Holden v. Garrett

The opinion of the court was delivered by Brewer, J.: The contest in this case is between one who claims under the lien of an execution levy, and the holder of — 107 — a prior but unrecorded mortgage. The judgment was in a county other than that in which the land was situate, and was rendered long after the execution of the mortgage. The levy was made before, but the sale not till after, the record of the mortgage. There was no actual notice of the existence of this mortgage. On the one side it is claimed that by virtue of §21, ch. 22, Gen. Stat., p. 187, which reads as follows: “No such instrument in writing shall be valid except between the parties thereto, and such as have actual notice thereof, until the same shall be deposited with the register of deeds for record,” the mortgage is to be considered as though it had no existence, and the land as free from any incumbrance at the date of the levy, and that the lien then secured by the levy ripened into a title by the sale, and was paramount to the lien created by the subsequent record of the mortgage; and on the other hand it is claimed that the lien of the levy was only upon the actual interest of the judgment debtor in the real estate, and that as such interest was in fact' limited by the mortgage, only such limited interest was seized and bound by the levy. Of course, this is but part and parcel of a still broader question, and that is, does the lien of an execution levy extend to only the actual, or does it also reach the apparent, title of the judgment debtor? Is the inquiry restricted to the face of the record, or may it pass to the actual facts? Authorities are not wanting to support either view, and cogent reasons may be adduced in favor of each. On the one hand it may be said with force that if the mortgage lien is adjudged paramount, then the section quoted is practically nullified, and an instrument which the statute declares invalid is pronounced valid; and on the other, that if the levy is adjudged paramount, then the statute which authorizes a levy upon the lands, tenements and hereditaments of the debtor is extended so as to sustain a levy upon lands which are not in fact wholly his. With much hesitation, and after a long and careful examination of the question in its various relations, we have reached the conclusion that the lien of the mortgage must be adjudged — 108 — prior and paramount. These are the reasons which have controlled us: It gives exact force to the statute declaring to what a judgment lien and an execution levy extend. Judgments “shall be liens on the real estate of the debtor within the county.” (Dassler’s Comp. Laws 1879, p. 656, § 419.) This evidently contemplates actual and not apparent ownership. The judgment is a lien upon that which is his, and not that which simply appears to be his. How often the legal title is placed in one party when the equitable title, the real ownership, is in others. Many reasons induce this — convenience in managing, facility in passing title, number of parties interested, and others needless to mention. And yet the record discloses only the naked legal title. Now if the judgment is a lien upon all that appears, it will cut off all the undisclosed equitable rights and interests. To extend the lien to that which is not, but which appears of record to be the defendant’s, is to do violence to the language. “ Real estate of the debtor” plainly means that which is in fact of or belonging to the debtor. And he who claims under a judgment lien can take no more than the statute gives. The question is not what rights some one else may have, but what lights does he acquire? The answer to this question must first and chiefly be sought in the statute which gives and defines the extent of that lien'. The section defining the extent of the execution levy may not be quite so clear in its indications, and yet, taken in connection with that cited concerning the judgment lien, it is perfectly plain. “All real estate, not bound by the lien of the judgment, as well as goods and chattels of the debtor, shall be bound from the time they shall be seized in execution.” (Dassler’s Comp. Laws 1879, p. 660, § 444.) It might be argued that the words “of the debtor” only qualify the immediately preceding words, “goods and chattels,” and not the prior clause, “all real estate,” etc.; but, comparing the two sections together, it is plain that no larger or other interest is taken by the levy of an execution upon real estate outside the county, than is covered by the lien of the judgment upon real estate within the county. — 109 — Again, this construction of the extent to which the lien goes was settled early in the history of this court, and has never been departed from. In Swarts v. Stees, 2 Kas. 241, Crozier, C. J., speaking for the court, says: “Their lien,” (i. e., the lien of judgment creditors,) “is upon the lands and tenements of the debtor, and not up m lands and tenements not in fadt belonging to him.” True, the decision in that case was under a different recording act, and much of the argument in the opinion is entirely inapplicable to the present question; but still, the extent of a judgment lien is plainly recognized and stated. See also Harrison v. Andrews, 18 Kas. 542. It may also here be remarked, that we have had occasion to notice the fact that priority of lien or title, even in the absence of actual notice, does not always hinge upon the mere priority of record. Other matters may enter into and affect the question, and equities not shown of record may control. (School District v. Taylor, 19 Kas. 287; Tucker v. Vandermark, 21 Kas. 263.) Again, it may be laid down as familiar law, that a judgment creditor is not a bona fide purchaser. He parts with nothing to acquire his lien. He is in a very different position from one who has bought and paid, or has loaned on the face of a recorded title. The equities are entirely unlike. One has, and the other has not, parted with value upon the face of the record. If the real prevails over the apparent title, the one is no worse off than before he acquired his lien — has lost nothing; while the other loses the value paid or loaned. Hence equity will help the latter,, while it cares nothing about the former. Further, in nearly every state in which an unrecorded mortgage has been postponed to a judgment lien, the statute has expressly declared that such a mortgage shall be void as against creditors; and the courts have laid stress upon this fact in their opinions. Thus, the statute of Illinois, 1845, p. 108, § 23, provides: “All deeds, mortgages or other instruments of writing which are required to be recorded, shall take effect and be in force after the time of filing the same for record, and not before, — 110 — as to all creditors and subsequent purchasers without notice; and all such deeds and title papers shall be adjudged void as to all such creditors and subsequent purchasers without notice, until the same shall be filed for record.” It has been decided under this statute that a deed not filed for record is, as to creditors and subsequent purchasers, wholly without effect. (Martin v. Dryden, 1 Gilman, 187; Cook v. Hall, 1 Gilman, 575; Choteau v. Jones, 11 Ill. 300; Kennedy v. Northrup, 15 Ill. 148; Curtis v. Root, 28 Ill. 367; Brookfield v. Goodrich, 32 Ill. 363. See also McNitt v. Turner, 16 Wall. 352.) To a similar effect is the language of the statutes of Massachusetts, Texas, Alabama, and perhaps other states. The state of Ohio is an exception. The language of her statute is (Swan’s Rev. Stat., pp. 310, 311), “That all mortgages executed agreeably to the provisions of this act shall be recorded in the office of the recorder of the county in which such mortgaged premises are situated, and shall take effect from the time the same are recorded.” The force of this language is somewhat similar to that of our statute, and under it the supreme court of Ohio has held the unrecorded mortgage the inferior lien. (White v. Denman, 16 Ohio, 60; Holliday v. Franklin Bank, 16 Ohio, 534; White v. Denman, 1 Ohio St. 110; Bloom v. Noggle, 4 Ohio St. 45.) It must be conceded that these cases are authority against the view we have taken. Yet it may be remarked that the statute attempts to make the record a part of the delivery and execution ot the mortgage. It is like the rule requiring the mortgage to be in writing. It must be recorded before it is a mortgage. But by our statute the unrecorded mortgage is valid, valid inter partes under all circumstances, and valid as to every one having actual notice. The record is not essential to its existence. But in Missouri we find the very language of our statute. Not merely is the section we have quoted identical with that of Missouri — the sections immediately preceding are alike. As they had been in force in Missouri for many years before they were enacted in. this state, — 111 — there is weight in the claim of counsel, that under the authority of Bemis v. Becker, 1 Kas. 226, the legislature intended that the same construction should be given to them here as had then been given to them in Missouri. The question has been frequently before the supreme court of Missouri, and the ruling uniform. The earliest case is that of Davis v. Ownsby, 14 Mo. 170, decided in 1851, and we quote at length from the opinion. After going on to show that there would be no question were it not for the recording act, the court says: “The words of the forty-first section, in declaring that the deposit of the deed for record shall impart notice to all persons of the contents thereof, are explained, in my opinion, by the subsequent words of the same section, which provide that all subsequent purchasers and mortgagees shall be deemed in law and equity to purchase with notice. The obvious meaning of the whole section is, that filing a deed for record imparts notice to all persons who shall subsequently become interested in the title, either as purchasers or mortgagees. “The forty-second section, in declaring that no such instrument in writing shall be valid, except between the parties thereto and such as shall have actual notice thereof, until deposited for record, is not designed to allpw any person to dispute the validity of an unrecorded deed, unless he is interested in the title under the same grantor. A mere trespasser cannot dispute it. There must be a title for value, under the grantor, to admit of the question being raised. “Now it will be seen that a creditor, as such, is nowhere alluded to in the statute as a person who is affected by notice, or to whom notice is to be given, and it would plainly be useless to give actual notice of an unrecorded deed to a creditor with a view to affect the person who might afterward become a purchaser under the judgment of the creditors. “A creditor, by obtaining a judgment, acquires a lien that binds the estate of the defendant against any subsequent act of his, but he acquires no interest or estate in the property. A purchaser of the property under the judgment of the creditor is the first person who acquires an interest in the property, and is the person who is to be affected by notice, either actual or constructive. If he has notice before he assumes the character of a purchaser, he invests his money in a — 112 — speculation against the deed, and the judgment creditor takes the money upon his judgment. The recording of the deed before the purchase is notice to him. “I exclude creditors altogether from the above statute, believing that they were never intended to be embraced within its provisions.” See also Valentine v. Havener, 20 Mo. 133; Stillwell v. McDonald, 39 Mo. 282; Potter v. McDowell, 43 Mo. 93; Reed v. Ownsby, 44 Mo. 204; Sappington v. Oeschli, 49 Mo. 244; Black v. Long, 60 Mo. 181; in all of which the ruling in Davis v. Ownsby was affirmed. The only other state in which we have found or been referred to a statute exactly like ours is Iowa, in which at one time was in force a section like the one first quoted in this opinion. Under that in Brown v. Tuthill, 1 G. Greene, 189, it was held that a “ lien by attachment'will hold against a prior unrecorded deed.” The section of the statute was soon after modified, and in a case arising under the new law, (Norton v. Williams, 9 Iowa 159,) the court says: “We incline to the opinion that, under the statute of 1843, the case of Brown v. Tuthill is against the current of the decisions.” The weight of authority, therefore, upon the exact statute before us, is decidedly with the conclusion we have reached. Without extending this opinion, we close by saying that our conclusion gives full and exact force to the statute which creates and defines a judgment lien; that it is in accord with the prior adjudications of this court; that it sustains and enforces the real equities of all parties; and that it is upheld by the decided' weight of authority elsewhere upon the exact question. The judgment will be affirmed. All the Justices concurring.