NO. 90-040 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

GREG PONCELET , D/B/A MONTANA READY MIX, - 

Plaintiff and Appellant, -.-. ( 

C, I -. -vs- . - C- - SHARON A. ENGLISH; WHITECAP INTERNATIONAL, 1 -xi-- 

INC., COLONIAL SAVINGS AND LOAN ASSOCIATION, I-> - 

and FIRST AMERICAN TITLE AND ESCROW OF POLSON, r' 

Defendants and Respondents. - 

- - -- 

. -- 

r; 

APPEAL FROM: District Court of the Twentieth Judicia-1, DisWict, 

In and for the County of Lake, -. 

The Honorable C.B. McNeil, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Richard J. Andriolo, Berg, Lilly, Stokes, Andriolo, 

Bozeman, Montana 

For Respondent: 

Marshall Murray, Murray, Kaufman, Vidal & Gordon, 

P.C., Kalispell, Montana 

Filed: 

Submitted: May 3, 1990 

Decided: July 12, 1990 
Justice John C. Sheehy delivered the Opinion of the Court. 

Appellant Greg Poncelet appeals from the determination of the 

District Court, Twentieth Judicial District, Lake County, granting 

summary judgment to Colonial Savings and Loan Association as to 

lien priority. We affirm the District Court. 

Appellant raises the following issues: 

1. Whether Colonial Savings and Loan and Whitecap 

International had notice of the appellant's prior recorded mortgage 

despite the error in its legal description. 

2. Whether the District Court erred in precluding priority 

designation to appellant's prior recorded mortgage. 

Respondent English executed a promissory note to appellant 

Poncelet, secured by a mortgage on real property in Polson, Lake 

County. The note and mortgage were recorded on June 2, 1986. The 

mortgage was drafted by Poncelet without benefit of any title 

insurance commitment. The description read: 

Lot ''A1' of the Amended Plat of Lots 11 and 12 in Block 

6, City of Polson, Lake County, Montana, according to the 

official plat thereof on file and of record in the off ice 

of the County Clerk and Recorder of Lake County, Montana. 

This legal description was in error since the appropriate 

description was: 

Lot ''A1' of the Amended Plat of Lots 11 and 12 of Block 

6 of Riverside Addition to the City of Polson, Lake 

County, Montana, according to the official plat thereof 

on file and of record in the office of the County Clerk 

and Recorder of Lake County, Montana. (Emphasis added.) 

On November 28, 1986, English executed and delivered a trust 

indenture to First American Title and Escrow of polson as the 

trustee, and Whitecap International, Inc. as the beneficiary, to 

secure the payment of a loan of $79,926. The trust indenture was 

recorded on December 4, 1986, and later assigned to Colonial 
Savings and Loan Association. 

Whitecap required the English loan to be secured by a mortgage 

on English's real property in Polson. Whitecap had First American 

examine the title to the real property. The record discloses that 

First American was aware of an existing mortgage on property 

belonging to English. Despite that knowledge, First American made 

no follow-up inquiries regarding the English-Poncelet mortgage. 

There is no dispute that a simple search of the grantor\grantee 

index for Lake County would have revealed the English-Poncelet 

mortgage and its reference number. 

Poncelet initiated the foreclosure on the note and mortgage 

given by English on November 17, 1987. In his complaint, Poncelet 

sought the $32,545.05 balance on the note plus interest, a 

reformation by the court of the legal description to include the 

omitted language "of Riverside Addition, and all proceeds from the 

sale of the property, plus any deficiency which might remain. 

Colonial Savings and Loan, a named defendant, answered, 

counterclaimed and cross-claimed on February 18, 1988. Colonial, 

which had been assigned the Whitecap note and trust indenture, 

raised as a counterclaim the inferior interest of Ponceletls 

mortgage due to the error in legal description, and sought a 

judicial declaration that it be declared null and void. In its 

cross claim, Colonial sought judicial foreclosure on the trust 

indenture, claiming English to be in default. Default for failure 

to answer or otherwise plead as to the Poncelet claim was entered 

against English on April 7, 1988. Similar default as to the 
Colonial cross-claim against English was entered on June 29, 1988. 

The District Court ordered foreclosure on the EnglishWhitecap-Colonial trust indenture, reserving the question as to 

validity and priority of the English-Poncelet mortgage. The court 

also reformed the English-Poncelet mortgage to add the missing 

language and decreed its foreclosure as against English only. 

Colonial and Poncelet thereafter submitted briefs to the 

District Court, and both parties moved for summary judgment. The 

court determined that both the English-Whitecap-Colonial trust 

indenture and the English-Poncelet mortgage were valid, but that 

the latter was invalid, null, and void in relation to the former. 

The court granted Colonial's motion for summary judgment and denied 

Ponceletls motion. From this judgment, Poncelet appeals. 

Poncelet maintains that Colonial and Whitecap had notice of 

the Poncelet mortgage through First American Title and Escrow of 

Polson, arguing that due to First American's actual notice of the 

Poncelet mortgage, Whitecap and its successor Colonial are thereby 

charged with notice. 

The record discloses no evidence of actual notice of the 

Poncelet mortgage on the parts of Whitecap or Colonial. Such 

notice is crucial. Montana case law is clear on this point. The 

form of recording of conveyance is paramount unless a party has 

actual notice of a prior claim. Hastings v. Wise (1931), 89 Mont. 

325, 297 P. 482; Angus v. Mariner (1929), 85 Mont. 365, 278 P. 996; 

Baker v. Bartlett (1896), 18 Mont. 446, 45 P. 1084. While this 

rule may have an undeniably harsh effect where Poncelet is 
concerned, we cannot minimize the import of full compliance with 

proper legal descriptions for the purpose of constructive notice 

from recorded instruments. It was incumbent upon poncelet to make 

certain that the recorded mortgage contained an accurate legal 

description of the property. 

In Ely v. Hoida (1924), 70 Mont. 542, 226 P. 525, a case on 

all fours with the one at bar, this Court stated that in order to 

give a mortgage priority as against a subsequent mortgagee, the 

mortgage must describe the land covered by it with sufficient 

accuracy to enable one examining the record to identify the land. 

In the present case, as in m, the mortgage described land other 

than the land intended to be mortgaged. The subsequent mortgagee 

had no duty to inquire further when the mortgage appeared on its 

face to describe some property but not specific property. The 

Court Ely stated: 

When Bateman took her mortgage, if she desired to protect 

herself against prior recorded conveyances or mortgages 

of the property embraced therein, it was, of course, her 

duty to examine the records. If she did so and 

discovered that the Ely mortgage covered lots 17 and 18 

in block 1, Lenox addition, even though she actually read 

this instrument she was under no obligation to pursue her 

inquiry further. There is nothing upon the face of the 

Ely mortgage to indicate that there was any mistake or 

imperfection therein. It contains as plain, simple, and 

unambiguous a description as can be imagined, and one 

reading it would have a right to assume that it was 

correct, and would have no duty imposed upon him to go 

beyond the record for the purpose of ascertaining that 

the parties intended to cover land located entirely 

outside the Lenox addition. 

Ely, 70 Mont. 542 at 547-548. 

The Court went on to state that "when the record of the 
instrument appears by it description to relate to a certain and 

definite tract of land, it is not constructive notice as to other 

land which it was intended to, but did not, describe.!! 

Clearly, neither the title company nor Whitecap or Colonial 

had a duty to inquire further when the Poncelet mortgage appeared 

to describe property outside the Riverside Addition. Rather, the 

risk is and should be upon the first mortgagee to use care in 

correctly and properly describing the property to protect against 

subsequent purchasers or mortgagees. The District Court correctly 

held the Poncelet mortgage to be inferior in priority to the 

Whitecap-Colonial trust indenture. 

Affirmed. 

Justice 

n ) / Chief Justice