First Bank Financial Centre v Miller et. al. Part 1 (WI)
Summary: A suspect date on a mortgage is not a material issue once the mortgage has been ratified.
First Bank Financial Centre v Miller et. al., 2010 AP 2263 (Wis. Ct. App., 2011).
Facts: In 1993 Dagmar Griffin (Griffin) and her husband made a loan to Thomas Miller (Miller) and were granted a mortgage on Miller’s West Allis restaurant as a security. To secure another loan on the West Allis property, Miller was required to get a clear title on the property. Miller convinced Griffin to exchange the mortgage on the West Allis property for one of equal value on the Greenfield property which would be second to Park Bank’s loan.
On July 31, 1998, Miller executed a mortgage in favor of the Griffins on the Greenfield property, but it was not recorded until January 11, 2000. On August 31, 1998, Miller recorded a mortgage for First Bank on the Greenfield property that claimed to be executed and authenticated on June 20, 1997, and second only to Park Bank’s mortgage. Beginning September 30, 1998, Miller wrote twenty-one renewal notes affirming his indebtedness to First Bank in regards to various properties, including the Greenfield property.
In June of 2008, Miller defaulted on his loan payments, and First Bank filed an action to foreclose on Miller’s properties. Griffin bought claims against First Bank for slander of title, false authentication, and intentional interference with contract. Griffin was also added as a third party defendant, disputing First Bank’s foreclosure action. First Bank sought summary judgment. Griffin responded by stating that First Bank’s mortgage cited no consideration and was fraudulent on its face because it purported executed on June 20, 1997 and second to Park Bank’s mortgage to be, whereas Park Bank’s mortgage did not exist until 1998. The circuit court held that despite the date being incorrect and no consideration being cited, because Miller ratified that document as a mortgage to the bank through his renewal notes and received the benefit of having the foreclosure delayed. Because of this, the date was no longer a material fact, and therefore the court upheld it as a valid foreclosure.
Griffin moved for reconsideration on the grounds that ratification does not apply to fraudulent documents. The court upheld its judgment. While seeking further discovery, Lynch testified that because it was not a new mortgage and merely added collateral, the computer used the earlier date from Miller’s existing loan.
With this information Griffin made a second motion for reconsideration on the grounds that Lynch’s deposition testimony raised a reasonable inference that First Bank had actual knowledge of Griffin’s mortgage when it executed and recorded its own mortgage. The circuit court held that this did not constitute a material fact because, even if the bank had knowledge of the Griffin mortgage, that Wisconsin Statutes Section 706.11(1)(d), stating that a duly recorded mortgage executed to a state or national bank has priority over all liens, abrogates the rule of Section 706.08(1)(a), providing that unrecorded conveyances are void as to subsequent good faith purchasers.
Holding: Affirmed. The court of appeals found that First Bank recorded its mortgage first, and that in light of the ratifications, the suspect date was not material to the issue. It further held that claim that First Bank and Miller colluded to defraud Griffin’s mortgage was merely speculative, and did not survive summary judgment. Because First Bank’s mortgage had priority and there was no evidence of fraud or deceit, Griffin’s third-party claims were foreclosed on the doctrine of issue preclusion.
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