Opinion ID: 2197300
Heading Depth: 3
Heading Rank: 1

Heading: Assignment of the Mortgage as used in the Foreclosure by Advertisement Statutes

Text: Plaintiffs' first argument is that the statutory language with respect to assignments of the mortgage, as that phrase is used in sections 580.02 and 580.04, includes not only transfers of the promissory note and security instrument together, but also includes transfers where the promissory note and security instrument are assigned separately. Plaintiffs give several examples which demonstrate that the term mortgage is often used indiscriminately to refer to the security instrument, the underlying indebtedness, or the combination of the security instrument and the indebtedness. See, e.g., William F. Walsh, A Treatise on Mortgages § 58 (1934); George E. Osborne, Handbook on the Law of Mortgages § 223 (2d ed.1970); Black's Law Dictionary 1031 (8th ed.2004). The facts in this case suggest that when MERS members transfer their interest in a debt, an assignment of the promissory note is executed but an assignment of the security instrument is not executed. Therefore, the question before us is whether the provisions in sections 580.02 and 580.04, which require a mortgagee to record and give notice of any assignment of the mortgage before foreclosing by advertisement, require MERS to record an assignment of the promissory note before a valid foreclosure by advertisement can be commenced. We conclude that the specific language of sections 580.02 and 580.04 does not require that a promissory note assignment be recorded before foreclosing a mortgage by advertisement. When interpreting a statute, we must look first to the plain language of the statute. Munger v. State, 749 N.W.2d 335, 338 (Minn.2008). When the language of the statute is unambiguous, the letter of the law shall not be disregarded under the pretext of pursuing the spirit. Id. (citing Minn.Stat. § 645.16 (2006)). We are to construe a statute as a whole so as to harmonize and give effect to all its parts, and where possible, no word, phrase, or sentence will be held superfluous, void, or insignificant. In re UnitedHealth Group Inc., 754 N.W.2d 544, 563 (Minn.2008) (citations omitted); see also Minn.Stat. § 645.16 (2008) (Every law shall be construed, if possible, to give effect to all its provisions.). Section 580.02 contains three requirements that must be met before a mortgagee can foreclose by advertisement: (1) that some default in a condition of such mortgage has occurred, by which the power to sell has become operative; (2) that no action or proceeding has been instituted at law to recover the debt then remaining secured by such mortgage ... (3) that the mortgage has been recorded and, if it has been assigned, that all assignments thereof have been recorded.... Subsection (2) refers to the debt then remaining secured by such mortgage.  (Emphasis added.) This clause secured by such mortgage is important to our analysis because it identifies the mortgage as the instrument that secures the debt. It is the security instrument that secures the debt, identifies the subject property, and provides for recovery of that property in the case of failure to repay the debt. Because the legislature specifically refers to the security aspect of the mortgage, we conclude that the legislature's use of the term mortgage in section 580.02(2) is unambiguous to the extent that the term mortgage does not refer to the debt as evidenced by the promissory note. Further, because we must apply the term mortgage consistently, we conclude that the use of the term mortgage throughout Minn.Stat. §§ 580.02 and 580.04 does not refer to the promissory note but to the security instrument itself. Therefore the statutory requirement to record assignments of the mortgage is not a requirement to record assignments of the promissory note, and the requirement to provide notice of mortgage assignments does not require giving notice of assignments of only the debt. Based on the record before us, there is no evidence that the security instruments connected to plaintiffs' mortgages have been assigned. While plaintiffs have reason to believe the promissory notes have been assigned, we have concluded that promissory note assignments do not have to be recorded under the plain language of the foreclosure by advertisement statutes. This conclusion suggests MERS may have properly instituted foreclosure by advertisement proceedings against plaintiffs. But plaintiffs argue that even if the statutory language specifically refers only to the security instrument, the promissory note assignments made by MERS members are an assignment of the security instrument by operation of law. Thus, plaintiffs assert that our plain language analysis is not dispositive in this case, and that we must consider prior case law to resolve the question before us. Therefore, we proceed to address plaintiffs' second argument.