UNITED
STATES BANKRUPTCY COURT LEXINGTON DIVISION |
|
IN RE: | |
NELSON DEAN JEFFERSON
ALFREDA
GAI |
CASE NO. 05-50450 |
DEBTORS | |
J. JAMES ROGAN, TRUSTEE | PLAINTIFF |
VS. | ADVERSARY NO. 05-5104 |
J & J
MORTGAGE COMPANY and FIFTH THIRD BANK |
DEFENDANTS |
MEMORANDUM
OPINION
The issue of whether a mortgage is rendered
unrecordable and subject to the subsequent interest of the Chapter 7 trustee,
due to a notary’s failure to include the expiration date of his commission in
the mortgage attestation clause, was submitted to the court on the parties’
cross motions for summary judgment (Dock. #s17 and 19). For the reasons set forth in this Memorandum
Opinion, the court finds that the mortgage is recordable under Kentucky law and
therefore prior to the interest of the Chapter 7 Trustee in this case. The facts, which have been jointly
stipulated to by the parties (Dock. #16), are not in dispute and the matter is
ripe for summary judgment. The court
has jurisdiction of this matter pursuant to 28 U.S.C. 1334 (b); it is a core
proceeding pursuant to 28 U.S.C. 157(b)(2)(k).
Debtors Nelson and Alfreda Jefferson
purchased a Skyline mobile home from Cooper Homes, Inc. on December 6,
2003. At the time of the purchase, the
Debtors owned real property located at 4595 Levee Road, Mt. Sterling,
Kentucky. The Debtors borrowed the sum
of $71,900 from Defendant J & J Mortgage Company in order to finance the
purchase of the mobile home. The
closing took place at the Flemingsburg, Kentucky offices of J & J Mortgage.
The following documents were executed by the
Debtors at the closing: Note in the
original principal amount of $71,900; Settlement Statement; Mortgage;
Application for Certificate of Title; and Declaration of Manufactured Home to
Real Property. Mr. Roger Kuhn, a notary
public for the state of Ohio and for the state at large for the Commonwealth of
Kentucky, conducted the loan closing and notarized the mortgage, mistakenly
affixing his Ohio notary seal thereto rather than a seal evidencing his
Kentucky commission. It is undisputed
that Mr. Kuhn, though holding a valid Kentucky notary commission, did not affix
any proof of his Kentucky notary nor did he affix his Kentucky commission
expiration date to the Mortgage.
On February 5, 2004, the Commonwealth of
Kentucky, Department of Transportation, issued a certificate of title with
respect to the mobile home. Thereafter,
on February 18, 2004, Debtors executed an Affidavit of Conversion to Real
Estate, to which the mobile home’s certificate of title was attached, and the
affidavit was recorded, along with the subject mortgage, in the Montgomery
County Clerk’s office on March 8, 2004.
The note and mortgage were ultimately assigned to Defendant Fifth Third
Bank via a Corporate Assignment of Mortgage dated December 6, 2003, recorded in
Miscellaneous Book 90, Page 768 of the Montgomery County Clerk’s Office. The Debtors filed their Chapter 7 petition
in bankruptcy on February 17, 2005 and the Plaintiff was appointed trustee of
the bankruptcy estate in their case.
Initially, the Plaintiff Trustee challenged
the validity of the lien of Defendants J & J Mortgage and Fifth Third Bank
on the Debtors’ mobile home, but apparently conceded that the Debtors properly
converted the mobile home to real property.
Accordingly, the only remaining issue to be determined is whether the mortgage
was properly acknowledged, given the lack of the notary’s Kentucky expiration
date. The identical issue has already
been decided by Judge Howard in the case of Kendrick v. Meyers, et. al.
(In re Meyers), Case No. 05-21663, Adversary Proceeding No. 05-2061,
Order and Judgment entered February 22, 2006, in which the court ruled that an
assignment of mortgage was properly acknowledged and recordable even though the
notary certificate failed to contain a recitation of the expiration date of the
notary’s commission.
Consequently, in the present proceeding, the
court finds that Mr. Kuhn’s failure to include his commission expiration date
in the notary certificate does not invalidate his notarial act. The mortgage executed by the Debtors and
acknowledged by Mr. Kuhn is a recordable document sufficient to provide
constructive notice to the Plaintiff Trustee and to defeat the Trustee’s status
as a bona fide purchaser without notice.
The court will enter a separate order sustaining the Defendant’s Motion
for Summary Judgment and overruling the Plaintiff’s Motion for Summary
Judgment.
Copies to:
John M. Simms, Esq.
John R. Brice, Esq.