Poulos v. Lyman Bros.

MR. JUSTICE' HOLLOWAY

delivered the opinion of the court.

The complaint in this action discloses that on January 29, 1918, plaintiff purchased lot 4, block 97,. original town site of Miles City, Custer county, from G. J. Lucas and wife and received a warranty deed which was duly recorded; that Lucas acquired title to the lot from Anna Ellerman by warranty deed dated November, 1917, which deed was duly recorded; that Lyman Bros. Company, defendant herein, had theretofore recovered a money judgment against Mrs. C. J. Ellerman in the district court of Yellowstone county and caused execution to be issued and placed in the hands of the sheriff of Custer county, who levied upon and sold lot 4 on February 3, 1919, and executed and delivered his certificate of sale to Lyman Bros. Company, the purchaser, and filed for record with the county clerk and recorder of Custer county a duplicate thereof. It is then alleged that the sale and all proceedings thereunder are null and void; that the certificate of sale does not convey any right or title in the property to defendant, but does cast a cloud upon plaintiff’s title. The complaint concludes with a prayer that the certificate be canceled, and that plaintiff be decreed to be the owner of lot 4, free from any lien on account of the judgment against Mrs. C. J. Ellerman or the levy or sale by the sheriff. To this complaint a general demurrer was interposed and overruled, • and defendant then answered. It is admitted that plaintiff acquired title to the property in the manner set forth in the complaint; that defendant recovered the judgment against Mrs. C. J. Ellerman and caused execution to be issued and lot 4 to be sold. ■ It is then alleged that the judgment was duly docketed in the office of the clerk of the district court of. Yellowstone county, and that on February 3, 1916, a certified copy of the original docket was filed with the clerk of the district court of Custer county; that Mrs. C. J. Ellerman and Anna Ellerman are the same person; that there was not any other family by the name of Ellerman living in Miles City; that Anna Ellerman was known by the name Mrs. C. J. Ellerman; and that reasonable inquiry by plaintiff or his predecessor would have disclosed that Anna Ellerman is Mrs. C. J. Ellerman, the judgment debtor.

Upon plaintiff’s motion the court granted judgment on these pleadings, and defendant appealed.

This action is prosecuted under section 8733, Revised Codes of 1921, which reads as follows: “A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled.”

An identical statute has been in force in California for many years and was construed by the California court before it was adopted by this state. An action brought under this statute is in common parlance designated an action to remove a cloud from the title to real property. It is directed to a particular instrument which is dangerous to plaintiff’s rights, and the object of the action is to have the instrument canceled and the cloud cast by it removed.

In order to constitute a cloud, the instrument must be one which, if valid, would affect or impair the title of the owner of a particular estate and which apparently and on its face has that effect, but which can be shown by extrinsic evidence to be invalid or inapplicable to the estate in question. (7 Cyc. 255.) If the instrument is void on its face or on the face of another instrument which is necessary to the use of the former in evidence, it is incapable of causing injury and does not east a cloud. (Sec. 8734, Rev. Codes 1921.)

This appeal presents the question: Does the complaint state facts sufficient to constitute a cause of action? In the early case of Hibernia Sav. & Loan Soc. v. Ordway, 38 Cal. 679, it was said: “In an action to remove a cloud there can be no question but that the facts which show the apparent validity of the instrument which is said to constitute the cloud, and also the facts showing its invalidity, ought to be stated.” That statement was adopted as the correct rule of pleading by the same court in Castro v. Barry, 79 Cal. 443, 21 Pac. 946, and as containing the indispensable ingredients of a sufficient complaint, by this court in Hicks v. Rupp, 49 Mont. 40, 140 Pac. 97, and in Heavilin v. O’Connor, 61 Mont. 507, 202 Pac. 1115, and was approved by the supreme court of the United States in Hopkins v. Walker, 244 U. S. 486, 61 L. Ed. 1270, 37 Sup. Ct. Rep. 711. It must now be.deemed settled that, in order to state a cause of action for the removal of a cloud, the complaint must state facts sufficient to disclose the apparent validity of the instrument attacked and its actual invalidity.

The motion for judgment on the pleadings admits the truth of the allegations contained in the answer (Daily v. Marshall, 47 Mont. 377, 133 Pac. 681) that Mrs. C. J. Ellerman and Anna Ellerman are the same person, and that a certified transcript of the original judgment docket from Yellowstone county was filed with the clerk of the district court of Custer county. The effect of filing this transcript was to impress a lien upon all real property in Custer county owned by the judgment debtor, not exempt from execution, or acquired by her thereafter and prior to the expiration of the lien or the satisfaction of the judgment. (Sec. 9413, Rev. Codes 1921.)

The judgment lien is imposed by statute, but it is general in its character, that is to say, it attaches to all real estate owned by the judgment debtor, not exempt, but it does not attach to any specific piece of property (Vaughn v. Schmalsle, 10 Mont. 186, 10 L. R. A. 411, 25 Pac. 102; Rockefeller v. Dellinger, 22 Mont. 418, 74 Am. St. Rep. 613, 56 Pac. 822), and therefore it does not afford any data from which a searcher of the records may determine that a particular piece of property standing of record in the name of a person is impressed with the lien of a judgment recovered against the same person, but by a different name. While the law imposes the lien, it is the record—the original judgment docket or the duly filed certified copy thereof, as the case may be—which imparts constructive notice of the existence of the lien to prospective purchasers. (McMillan v. Davenport, 44 Mont. 23, Ann. Cas. 1912D, 894, 118 Pac. 756.)

Clearly enough the record of a money judgment against Mrs. C. J. Ellerman would not impart notice to an intending purchaser from Anna Ellerman, the record title holder, that the property is impressed with a lien of the jud.gment (Davis v. Steeps, 87 Wis. 472, 41 Am. St. Rep. 51, 23 L. R. A. 818, 58 N. W. 769; Crouse v. Murphy, 140 Pa. 335, 23 Am. St. Rep. 232, 12 L. R. A. 58, 21 Atl. 358; Bankers’ L. & I. Co. v. Blair, 99 Va. 606, 86 Am. St. Rep. 914, 39 S. E. 231; Grundies v. Reid, 107 Ill. 304; Phillips v. McKaig, 36 Neb. 853, 55 N. W. 259; Haring v. Murphy, 60 Misc. Rep. 374, 113 N. Y. Supp. 452; Johnson v. Wilson, 137 Ala. 468, 97 Am. St. Rep. 52, 34 South. 392), but such purchaser would be bound by actual knowledge that Mrs. C. J. Ellerman and Anna Ellerman are the same person.

The complaint herein fails to disclose in whose name lot 4 stood of record at the time Lucas purchased the property. If it stood in the name of Mrs. C. J. Ellerman, then the record imparted constructive notice to all subsequent purchasers of the existence of the lien. If .it stood in the name of Anna Ellerman, and Anna Ellerman is but another name for the judgment debtor, then the question arises: Did the purchaser have actual knowledge of that fact or of facts sufficient to put a reasonable person on inquiry?

In order to disclose the apparent validity of the certificate, it would seem to be necessary for plaintiff to allege that Anna Ellerman was the owner of lot 4 at the time the certified transcript of the original judgment docket was filed with the clerk of the district court of Custer county or thereafter until she sold to Lucas, and that she was in fact the judgment debtor, but by a different name. To disclose the invadility "of the certificate so far as plaintiff’s title is concerned, it was necessary for plaintiff to allege that at the time he purchased, he did not have actual knowledge that Mrs. C. J. Ellerman and Anna Ellerman are the same person or knowledge of such facts as would put a reasonably prudent person on inquiry.

The complaint fails to state facts sufficient to disclose either the apparent validity of the certificate or its actual invalidity or rather inapplicability to the estate claimed by plaintiff, and is fatally defective.

There is not any merit, however, in the contention advanced by defendant that by reasonable inquiry dehors the record plaintiff might have ascertained that Mrs. C. J. Ellerman and Anna Ellerman are the same person. As indicated by this court in McMillan v. Davenport, above, the purpose of requiring a proper record of the judgment is to impart notice that all real estate of the judgment debtor, not exempt, is encumbered by a lien, and it is the general rule that the searcher of the record may rely upon it as it is made, in the absence of actual knowledge or notice to the contrary or knowledge of facts sufficient to put a reasonable person on inquiry. (Prouty v. Marshall, 225 Pa. 570, 25 L. R. A. (n. s.) 1211, 74 Atl. 550; 23 R. C. L. 197.) If this were not so, no one would ever be safe in purchasing real property or in loaning money upon it as security.

In Montana Min. Co. v. St. Louis M. & M. Co., 23 Mont. 311, 58 Pac. 870, this court announced the rule which governs in granting judgment on the pleadings as follows: “Judgment on the pleadings is proper where the complaint is sufficient, and none of its material allegations are denied, and no affirm-, ative matter alleged to defeat the action. ’ ’

Granting that the answer in this instance does not controvert any material allegation of the complaint and does not contain any new matter which tends to defeat plaintiff’s action, still the court erred in granting the motion in tlie absence of a sufficient complaint.

The judgment is reversed and the cause is remanded for further proceedings.

Reversed and remanded.

Associate Justices Cooper and Galen and Honorable Roy E. Ayers, District Judge, sitting in place of Mr. Chiep Justice Brantly, disqualified, concur. Mr. Justice Farr, being disqualified, takes no part in the foregoing decision.