Summary
concluding that, under Ohio law, a mortgage does not encumber a spouse's one-half interest in real property if the mortgage, although signed and acknowledged by the spouse, does not otherwise reference the spouse and the spouse was not a party to the promissory note
Summary of this case from Stephens v. Regions Bank (In re Stephens)Opinion
Case No. 05-24918, Adversary Case No. 06-1322.
November 15, 2007
MEMORANDUM OF DECISION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
The chapter 7 trustee ("Plaintiff") commenced this action, seeking a determination of the extent of a mortgage held by ABN AMRO Mortgage Group, Inc. ("Defendant"). Presently before the Court are cross-motions for summary judgment. For the reasons stated below, the Plaintiff's motion (Doc. 13) will be GRANTED and the Defendant's motion (Doc. 14) will be DENIED.
THE ISSUE
The issue before the Court is whether, under Ohio law, a mortgage encumbers a spouse's one-half interest in real property when the spouse signs the mortgage and the spouse's signature is acknowledged by a notary, but the body of the mortgage does not reference the spouse.
THE DEED AND THE DEBT
The Debtors, Arthur and Marcia Wallace, own their residence as joint tenants with rights of survivorship. On August 28, 2003, Mr. Wallace executed a promissory note in favor of the Defendant. Mrs. Wallace is not a party to the note.
THE MORTGAGE
Also on August 28, 2003, Mr. Wallace executed a mortgage in favor of the Defendant, encumbering his one-half interest in the residence. The mortgage does not reference Mrs. Wallace. It provides as follows: "Borrower does hereby mortgage, grant and convey to Lender the following described property[.]" "Borrower" is defined as "Arthur Wallace, a married man."
The mortgage contains only one pre-printed signature line, signed by Mr. Wallace. Under Mr. Wallace's signature is a hand-written signature line signed by Mrs. Wallace.
The acknowledgment clause contains the pre-printed name of Mr. Wallace. Below Mr. Wallace's pre-printed name is the following hand-written addition: " Marcia Wallace." Moreover, every page of the mortgage contains the initials "MW" and "AW."
THE LAW
The parties have not cited an Ohio decision that addresses the effect of a mortgage upon the one-half interest of a signatory who is not referenced therein. Given the absence of controlling law, this Court must try to predict how the Supreme Court of Ohio would rule on this issue.
The general rule has been summarized as follows:
According to the rule adopted in many jurisdictions, it is essential to the operative effect of a conveyance of real estate that the grantor's name appear in the body of the instrument in connection with apt words of conveyance, and that the mere execution of the instrument by signing and acknowledging is not sufficient. The same question naturally arises with respect to mortgages, and so far, at least, as a mortgage is considered as a conveyance of the legal title, the rule applicable to deeds has been held to govern in the case of mortgages.
54A Am. Jur. 2d Mortgages § 24 (2007). Therefore, if a state's highest court has not already ruled on the issue in the context of a mortgage, it is likely to consider if any analogous precedent exists in the context of a deed. See Ethridge v. Tierone Bank, 226 S.W.3d 127 (Mo. 2007) (holding that a deed of trust did not encumber a wife's one-half interest in real property where: (1) the wife signed the deed of trust; (2) the wife's signature was notarized; (3) the wife initialed each page of the deed of trust; and (4) controlling precedent provided that a deed does not convey the interest of a signatory if the deed does not reference the signatory); accord Goodrum's Guardian v. Kelsey, 50 S.W.2d 932 (Ky. 1932); Berrigan v. Fleming, 70 Tenn. 271 (1879).
As with the mortgage issue, the Supreme Court of Ohio does not appear to have spoken on the issue of whether a deed conveys the interest of a signatory who is not referenced in the deed. Nevertheless, the vast weight of authority on this issue holds that a deed does not convey the interest of a signatory that is not referenced therein. See 2 Patton and Palomer on Land Titles § 335 (2007) ("The traditional rule is that a deed is void as to any party signing it who is not named therein as grantor. If the deed is signed by two persons, only one of whom is named in the body thereof, it is the deed of that one only.") (collecting cases); 4 Ohio Real Property Law and Practice § 4.05 (2006) ("When a person executes a deed but is not named in the body, he is generally held not to be a party unless he is the sole grantor.") (citing authority other than Ohio law); 23 Am. Jur. 2d Deeds § 25 (2007) ("When a conveyance is subscribed by more than one person and one of the signers' names is not shown in the granting clause or body of the instrument, such conveying instrument is void as to that person."); see e.g., Manning v. Wingo, 577 So.2d 865 (Ala. 1991).
THE ANALYSIS
Based upon the foregoing, this Court believes that the Supreme Court of Ohio would follow the lead of the highest courts from Missouri, Kentucky and Tennessee, holding that a mortgage does not encumber the one-half interest of a signatory who is not referenced therein. See Ethridge v. Tierone Bank, 226 S.W.3d 127 (Mo. 2007); Goodrum's Guardian v. Kelsey, 50 S.W.2d 932 (Ky. 1932); Berrigan v. Fleming, 70 Tenn. 271 (1879).
The Defendant relies upon three decisions that are distinguishable. In Dodd v. Bartholomew, 44 Ohio St. 171 (1886) a mortgage referenced both signatories, although by incorrect first name or middle initial at times. In Hitesman v. Donnel, 40 Ohio St. 287 (1883) a mortgage omitted the name of the grantee, a trustee for the benefit of a creditor, in the granting clause but elsewhere expressly identified the trustee by reciting the grantor's obligation to pay the trustee for the benefit of the creditor. In Menninger v. First Franklin Corp. (In re Fryman), 314 B.R. 137 (Bankr. S.D. Ohio 2004) (Aug, J.) a mortgage acknowledgment clause failed to list one of two grantors, though he was referenced elsewhere in the mortgage. These decisions are distinguishable because each of the mortgages contained additional references to the omitted persons. In the instant case, the mortgage contains no reference whatsoever to Mrs. Wallace.
Lastly, the Defendant contends that the mortgage encumbers Mrs. Wallace's interest because it fully complies with Ohio Rev. Code § 5301.01. Section 5301.01 sets forth the requisites for execution of a mortgage (e.g., signature and acknowledgment). It does not address the form or substance of a mortgage. The latter is addressed in Ohio Rev. Code § 5302.12, which provides in relevant part:
A mortgage in substance following the form set forth in this section, when duly executed in accordance with Chapter 5301 of the Revised Code, has the force and effect of a mortgage[.]
Thereafter, § 5302.12 includes a form mortgage. The first paragraph of the form mortgage provides:
__________, __________ (marital status), of__________ (current mailing address), for __________ Dollars paid, grant(s), with mortgage covenants, to __________, of __________ (current mailing address), the following real property. . . .
Although § 5302.12 is not dispositive of the pending issue, it certainly suggests the importance of identifying the grantor(s) of a mortgage. See Drown v. Argent Mort. Co., LLC (In re Bunn), Ch. 7 Case No. 05-68835, Adv. No. 06-2232, 2007 WL 2823666, at *3 (Bankr. S.D. Ohio Sept. 29, 2007) ("The form requires the name . . . of the mortgagor[.]").
THE CONCLUSION
The Court holds that a mortgage, under Ohio law, does not encumber a spouse's one-half interest in real property if the mortgage, although signed and acknowledged by the spouse, does not otherwise reference the spouse. Accordingly, the Plaintiff's motion (Doc. 13) will be GRANTED and the Defendant's motion (Doc. 14) will be DENIED. A judgment to this effect will be entered.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.