Opinion ID: 2135346
Heading Depth: 1
Heading Rank: 5

Heading: Whether the deed from Karras to Dion was void under SDCL 43-28-17 as against Department because it was recorded after the sales tax lien.

Text: SDCL 43-28-17, which is entitled in part Priority of first recorded conveyance of real property, provides: Every conveyance of real property ... is void as against any subsequent purchaser or encumbrancer including an assignee of a mortgage, lease, or other conditional estate of the same property, or any part thereof in good faith and for a valuable consideration whose conveyance is first duly recorded. The term conveyance as used in this section, embraces every instrument in writing by which any estate or interest in real property is created, aliened, mortgaged, or encumbered or by which the title to any real property may be affected, except wills and powers of attorney. (Emphasis added.) Department argues that it had no notice of the transfer prior to recording its lien because the deed from Karras to Dion was not recorded in Lincoln County until five days after Department recorded its sales tax lien. Therefore, Department argues that the transfer is void because Department was an encumbrancer that in good faith and for valuable consideration first duly recorded its lien. The trial court, citing Murphy v. Plankinton Bank, 13 S.D. 501, 83 N.W. 575 (1900), concluded however, that Department was not a purchaser or encumbrancer in good faith without notice because a filer of a statutory lien for taxes is nothing more than an attachment creditor. We find Murphy unpersuasive under these facts and circumstances. In 1959, a South Dakota Attorney General's Opinion interpreted South Dakota's recording statute, SDCL 43-28-17. The question was whether county aid liens are an encumbrance within the meaning of the statute so that the liens have priority over the rights of a holder of an unrecorded deed. The Attorney General, citing Willsie v. Rapid Valley Horse-Ranch Co., 7 S.D. 114, 63 N.W. 546 (1895), defined an encumbrance as a lien and concluded that county aid liens filed before a deed was recorded are valid liens against the property. Op. Att'y Gen. 83 (1959-60). For these, and the following reasons, we agree with the rationale of this Attorney General's Opinion. SDCL 43-25-19 defines `encumbrances' [to] include[ ] taxes, assessments, and all liens upon real property. Present consideration is defined elsewhere in the code to include the payment of taxes and any other obligation due the state of South Dakota[.] SDCL 22-41-2.1. [6] Therefore, State was an encumbrancer under SDCL 43-28-17. We overrule Murphy v. Plankinton Bank to the extent that it is inconsistent with our holding herein. The trial court erred in concluding that Department was not an encumbrancer in good faith, for valuable consideration, and without notice and the deed from Karras to Dion is void under SDCL 43-28-17 as against Department because it was recorded after the sales tax lien was recorded. We reverse and remand.