Case ID: ohio-st_26/html/0471-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Philip Van Thorniley v. Frances Peters et al.
    1. A defective mortgage when reformed will not affect the lien of a judgment rendered between the date of the execution and the reformation of the mortgage.
    2. As between the owner of a mortgage attested by one witness only, and subsequent judgment creditors, and the owner of a homestead sold under a claim which precluded the allowance of a homestead, the proceeds of the sale should be distributed (since the passage of the act of April 9, 1869, 66 Ohio L. 50), as follows: 1st. To the debtor as against the judgment creditors, $500 in lieu of the homestead. 2d. The balance‘to the judgment creditors as against the mortgagee; and 3d. As between the debtor and his mortgagee, the allowance in lieu of homestead should be decreed to the mortgagee.
    Motion for leave to file a petition in error to the District Court of "Washington county.
    Peters and wife executed a mortgage upon their homestead, to secure the payment of certain money to James Posey. This mortgage confessedly is the first lien on the premises. A mechanic’s lien in favor of Miller & Bro. was next secured upon the homestead. Afterward, on the 7th of February, 1866, Peters and wife executed a defective mortgage (there being but one witness) to the plaintiff in error, Thorniley, which was recorded in the proper recorder’s office, on the 14th of- August, 1866. Subsequently, several judgments were recovered against Peters, which also became liens upon the same real estate.
    In October, 1875, a decree in favor of Posey was rendered in the Court of Common Pleas of Washington county against Peters and wife, and the real estate described in the mortgage was ordered to be sold. At the February term, 1876, the sale having been made, distribution of the proceeds was ordered as follows : 1st. In payment of costs; 2d. Posey’s mortgage ; 3d. Mechanic’s lien; 4th. To Peters and wife, in lieu of homestead, $500; 5th. To .judgment creditors. Under this order, the proceeds were exhausted without payment of the claim of plaintiff in error. The court, however, found that the defect in Thorniley’s mortgage was the result of a mistake; that all the parties thereto intended to execute a valid legal mortgage, and that there was still due to the plaintiff in error on the claim intended to be secured thereby the sum of $318. Thereupon the plaintiff in error excepted to the order of distribution.
    On error to the District Court, the decree below was affirmed, and this proceeding is prosecuted to reverse the orders of the District Court, and, of the Common Pleas.
    
      Ewart, Sibley § Ewart, for the motion :
    1. A mortgage by mistake, defective in lacking one oí the two witnesses requisite in its formal execution, is in equity regarded as valid between the parties. White v. Den-man, 16 Ohio, 59; 1 Ohio St. 110; Garter v. Champion, 8 Conn. 548.
    2. Upon general principles of equity jurisprudence, as between the parties, a court of chancery will reform such a mortgage on the ground of the mistake. Story’s Eq. Jur., sec. 165 ; Carter v. Champion, 8 Conn. 548; Beardsley v. Knight, 10 Yt. 185; Smith v. Ghapm.an, 4 Conn. 344; Kennarcl v. George, 44 N. H. 441; Goshorn v. Purcell, 11 Ohio St. 641; Story’s Eq. Jur., sec. 165 ; Ereeman on Judgments, sec. 357; Wall v. Arrington, 13 Geo. 93; White v. Wilson, 6 Blaekf. 448; Baker v. Morton, 12 Wall. 150; Watson v. Wells, 5 Conn. 468; Beardsley v. Knight, 10 Yt. 185; Strang v, Beach, 11 Ohio St. 287.
    3. The provisions of what is familiarly known as the “homestead act” (S. & C. 1146, sec. 7), by express limitation of the statute itself, do not extend to any “judgment or decree rendered on any note or mortgage executed by the debtor and his wife.” As against Thorniley’s reformed mortgage, no exemption could be claimed under this act by either Peters or his wife; for, on the admissions of their auswer, as well as by the decree correcting the mistake, they are both estopped to say that the mortgage was not executed by them. Indeed, it may well be questioned,' on the conceded facts of this case, whether the lien of this mortgage, which in equity is valid between the parties, would not preclude the allowance of a homestead had it not been reformed. Without correction, as against the mortgagors, Thorniley would have been entitled to a decree for the amount due on the note and mortgage, and to an order for the sale of the mortgage premises in default of payment; and, if that relief could have been granted, it would seem to bar any claim to the homestead exemption. Bloom v.Noggle,4: Ohio St. 45; McMahon v. McGraw, 26 Wis. 614; White v. Denman, 16 Ohio, 59; Danforth v Beattie, 43 Vt. 138.
    If Thorniley’s mortgage, as reformed, be held to preclude the allowance of a homestead as against Peters and wife, the part of the decree ordering the payment of the $500 in lieu of a homestead, not only before, but in preference to the sum due Thorniley, is contrary to the express words of the statute (66 Ohio L. 50, see. 4); palpably erroneous, and must therefore be reversed.
    The case is this : As between the parties thereto, chancery will cure the defect in the mortgage ; but as reformed (if not before) the lien of the mortgage, by provision of the statute (S. & C. 1146, sec. 7) precludes the allowance of a homestead to either the husband or wife signing it; therefore the $500 in lieu of a homestead can not be paid until “after payment ” of the lien of the reformed mortgage. But if any “ balance ” be left over what is necessary to satisfy liens precluding a homestead, the allowance in lieu thereof will be paid out of that; the result being, on the particular and peculiar facts of such a case, to give the reformed mortgage priority over judgment liens. Holliday v. Franklin Bank, 16 Ohio, 553 ; Brazee v. Bank of Lancaster, 14 lb. 318.
    
      Chamberlain § Hamilton, contra, argued:
    That Posey’s mortgage, Miller & Bros, mechanic lien, and the costs were the only liens precluding the allowance of $500 to Peters and wife in lieu of a homestead under the act of April 9, 1869 (66 Ohio L. 50, sec. 4); that as there was sufficient left after paying these claims that the $500 vested absolutely in Peters and wife, by virtue of the said statute, and the decree of the court made afterward reforming the mortgage could not change it. There was nothing to reform. The defectively executed mortgage created no lien upon the lands whatever. White v. Denman, 16 Ohio, 59; Bloom v. Noggle, 4 Ohio St. 45; Erwin v. Shury, 8 lb. 509; White v. Denman, 1 lb. 110.
   McIlvaine, J.

Several propositions involved in this case have been settled by former decisions of this court, and others must be controlled by deductions of necessity to be .drawn from such decisions. 1. A mortgage defectively ex'-ecuted is not entitled to record under our registry laws. 2. An unrecorded mortgage, or a defectively executed mortgage, whether recorded or not, does not vest in the mortgagee any interest in the premises, either legal or equitable, as against subsequent purchasers or judgment creditors of the mortgagor. 3. As between the parties to such mortgage, whether it be duly executed and not recorded, or defectively executed and recorded or not, equity will give it effect according to the intention of the parties. 4. A defective mortgage, when reformed, will not affect the lien of a judgment intervening between the date of the execution and the reformation. Hood v. Brown, 2 Ohio, 59; Mayham v. Combs, 14 Ohio, 428; White v. Denman, 16 Ohio, 59 ; White v. Denman, 1 Ohio St. 110 ; Fosdick v. Barr, 3 Ohio St. 471; Holliday v. Franklin Bank, 16 Ohio, 533.

The question,now to be determined on distribution of thn proceeds of a homestead grow out of an apparent conflict of rights, namely : on the claim for an award in lieu of the homestead; on a claim under a defective mortgage; and on liens of subsequent judgments. The respective claims oj. the parties would make the case thus : the homestead right superior to the judgment liens ; the judgment liens superior to the mortgage; and the right under the mortgage superior to the homestead—a triangular case-somewhat similar to Holliday v. Franklin Bank, supra.

But we are relieved from difficulty in this case by section 4 of the act of April 9,1869 (66 Ohio L. 50), which provides:

“ “When a homestead shall be charged with liens, some of which, as against them, preclude the allowance of a homestead to either the head of the family or the wife, and others of such liens do not preclude the allowance of such homestead, and a sale of such homestead is had, then of the proceeds of such sale, after the payment of the liens so precluding the allowance of such homestead, the balance, not exceeding five hundred dollars, shall be awarded to the head of the family, or the wife, upon the application of either . . in lieu of such homestead.”

Under this statute, judgment liens are lifted from so much of the proceeds of the sale of a homestead as may be awarded to the claimant in lieu of the homestead; so that, as to that portion of the proceeds, the judgment creditors can assert no claim either as against the debtor or his mortgagee. The judgment liens, which had attached to the whole premises, subject only to the right of the debtor to their use for a limited period, as a family homestead, were lost, as to the specific property, when sold under liens which precluded an allowance of a homestead, and, by virtue of the statute, were also discharged as to the portion of the proceeds awarded to the debtor in lieu of the homestead. This statute, however, does not affect the conventional rights of the parties to the mortgage.

It follows that the allowance in lieu of the homestead was absolutely discharged from all lien in favor of the judgment creditors, but was subject to the claim of the mortgage; and that the judgment liens, after the allowance in lieu of homestead, were superior to the rights of the mortgagee; and therefore the court below, having awarded to Peters and wife $500 in lieu of the homestead,, should have decreed to Thorniley, plaintiff in error, so-much of that sum as was needed to satisfy the balance due on his mortgage.

In excluding the plaintiff in error from his equitable right in the sum so awarded to Peters and wife, we think the Court of Common Pleas erred, and for that error the judgment of affirmance as well as the judgment of Court -of Common Pleas should be reversed and cause remanded.

Judgment accordingly.

Welch, C. J., White, Rex, and Gilmore, JJ., concurred.