, held that the judgment was a lien from the first day of the term, and took priority in date over the conveyance. We have been unable to find, although we have made diligent search, a single decision under a statutory provis — 748 — ion similar to the Nebraska statutes which sustains the contention of counsel for appellant. We do not think that the district court erred in giving the judgment priority over the mortgage. The decree is Affirmed. Irvine, C., having presided in the court below, took no part in the above decision.