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39. Is the bank's contention correct?
The finance company sued to enforce its judgment lien against the businessman's real estate. The bank intervened in the action, contending that the judgment lien was a second lien on the real estate and that its mortgage was a first lien.
Two weeks after that filing, the bank recorded its mortgage on the businessman's real estate. The recording act of the jurisdiction provides: «Unless the same be recorded according to law, no conveyance or mortgage of real property shall be good against subsequent purchasers for value and without notice or against judgment creditors without notice.»
One week later, a finance company obtained a judgment against the businessman for $50,000 and filed the judgment in the county where the real estate was located. At the time the judgment was filed, the finance company had no actual notice of the bank's mortgage.
A businessman executed a promissory note for $200,000 to a bank, secured by a mortgage on commercial real estate owned by the businessman. The promissory note stated that the businessman was not personally liable for the mortgage debt.
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B is incorrect. The fact that the businessman was not personally liable for the mortgage debt is irrelevant and does not make the mortgage void. The judgment was recorded first in a jurisdiction that expressly protects judgment creditors without notice. The finance company had no actual notice of the mortgage and had no constructive notice because the mortgage was not recorded until two weeks after the judgment was filed.
C is incorrect. The judgment was recorded first in a jurisdiction that expressly protects judgment creditors without notice. The finance company had no actual notice of the mortgage and had no constructive notice because the mortgage was not recorded until two weeks after the judgment was filed. Priority is determined under these facts by the order of filing.
D is incorrect. The recording of a mortgage does not relate back to the date of execution of the mortgage note. The mortgage gives constructive notice as of the date of its recording. Therefore, at the time the judgment was recorded, the finance company had neither actual nor constructive notice of the mortgage and is protected under the jurisdiction's recording act.