IN COURT OF APPEALS
In the Matter of the Petition of Joshua S. Collier,
in Relation to Property Registered in Certificate
of Title No. 1596547 for an Order Directing Entry
of a New Certificate and Declaratory Relief.
Filed April 4, 2006
Ramsey County District Court
File No. C1-03-11538
John G. Westrick, Kirk M. Anderson, Westrick & McDowall-Nix, P.L.L.P., 450 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (for appellant Joshua Collier)
Timothy J. Grande, Katheryn A. Gettman, Joanne H. Turner, Mackall, Crounse & Moore, PLC, 1400 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402 (for respondent M & I Bank)
Arthur D. Walsh, A.D. Walsh & Associates, 6053 Hudson Road, Suite 190, Woodbury, MN 55125 (for respondent Dennis Wager)
Considered and decided by Lansing, Presiding Judge; Shumaker, Judge; and Halbrooks, Judge.
A purchaser of
Torrens property is a good-faith purchaser under Minn. Stat. § 508.25
(2004) even if he has actual notice of an unregistered mortgage in the property
because the unregistered mortgage does not constitute an encumbrance under
challenges the district court’s grant of respondent’s motion for summary
judgment based on its finding that appellant’s interest is junior to
respondent’s interest. Appellant argues
that, although he had actual knowledge of respondent’s unregistered interest in
Conley purchased the
Approximately three months later, the bank held a foreclosure sale and purchased the property. Again, the bank recorded the certificate of sale, but did not register it with the county registrar. Approximately one month later, appellant Joshua Collier learned of the foreclosure sale and contacted the bank with an offer to purchase its interest. The bank declined. Nonetheless, Collier researched the property and learned that the bank had never registered its interest. Collier then contacted Conley and offered to purchase his interest for $5,000. Conley agreed and conveyed the property to Collier by warranty deed. The same day, Collier executed a mortgage in favor of Wager for $145,000 and registered both the warranty deed and the mortgage with the county registrar.
A few months later, Collier initiated the instant action by filing a petition in the district court, seeking a declaratory judgment of the priority of the various interests in the property. Both Collier and the bank moved for summary judgment, and the district court granted the bank’s motion as to Collier and denied Collier’s motion. (The district court denied the bank’s motion as to Wager, but the bank and Wager subsequently entered into a stipulation, whereby the bank dismissed Wager from the proceeding with prejudice.) The district court concluded that Collier was not a good-faith purchaser under the statute because he had actual notice of the bank’s interest at the time of his purchase, so the fact that he registered his interest before the bank was not determinative. This appeal follows.
purchaser for value of
“On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of
material fact and (2) whether the [district] court erred in [its] application
of the law.” State by Cooper v. French, 460 N.W.2d 2, 4 (
Here, there are no
genuine issues of material fact. Both
parties agree that (1) the property at issue is
The Torrens Act comprises several statutory sections in Minnesota Statutes chapter 508.
No voluntary instrument of conveyance purporting to convey or affect registered land . . . shall take effect as a conveyance, or bind or affect the land, but shall operate only as a contract between the parties. . . . The act of registration shall be the operative act to convey or affect the land.
Minn. Stat. § 508.47, subd. 1
(2004). In addition, “[e]very
conveyance, . . . which would affect the title to unregistered land under
existing laws, if recorded, . . . shall, . . . affect the title to registered
land if filed and registered with the registrar . . ., and shall be notice to
all persons from the time of such registering.”
begin our analysis by examining the principles underlying
The purpose of the Torrens Law is to establish an indefeasible title free from any and all rights or claims not registered with the registrar of titles, . . . to the end that anyone may deal with such property with the assurance that the only rights or claims of which he need take notice are those so registered. The law was framed to accomplish that purpose; and it establishes rules in respect to registered land which differ widely from those which apply in the case of unregistered land.
re Juran, 178
In Fingerhut Corp. v. Suburban Nat’l Bank,
we held that the bank’s interest was not binding on the land because it did not
register the interest. 460 N.W.2d 63, 66
It is well
Finnegan seems to stand for the
principle that registration is not the ultimate act with regards to
The court in Juran stated that the
In re Ocwen Fin. Servs., Inc., Jacox,
a homeowner of
was no dispute that Ocwen had actual notice of the second mortgage. The issue was the priority of the second mortgage. On cross-motions for summary judgment, the
district court ruled that Jacox’s mortgage had priority over Ocwen’s. On appeal, we held that “Ocwen had no
knowledge of an encumbrance inconsistent with its interest in the property
because the Jacox mortgage was clearly a ‘second mortgage’. . . . The fact that Ocwen had notice of the Jacox second mortgage does not affect Ocwen’s
status as a bona fide purchaser.”
these precedents and the rationale behind the
mortgage does not become an encumbrance, for purposes of the
 There are two respondents in this action, M & I Bank, which holds the contested interest, and Dennis Wager, a business associate of appellant. Respondent M & I Bank dismissed respondent Wager with prejudice from this action, so this opinion refers to M & I Bank as the sole respondent.