Opinion ID: 1798740
Heading Depth: 1
Heading Rank: 1

Heading: Priority Issue.

Text: The evidence which supports the trial court's finding that plaintiff's March 16, 1961, mortgage was given in renewal of its October 3, 1960, mortgage is this: Kaminsky, president of plaintiff, testified that the March 16, 1961, note in the sum of $10,644 was a renewal of the October 3, 1960, note of $14,893. The balance owing on the $14,893 original note as of March 16, 1960, was $10,644 so that the new note was for the identical sum of this balance. The October 3, 1960, mortgage was later satisfied of record. To rebut this evidence appellant relies on the fact that the October 3, 1960, mortgage was not satisfied until three months after the giving of the new note and mortgage, and the printed form of satisfaction recited that the October 3, 1960, mortgage is fully paid, satisfied and discharged. In Kellogg Brothers Lumber Co. v. Mularkey [1] this court was faced with a fact situation not essentially different from what is before us in the instant case. There a mechanic's lien claimant stood in the same position as appellant bank does here. The original mortgage which had priority over the mechanic's lien was satisfied five days after the giving of the new mortgage in renewal of the original mortgage. The mechanic's lien claimant, as does appellant here, contended that the satisfaction of the original mortgage was conclusive with respect to its discharge as a lien against the mortgaged premises. In rejecting this contention, Mr. Justice WICKHEM, speaking for the court, stated: The authorities in this country are overwhelming to the effect that such a satisfaction as is here involved is not conclusive as to the discharge of the mortgage or the payment of the indebtedness secured thereby, and that in the absence of paramount equities it will not be held to have resulted in a subordination of the security of the senior lien to an existing junior lien unless the circumstances of the transaction indicate this to have been the intention, or unless such intention is shown by extrinsic evidence. [2] The facts of the instant case clearly bring it within the scope of this rule. There is no evidence of express intention on the part of plaintiff and the mortgagors that appellant's mortgage should have priority and there is a complete absence of any paramount equities which would require such result. Appellant has done nothing in reliance upon the satisfaction of plaintiff's original mortgage. By according priority to plaintiff's present mortgage appellant is left in no worse position than it was when it took its mortgage on October 17, 1960. Appellant argues that the rule stated in the Kellogg Brothers Lumber Co. Case is considered applicable primarily when the renewal and satisfaction are contemporaneous, [3] and the three-month separation in time between the March mortgage and the June satisfaction defeats the application of the general rule to the facts before us. Although the contemporaneousness of the transactions has been stressed by some authorities, the fact that three months separated the transactions in the case before us should not defeat the operation of the general rule. If the transactions had been reversed, the October 3, 1960, mortgage satisfied in March and the new mortgage not executed until June, then the time discrepancy would be important as it would tend to refute plaintiff's claim that the second mortgage was in fact a renewal. However, in the present case, the renewal was executed first, and the satisfaction three months later. The important transaction from the standpoint of time is the new mortgage, and it was concluded while the October 3, 1960, mortgage was still in effect. We attach no significance to the fact that the printed form of mortgage satisfaction used the words fully paid. Appellant cites Rielly v. Arnsmeier [4] where this court held the rule of the Kellogg Brothers Lumber Co. Case [5] inapplicable because of change in some of the parties executing the two mortgages. We do not have such distinguishing facts here. [6] Not only do we find the trial court's determination that plaintiff's mortgage has priority over that of appellant is not contrary to the great weight and clear preponderance of the evidence, but that the evidence here requires such a holding as a matter of law.