Opinion letter to Honorable Anthony D. Ribaudo

WILLIAM L . WEBSTER .A.TTOBNJ!:Y O!QiEJi.A..L - ATTORNEY GENERAL OF' MISSOURI JEFFERSON CITY 65102 February 24, 1986 P. 0. Box 899 ( 314) nu-3321 Opinion Letter No. 5-86 Honorable Anthony D. Ribaudo State Representative, 65th District 5440 Daggett St . Louis, Missouri 63110 Dear Representative Ribaudo: - - I I F I LED ·1. 5 I This letter is in of this office asking modified as to form: response to your reques£ for an opinion the following questions which we have 1. The requirement in § 443.060 RSMo for identification of the evidence of indebted- ness (e . g . , note) secured with a deed of trust has been deleted by House Bill No . 210 (1985) . Is a recorder of deeds allowed to identify such a note after January 1, 1986? 2. The statutes do not appear to require such a note to be presented to the recorder when the securing instrument is to be re- leased by notation on its margin . Can the recorder require execution and recording of a deed of release of such instrument? If the recorder may not impose such a require- ment, should the recorder make some notation of the particulars of a release based only on verbal instruction? 3. Is a partial deed of release necessary · to effectuate a partial release of a deed of trust? The premise upon which your first question rests deserves independent consideration. A pre- enactment analysi s of H. B. No. 210 (1985) by the House Research Staff included in its summary of the bill: Hon. Anthony D. Ribaudo .; and providing, as to security instru- ments recorded after the effective date of t he bill , that the promissory note or other obligation would not have to be presented for identification at the time of recording the security instrument or for cancellati on at the time of recording a release . The bill contains an effective date of January 1, 1986 .. . . The production of promissory notes and other obligations for identification and cancellation would be eliminated .• • • Truly agreed to and finally passed H.B. No. 210 (1985) 1 enacted an entirely new section, § 443.035 RSMo, which pro- vides: 1. "Security instrument" , as that term is used in this section, and in sec- tions 443.060, 443.070, 443.080, 443.090, 443.100, 443.110 and 443.390, shall mean any mortgage , deed of trust or other real proper- ty security instrument securing the payment or satisfaction of any debt or other obliga- tion. 2. Security instruments may be as- signed by instrument in writing, acknowl- edged by the assignor in the manner provided for the acknowledgment of other instruments affecting the title to real property, and may be recorded in the office of the record- er of deeds in the county or counties in which the security instrument being assigned was recorded. 3. Any person who acquires an inter- est in or a lien upon real property for value and without notice of an unrecorded assignment of a security instrument . recorded on or after January 1, 1986, and who has relied upon a release of such security instru- ment executed by the party last shown of record to be -the owner thereof, shall ac- quire said interest in or lien upon zuch real property free from the lien of said security instrument to the same extent as if the release upon which reliance was placed had been executed by the lawful holder of - 2- - Hon. Anthony D. Ribaudo the debt or other obligation secured by said security instrument. 4. From and after January 1, 1986, no recorder of deeds in this state shall accept for record any security instrument or assign- ment thereof in which the mortgagee, cestui que trust or assignee is named as bearer or the actual i dentity of the mortgagee, cestui que trust o r assignee is otherwise not ascer- tainable from the face of said security instrument or assignment . All security instruments and assignments thereof present- ed for record shall contain the mailing address of the mortgagee, cestui que trust or assignee; provided, however , that the omission thereof shall not affect the validi- ty of any security instrument or assignment, or the constructive notice imparted by the record thereof . § 443.035 H.B . No. 210 (1985) repealed §§ 443.040 and . 050 which provided for the presentation to the recorder of deeds, simultaneous with the recording of a real estate mortgage or deed of trust , of the evidence(s) of debt (e.g., promissory note) intended to be secured by the mortgage or deed of trust, for the recorder's identification and presumable basis for the recorder's subsequent authentication of the note at the time of release of the mortgage or deed of trust . H.B. No . 210 (1985) revised existing § 443.0602 by substituting the defined term "security instrument" (§ 443 . 035 . 1) for the numerous uses of the phrase "mortgage or deed of trust" in that statutory section and by modifying subsec- tions 1, 2 and 3 in the following manner : 1 . In the case of security instruments recorded prior to January 1, 1986 , if satisfaction be acknowledged by the payee or assignee, or in case a full deed of release is offered for record, and except as otherwise provided in subsection 3 hereof , the note or notes secured shall be produced and canceled in the presence of the recorder, who shall enter that fact on the margin of the record and attest the same with his official signature; and except as otherwise provided in subsection 3 hereof, no full deed of release of nuch a security -3- Hon. Anthony D. Ribaudo instrument shall unless the note or canceled, and that gin of the record provided . - be admitted to record notes are so produced and fact entered on the mar- and attested as above 2. If such note or notes are re- quired by s ubsection 1 of this section to be presented for cancellation and are not presented for the alleged reason that they have been lost or destroyed, the recorder, before allowing any entry of satisfaction to be made on the record or any deed of release to be placed on the file or record, shall require the mortgagee £E cestui que trust named in the security instrument desired to be released or his legal represen- tative, to make oath , in writing, stating that the note or other evidences of debt named in the security instrument sought to be released have been paid and delivered to the maker or his representative , and the recorder shall also require the maker of such note or notes, or his legal representa- tive, to make affidavit, in writing, that the note or notes in question have been paid , and cannot be produced because lost or destroyed, and that they are not then in the possession of any person having any lawful claim to the same; . .. 3 . In case any mortgagee , cestui que trust or assignee, or personal representa- tive[thereof] . .. shall desire to release the property described in any security instrument recorded prior to January 1, 1986, without receiving full satisfaction of the debt, note or obligation thereby secured, he shall be permitted to do so by the recorder on presentation to the recorder of the notes or other obligations evidencing the principal of the debt secured thereby, or accounting for them by affidavits or otherwise as now or hereafter provided by law in the case of f ull release and the recorder shall note the fact of such full release on the margin of the record of such security instrument or, if such release is made by deed of release, shall note the -4- Hon. Anthony D. Ribaudo fact of the filing for record of such re- lease, and of the presentation of such notes or other obligations , or accounting there- for , on such notes or obligations . . . [and) on the margin of the record of such security instrument, but shall not can- cel such notes or other obligations; . • . § 443.060 (added language underscored) H.B. No . 210 (1985) similarly revised §§ 443.070, - .080, - .090, and -.100, to wit: Every person who shall execute a deed of release of a security instrument record- ed prior to Januc.ry 1, 1986, shall at the time of making and delivering such release deed , make and deliver the affidavit re- quired by section 443 . 060 unless such deed of release states that the indebtedness remains unpaid in whole or in part; . • . § 443.070 (added language underscored) The trustee . . • in any security instrument . . . by a . public utility company . . . upon its property . . . may enter satisfaction of said security instru- ment upon the records where the same has been recorded . Where such security instru- ment was recorded prior to January 1, 1986 , without producing the . . . notes . . . secured by said . . . securi tv instrument, satisfaction shall not be entered . . . unless the trustee . . . and the president . . . of the . . . public utility company . . . shall make and file with the recorder affidavits stating that all of the • . . notes ..• secured by said security instru- ment have been paid. . . . § 443.080 (added language underscored) In case any person desires to release any part of the property described in any security instrument recorded prior to January 1, 1986, by marginal record or deed of release, he shall be permitted to do so by the recorder on presentation to the record- er of the notes or other obligations evidenc- ing the principal of the debt secured there- - 5- - Hon. Anthony D. Ribaudo by, or accounting for them by ~ffidavits or otherwise as . . . provided by law in the case of full release, and the recorder shall note the fact of such partial release on the margin of the record of such security instru- ment or, if such release is made by deed of release, shall note the fact of the filing for record of such partial release, and of the presentation of such notes or other obligations, or accounting therefor, on such notes or obligations . . . and on the margin of the record of such security instrument but shall not cancel such notes or other obligations; ... § 443.090 (added lan- guage underscored) In cases where a number of notes are named in any security instrument which was recorded prior to January 1, 1986 , on pay- ment of any one or more of such notes, the maker thereof may present the same to the recorder, and the recorder shall cancel the same and make a memorandum of such presenta- tion and cancellation on the margin of the record of such security instrument . § 443.100 (added language underscored) The revision of § 443 . 110 by H. B. No . 210 (1985) is to simply convert the words or phrase "mortgage or deed of trust" into the term " security instrument . " Lastly, H. B. No . 210 (1985) revises § 443.390 (pertain- ing to St. Louis City and Kansas City, and to St . Louis, Jack- son, St. Charles, Jefferson, Greene, and Clay counties) so as to similarly isolate this section's application to "security instru- ments " recorded prior to January 1 , 1986. Although the method employed was rather abstruse , we con- clude that H. B. No. 210 (1985) prospectively eliminated the procedure whereby the recorder of deeds would identify the sub- ject evidence of indebtedness when a =eal estate "security instru- ment" was initially placed of public record so as to be able to authenticate such evidence when the security instrument was subsequently removed (released) of public record. Therefore, in answer to your first question, it is our opinion that for real estate "security instruments" placed of public record on and after January 1, 1986, there is no statutory authorization for the recorder of deeds to identify the evidence of indebtedness to which the "security instrument" may relate . -6- - Hon. Anthony D. Ribaudo Your second question is primarily whether written rather than oral releases of real estate "security instruments " may be required by recorders of deeds . As amended by H.B. No. 210 (1985) , § 443.060 RSMo provides: 1 . If any mortgagee , cestui que trust or assignee, or personal representative . .. [thereof] • .. , receive full satisfaction of any s'ecuri ty instrument , he shall, at the request and cost of the person making the same, acknowledge satisfaction of the security instrument on the margin of the record thereof, or deliver to such person a sufficient dee~of release of the security instrument ; * * * § 443 . 060 (emphasis added) The law authorizing phot ographic and similar copying of public records, §§ 109 . 090 et seq . RSMo , provides : * * * 3 . When any recorder of deeds in this state is required or authorized by law to record . any . . . written instrument, he may do so b~, . • • photographic , . . . microfilm, or similar mechanical process which produces a clear, accurate and perma- nen~ copy of the original . The reproduc- tions so made may be used as permanent records of the original . . .. In all cases where instruments are recorded under the provisions of this section by microfilm, any release , assignment or other instrument affecting a previously recorded instrument by microfilm may not be made by marginal entry but shall be filed and recorded as a separate instrument and shall be in a sepa- rate book, cross- indexed t?J the document which it affects. § 109.120 Accordingly, it is our opinion that where the recorder of deeds maintains a system of microfilmed land records pursuant to § 109.120, the recorder must require a deed of release before a real estate "security instrument" is removed {released) from -7- Hon. Anthony D. Ribaudo the public record. We also are of the opinion that the "he" referred to in § 4 4 3. 0 6 0 is the mortgagee, not the recorder. Dodson v. Clark, 49 Mo.App. 148 (1892); se; Hellweq v. Bush et al., 74 S.W.2d 89 (Mo . App., Spr. 1934). Thus, recorders of deeds not maintaining microfilmed land records under § 109.120 must require the physical presence of the mortgagee or other legally authorized person to execute the acknowledge- ment of the satisfaction of the debt by marginal entry. The secured party cannot orally (by telephone or in person) instruct the recorder to make a "marginal" release; the marginal entr%of the release must be acknowledged in writing by the mortgagee. Your third question asks if partial releases of security instruments may be made by rnargi11al entry. There apparently are two partial release statutes: §§ 443 . 090 and 443.110, RSMo Supp. 1985. See also § 443 . 060 .3, RSMo Supp. 1985 (appli- cable to full releases of partially satisfied debts) . Section 443 . 090, RSMo Supp. 1985, authorizes partial releases by margin- al entry but is applicable only to security instruments recorded prior to January 1, 1986. Section 443 . 110, RSMo Supp. 1985, does not authorize partial releases by marginal entry. Thus, we believe that security instruments recorded after January 1, 1986, may not be partially released by marginal entry, but may be partially released by deed of release in the circumstances described in § 443.110 , RSMo. Sincerely, ~w~ WILLI~! L. WEBSTER Attorney General 1"AN ACT to repeal sections 59.330, 443.040, 443.050, 443.060, 4 4 3 . 0 7 0 , 4 4 3 . 0 8 0 , 4 4 3 . 0 9 0 , 4 4 3 . 1 0 0 , 4 4 3 . 11 0 , and 4 4 3 . 3 9 0 , RSMo 1978, relating to security instruments, and to enact in lieu thereof nine new sections relating to the same subject, with an effective date." 2The essential concept of this statute is quite old. See L. Mo. 1835, p. 210. The substantial form of the present statute appears to date frcrn L. Mo . 1887, pp. 224-2 25 . The last r e - peal and re-enactment of this statute was in H.B. No. 226, 78th G.A. (L.Mo. 1975, pp. 391- 396). "AN ACT . . . relating to mortgages and deeds of trust . ... " -8- - Hon . Anthony D. Ribaudo 3This law authorizing custodians of public records to create duplicate originals appears to have been first enacted in H.B. No. 626, 63rd G.A.; L.Mo 1945 , pp. 1427- 1428. "AN ACT authoriz- ing the reproduction of any records by photostating, photograph- ing or microphotographing; • .. " The provisions above quoted were added by H.B. No. 142, 72nd G.A.; L.Mo. 1963, pp . 150- 158 . "AN ACT . .• relating to public records . .. and permit- ting the reproduction of certain records and the destruction or storage of certain records • ... " · 4In Hellweg it is noted: . On August 29 , 1929 , based on the affidavits above referred to, the release of the Hellweg mortgage was effected , and on the same day P.J. Hill, as assignee of the beneficiary, executed a marginal release of the Groh mortgage, the original first mort- gage, in words and figures as follows: "' I hereby certify that the within described note was produced, fully assigned, and I marked it cancelled on the face .' " "Witness my hand and seal this 9th day of August , 1929. Calvin E. Henderson, Record- er of Deeds. " 74 S . W.2d at 91 This case also reflects the desirability of that aspect of H. B. No. 210 (1985) providing a considerable incentive for the record- ing of assignments of security instruments . . We cannot refrain from stating, howev- er, that, if our statute did provide for the recording of assignments of mortgages where the notes secured thereby have been as- signed, the possibility of fraudulent releas- es, such as we now have under consideration, would be most effectively eliminated. . . . 74 S.W.2d at 94 5we make no representation as to the weight to be accorded any particular release, and the degree of reliance thereon should be a matter of judgment and discretion on the part of the prospec- tive purchaser of the property . -9-