Court Opinion

ID: 9523645
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:45:00.306465+00
Date Added: 2024-06-11T13:07:05.065105
License: Public Domain

WAHL, Justice,
dissenting.
I must respectfully dissent. This case involves more than the simple application of the general rule that the first creditor to perfect a lien in a debtor’s property shall prevail in a dispute concerning the satisfac*729tion of a debt through foreclosing a lien on the debtor’s property.
In the context of the dissolution proceeding which gave rise to the security transactions and liens here at issue, the trial court determined that the plainitffs — the father of James Redding and the Windom State Bank — were not in the position of a purchaser of good faith as was the bank in State Bank of Pennock v. Schwenk, 395 N.W.2d 371 (Minn.App.1986). Rather, the trial court found the bank and the father had been involved in the dissolution from the beginning, and were charged with the same knowledge and responsibility of James Redding himself. They were charged with the knowledge that under Minn.Stat. § 518.58, until the dissolution became final in August 1986, the court could have awarded up to one-half of the non-marital property to Louise Oldewurtel. Because the bank and the father had taken the property in question as security, with that knowledge, the trial court held their lien to be subsequent to the judicial lien implementing the property division. The trial court also held that James Redding, by accepting the quit claim deed to the farm from Louise Oldewurtel, was es-topped to deny her lien priority since he could not have gotten a first mortgage on the farm without the quit claim deed.
It was clear to the trial court, and the court of appeals agreed, that it is not the intent of the law that “a party to a dissolution, during the pendency of the dissolution, by perfecting appeals and bankruptcy filings, can maneuver his property through his family and corporations in which he is an officer and director and thereby give preference to them over his wife when the case is finally closed.”
The basic rule of lien priority law cannot be properly applied in the context of these facts. Rather, the equitable exception applied by the trial court and court of appeals is required. Louise Oldewurtel could be deprived of her rightful share of marital property if state law were to permit James Redding to assure that his property will go to his father and the family-owned bank rather than to the spouse whose interest in that property under the statute was turned into a cash award secured by the property.
I would affirm the decision of the court of appeals affirming the decision of the trial court.