Merchant v. Woods

Cornell, J. ' The statutory provisions relating to recording conveyances of any estate or interest in real estate by which the title may be affected, are especially designed for the benefit and protection of parties dealing in that kind of property. The leading object is to provide full, truthful and reliable information respecting titles, easily accessible to all, •and upon which any one may safely act in making a purchase when he has no knowledge or notice of any fact sufficient to put him upon inquiry, or to excite suspicion as to the fulness or accuracy of the record title. Wade on Law of Notice, § 96. To this end every such conveyance by deed, mortgage, •ior Otherwise, is required to be recorded in the office of the register 'of deeds of the county where the real estate is situated, and, if not, it is declared to be void as against any subsequent purchaser of the same in good faith, and for a valuable consideration, whose conveyance, in whatever form, is first duly recorded. Gen. St. 1878, c. 40, § 21. Within the meaning of this section, a release by a mortgagee of his interest and estate in mortgaged premises, whether done by an •entry in the margin of the record, by a certificate of discharge as authorized by section 36, or by a decree of court under section 37, is a conveyance, as that term is defined by section 26. Such was the ruling of this court in Palmer v. Bates, 22 Minn. 532, where it was also held that an unrecorded release of a portion of the mortgaged premises was of no avail as against an innocent purchaser for value, acquiring title under a statutory foreclosure by advertisement of the mort [399] gage upon the entire tract, and a certificate of sale duly executed and recorded, with the usual, affidavits of sale and publication of the foreclosure notice. In the ease at bar, the foreclosure proceedings under which ‘defendant claims title were had in strict conformity with the requirements of statute, and without objection from any source. The foreclosure notice was duly published, the mortgage was undischarged of record, and it and the note, for default in the payment of which the foreclosure was had, both purported upon their face to be unsatisfied, and were so held by the mortgagee at the time, of which facts the defendant had knowledge prior to his purchase. The certificate of sale and the affidavits of publication and sale were duly made and recorded, and it is not questioned that the defendant in entire good faith bought and paid a valuable consideration for .the property, which was vacant and unoccupied at the. time. In view of these facts it is difficult to distinguish the present case in principle from that decided in Palmer v. Bates, supra. The additional fact which exists in this case, but did not in that, that the whole mortgage debt was paid prior to the foreclosure, is'only important as showing the extent of the relinquishment •of the mortgage-security as between the parties thereto and their assigns; but it does not affect the question as to the effect of such relinquishment against third parties, having no notice thereof, actual or constructive. As between the former, ■such payment would operate to extinguish the entire mortgage and all rights under it, and would equitably entitle the mortgagor or the holder of the equity of redemption to a deed ■of release from the mortgagee, releasing and relinquishing all his interest and rights under the mortgage. But no greater effect could be given to such a payment than would be accorded to a full deed of release, founded upon any valid consideration, covering and relinquishing all the rights of the mortgagee under his mortgage. If such a release, unrecorded, would be ineffectual to defeat the title of an innocent purchaser without notice, acquired under a subsequent and [400] apparently valid foreclosure of the mortgage, clearly a payment of the mortgage debt, unaccompanied by any -written release whatever, would be equally ineffectual under like circumstances. The invalidity, under the registry laws, of such an unrecorded release, as respects the rights of such a purchaser, follows as a logical sequence from the decision in Palmer v. Bates, supra-. Though the release in that case only covered a part of the mortgaged premises, the decision was not put-upon that ground, but upon the ground that the statute makes-every unrecorded instrument of that character, without regard to the extent of the interest released, void as against any purchaser in good faith, and for a valuable consideration, whose conveyance is first duly recorded. The principle, and the reason for it, is this: Whenever the lien of a recorded mortgage containing a power of sale is in fact discharged, in-whole or in part, by payment or otherwise, the law makes it the duty of the mortgagor or the holder of the equity of redemption, as between him and third parties having no notice thereof, to procure the evidence of the discharge to be properly put upon record. A failure so to do leaves the mortgage apparently a subsisting security, and the mortgagee apparently still clothed with the authority originally conferred by the power; and if, in the exercise of such apparent authority, a foreclosure is regularly had, and a sale is effected upon the faith of the appearances, the innocent purchaser will be protected in his title, if first recorded, as against the party through whose fault and negligence the apparently valid foreclosure and sale were rendered possible. Upon the findings of fact, the case at bar comes clearly within this principle. The facts, as they appeared to defendant from the record of title which constituted notice to him as-a purchaser, showed a mortgage debt long overdue, a mortgage-unsatisfied, and an existing power of sale that had become-operative by reason of a default in the payment of the debt. The possession of the note and mortgage by the mortgagee. [401] and their appearance, furnished additional evidence in support of the same facts. Suffering the foreclosure and sale to pass without objection, after the publication of the foreclosure notice provided by statute as sufficient and conclusive notice of the proceedings to interested ■ parties, — Bennett v. Healy, 6 Minn. 158 (240,) — was, to say the least, an apparent acquiescence on the part of the mortgagor, and those-claiming under him subsequent to the mortgage, in the valid-, ity of the foreclosure, and the claim of default upon which it was based. The apparent existence of these facts was the-direct result of the culpable neglect of Connelly in omitting to do what ordinary prudence and duty required of him under the circumstances. They all concurred and were well calculated to induce a belief in their validity by the defendant, and to cause him to make the purchase he did upon the faith of that belief. Having completed the purchase in good faith, got the statutory conveyance evidencing his title, and placed it properly upon record, the defendant is protected against the fraud and injustice which would result if Connelly were now permitted to impeach its validity, by showing that the mortgage was in fact extinguished prior to its foreclosure. Judgment affirmed.