Court Opinion

ID: 9570134
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:20:24.210132+00
Date Added: 2024-06-11T12:05:00.104818
License: Public Domain

MINGE, Judge,
dissenting.
I respectfully dissent.
The issue in this ease is the application of the following clause to a mortgage:
Buyers * * * cannot sell, transfer or assign this property without written permission or consent of the seller.
*295Appellant bank asserts this does not apply to the mortgage; respondent sellers assert it does.
Minnesota law defines the word “transfer” as follows:
“Transfer” means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.
Minn.Stat. § 513.41(12) (2002) (emphasis added). Although this definition is provided in the context of fraudulent transfers, it is consistent with the dictionary definition, makes sense and, in the absence of any other statutory definition, should be used in this context. The Black’s Law Dictionary defines the word “transfer” as follows:
Any mode of disposing of or parting with an asset or an interest in an asset, including the payment of money, release, lease, or creation of a lien or other encumbrance. * * * The term embraces every method — direct or indirect, absolute or conditional, voluntary or involuntary — of disposing of or parting with property or with an interest in property, including retention of title as a security interest and foreclosure of the debtor’s equity of redemption.
Black’s Law Dictionary, 1503 (7th ed.1999) (emphasis added.)
This definition squares with logic. The ownership of real estate includes a bundle of rights. An instrument need not give all of these rights or even possession to be a “transfer.” Given the powerful and extensive property interest that is inherent in a mortgage, it is certainly a transfer of an interest in property. To be sure, it has a conditional character. However, upon default and foreclosure, the mortgagee can terminate the mortgagor’s right to possession. The very existence of the mortgage prevents conveyance of clear title.
It is noteworthy that a mortgage is functionally almost indistinguishable from the conditional assignment that was also executed by the purchasers. Assignments are precluded by the restriction in the contract for deed and the conditional assignment in this case has been set aside by the majority. This is indeed a fine line between an assignment for security and a mortgage.
This case illustrates a further dimension of the problem. The appellant is not merely holding a tentative or speculative interest in the land. The mortgage is in default and the appellant mortgagee has initiated foreclosure. This is a step towards obtaining all the mortgagor’s right, title and interest, which in this case includes the right to possession. We should not ignore the fact that a sheriffs foreclosure sale is the logical outcome of this process. The sheriffs certificate of sale would certainly be a “transfer” within the meaning of the restriction in the contract for deed in this case. That being the case, the mortgage, which is the basis for the foreclosure, is part and parcel of a transfer. We only postpone the inevitable.
I submit the majority’s reliance on Minn.Stat. § 559.17 (2002) is misplaced. First the language in the document in question does not use the word “convey” or “conveyance.” It uses the word “transfer.” Second, although § 559.17 contains the language quoted by the majority, it only establishes that for mortgage purposes Minnesota is a lien state. The statute reads:
a mortgage of real property is not to be deemed a conveyance, so as to enable the owner of the mortgage to recover possession * * * without a foreclosure
*296Id. (emphasis added). It does not say that a mortgage is not otherwise a conveyance or that no interest is transferred or conveyed. Id. This statute would be relevant if the dispute were over the bank’s effort to obtain possession without foreclosure. However, no one is contending that there is any dispute over the right of possession in this appeal. It is ironic that a statute, that was designed to protect debtor’s rights, in this case saves the lien on the creditor’s mortgage.
This narrow view of § 559.17 is confirmed by the fact that neither the parties nor the district court cited or discussed the section. Rarely does this court consider a legal argument much less decide a case on a legal argument the parties did not raise either with the district court or on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988).
I would affirm the district court’s decision. However, given the difference between the district court and the outcome on this appeal, one is forced to consider the question of ambiguity. Before reversing, I would remand this case for a trial on the question of how the parties’ intentions affect the meaning of the contract for deed restriction that the purchasers (son and daughter-in-law) not “sell, transfer or assign” without the written consent of the sellers (parents). The record indicates that the price being paid for the land under the contract for deed was substantially less than its market value. The parents clearly wished to keep the family farm in the family. Mortgaging the property to a lender for a pre-existing debt appears to be as inconsistent with this intent as selling the property to a neighbor.