                  ELECTRONIC CITATION: 2007 FED App. 0009P (6th Cir.)
                               File Name: 07b0009p.06


           BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: DAVID MORGESON,                           )
       TINA MORGESON,                            )
                                                 )
            Debtors.                             )
______________________________________           )
                                                 )
HENRY MENNINGER, TRUSTEE,                        )
                                                 )            No. 06-8070
             Plaintiff-Appellee,                 )
                                                 )
             v.                                  )
                                                 )
ACCREDITED HOME LENDERS,                         )
                                                 )
             Defendant-Appellant.                )
                                                 )
______________________________________           )


                      Appeal from the United States Bankruptcy Court
             for the Southern District of Ohio, Western Division, at Cincinnati.
                  Bankruptcy Case No. 04-15619; Adversary No. 05-1270.

                                    Argued: May 1, 2007

                              Decided and Filed: July 25, 2007

      Before: PARSONS, SCOTT, and WHIPPLE, Bankruptcy Appellate Panel Judges.

                                   ____________________

                                        COUNSEL

ARGUED: David A. Freeburg, McFADDEN & FREEBURG CO. L.P.A., Cleveland, Ohio, for
Appellant. Henry E. Menninger, WOOD & LAMPING LLP, Cincinnati, Ohio, for Appellee. ON
BRIEF: David A. Freeburg, McFADDEN & FREEBURG CO. L.P.A., Cleveland, Ohio, for
Appellant. Henry E. Menninger, WOOD & LAMPING LLP, Cincinnati, Ohio, for Appellee.
                                      ____________________

                                            OPINION
                                      ____________________

       MARY ANN WHIPPLE, Bankruptcy Appellate Panel Judge. Accredited Home Lenders
(“Accredited”) appeals the entry of summary judgment by the bankruptcy court in favor of the
Chapter 7 Trustee (“the Trustee”) in an adversary proceeding in which the Trustee sought a
determination of the validity and extent of Accredited’s mortgage against the debtors’ real estate,
which was subject to the Ohio Land Registration Act. In granting summary judgment, the
bankruptcy court found that Accredited’s mortgage interest in the debtors’ real estate (“the property”)
extends only to husband David Morgeson’s one-half interest in the property, thereby reserving wife
Tina Morgeson’s one-half interest for the bankruptcy estate. For the reasons that follow, the
bankruptcy court’s decision is AFFIRMED.

                                     I. ISSUES ON APPEAL

       The issue presented is whether the bankruptcy court erred in granting summary judgment in
favor of the Trustee and finding that Accredited’s mortgage interest extends only to David
Morgeson’s one-half interest in the property, despite a memorial on the certificate of title noting its
mortgage against the present owner.

                    II. JURISDICTION AND STANDARD OF REVIEW

       The Bankruptcy Appellate Panel (“BAP”) of the Sixth Circuit has jurisdiction to hear this
appeal. The United States District Court for the Southern District of Ohio has authorized appeals
to the BAP, and neither party has timely elected to have this appeal heard by the district court.
28 U.S.C. §§ 158(b)(6), (c)(1). “A final order ‘ends the litigation on the merits and leaves nothing
for the court to do but execute the judgment.’” Belfance v. Bushey (In re Bushey), 210 B.R. 95, 98
(B.A.P. 6th Cir. 1997) (quoting Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109
S.Ct. 1494, 1497 (1989)). The bankruptcy court's grant of summary judgment to the Trustee is a
final appealable order reviewed de novo. See In re Bushey, 210 B.R. at 98. Under a de novo
standard of review, the reviewing court decides an issue independently of, and without deference to,


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the trial court’s determination. Treinish v. Norwest Bank Minn., N.A. (In re Periandri), 266 B.R.
651, 653 (B.A.P. 6th Cir. 2001).

        Summary Judgment is appropriate when “[t]he pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of
law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986); Fed. R. Civ. P.
56(c). A material fact is that which is outcome-determinative. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986) (“Only disputes over facts that might affect the
outcome of the suit under the governing law will properly preclude the entry of summary
judgment.”). In order to prevail, the movant must prove all elements of the cause of action or
defense. Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). Once that burden is
met, however, the opposing party must set forth specific facts showing there is a genuine issue for
trial. Liberty Lobby, 477 U.S. at 249-51; 60 Ivy St. Corp. v. Alexander, 822 F.2d 1432, 1435 (6th
Cir. 1987). Inferences drawn from the underlying facts must be viewed in a light most favorable to
the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586-88, 106 S. Ct. 1348, 1356 (1986).

        In cases such as this, where the parties have filed cross-motions for summary judgment, the
court must consider each motion separately on its merits, since each party, as a movant for summary
judgment, bears the burden to establish both the nonexistence of genuine issues of material fact and
that party’s entitlement to judgment as a matter of law. Lansing Dairy v. Espy, 39 F.3d 1339, 1347
(6th Cir. 1994); Markowitz v. Campbell (In re Markowitz), 190 F.3d 455, 463 n.6 (6th Cir. 1999).
That both parties simultaneously argue there are no genuine issues of material fact does not in itself
establish that a trial is not necessary, and that one party has failed to sustain its burden under Federal
Rule of Civil Procedure 56 does not automatically entitle the opposing party to summary judgment.
See 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and
Procedure: Civil 3d § 2720 (1998).

                                             III.   FACTS

        On August 31, 1999, husband and wife David and Tina Morgeson were granted a certificate
of title to the real property commonly known as 9684 Kelso Court, Cincinnati, Ohio 45231,

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certifying that they are the owners in fee simple of the property as joint tenants with rights of
survivorship. The property is situated in Hamilton County, Ohio, and is subject to Ohio’s Land
Registration Act. The certificate of title was properly registered on the Torrens Land Title Register
of Hamilton County.

       On May 24, 2002, the Morgesons executed a mortgage in favor of Accredited Home Lenders,
Inc. The mortgage document provides that “‘Borrower’ is David M. Morgeson and Tina M.
Morgeson, husband and wife” and further provides that “Borrower is the mortgagor under this
Security Instrument.” (J.A. at 77.) David Morgeson signed the mortgage document, granting a
mortgage on his full one-half interest in the property. Tina Morgeson also signed the document.
Below Tina Morgeson’s signature, however, was a notation stating “spouse, signing only to release
her dower interest.” The certificate of acknowledgment contained the same language, stating that
Tina Morgeson was signing only to release her dower interest in the property.

       The signed and acknowledged mortgage document was filed for record with the Hamilton
Country Recorder and, thereafter, the Hamilton County Recorder placed a notation on the certificate
of title for the property, as is required by Ohio Revised Code § 5309.48. This notation indicates that
Accredited is the holder of a $106,200 mortgage against the “present owner” of the property.1 The
county recorder did not note on the certificate of title that Tina Morgeson had released only her
dower interest.

       On July 15, 2004, the Morgesons filed a voluntary petition for Chapter 7 relief in the United



        1
        In setting forth the memorials of lesser estates and liens, the certificate of title states that
“PRESENT OWNER [is] INDICATED WITH O.” The certificate then sets forth a memorial of a
mortgage in favor of Accredited as follows:
       MORTGAGE
           DOCUMENT:                   02-112947
           FAVOR OF:                   ACCREDITED HOME LENDERS, INC.
                                       SAN DIEGO, CA
                 AGAINST:              (O) SECURES $106,200
(J.A. at 74-75.) Although indicating that the mortgage is against “present owner” appears ambiguous
where there is more than one owner, Accredited, as well as the bankruptcy court, interpret this
designation as referring to both owners. As it does not affect the Panel’s ultimate decision in this
case, the Panel will assume, for purposes of this appeal, that “present owner” refers to both David
and Tina Morgeson.

                                                  -4-
States Bankruptcy Court for the Southern District of Ohio. An order for relief was entered and,
thereafter, the Trustee, Appellee herein, filed a complaint against Accredited seeking to avoid
Accredited’s purported mortgage against Tina Morgeson’s one-half interest in the property and to
determine the validity and extent of Accredited’s mortgage lien. Although brought under 11 U.S.C.
§§ 544 and 547, the prayer for relief in the complaint asks for “such other and further relief as the
court might deem to be just and proper.” (J.A. at 11.) The parties filed cross motions for summary
judgment. On August 31, 2006, the bankruptcy court granted the Trustee’s motion for summary
judgment and denied Accredited’s motion for summary judgment.

         The court found that Tina Morgeson’s intent was to convey only her dower interest, and that
the county recorder erred in noting on the certificate of title that both Morgesons were mortgagors.
The bankruptcy court further found that the underlying mortgage document must be given effect
despite the notation on the certificate of title. The bankruptcy court then concluded that Accredited’s
mortgage interest extended only to David Morgeson’s interest in the property. Having found that
no mortgage against Tina Morgeson’s one-half interest was ever granted to Accredited, the
bankruptcy court did not address whether a mortgage on her one-half interest was avoidable under
§ 544.

                                         IV.     DISCUSSION

         The Ohio Land Registration Act, also known as Torrens law, creates a system by which title
to land is registered, not recorded as under traditional recording laws. See Weyandt v. Davis, 112
Ohio App. 3d 717, 720 (1996). Under the Torrens system, the owners of registered land are issued
a certificate of title, which contains a description of the registered parcel, along with memorials
noting all liens, encumbrances and charges that bind the land.

         The purpose of the Ohio Land Registration Act was “to create an absolute presumption that
the certificate of registration in the registrar’s office at all times speaks the last word as to the title,
thus doing away with secret liens and hidden equities” and creating an indefeasible title, excepting
only those claims and encumbrances noted therein. Curry v. Lybarger, 133 Ohio St. 55, 58 (1937).
The certificate of title to registered land purports to show the exact state of title, and any liens or
encumbrances not noted on the certificate of title are deemed unenforceable as to a bona fide
purchaser. See Kincaid v. Yount, 9 Ohio App. 3d 145, 147 (1983); Ohio Revised Code § 5309.28.

                                                    -5-
If a lien or encumbrance is not noted on the certificate of title, the bona fide purchaser takes the
property free of the encumbrance. Land registration is designed to provide notice to bona fide
purchasers, not to notify owners of encumbrances against their land. See Amrich v. Boyle, 136 Ohio
St. 325, 326 (1940). With this background in mind, the Panel addresses Accredited’s arguments that
the bankruptcy court erred in granting summary judgment to the Trustee and concluding that
Accredited’s mortgage extended only to David Morgeson’s one-half interest in the property.

       Accredited argues that the certificate of title must be given effect over the underlying
mortgage document because it is the act of registering and memorializing the mortgage on the
certificate of title that creates the property interest, not merely the execution of the mortgage as
between the parties. Accredited relies on Bavely v. Huntington Nat’l Bank (In re Cowan), 273 B.R.
98 (B.A.P. 6th Cir. 2002), and contends that the bankruptcy court erred when it considered the
underlying mortgage document rather than the encumbrance memorialized on the certificate of title.

       Accredited’s reliance on Bavely, however, is misplaced. The facts of Bavely are not
analogous to those under consideration here. In Bavely, Fifth Third Bank failed entirely to register
its mortgage. Id. at 102. The subject property in Bavely straddled two parcels of land, one of which
was registered land, the other of which was traditional, non-registered land. Id. Although Fifth
Third had recorded the mortgage with respect to the non-registered land, it had failed to present the
mortgage to the county recorder for notation on the certificate of title to the registered parcel. Id.
The panel in Bavely held that Fifth Third did not hold a perfected security interest in the debtor’s
registered parcel because “no unregistered claim or interest shall prevail against a registered title
taken bona fide for valuable consideration.” Id. at 103.

       The Bavely decision relies on the purpose of land registration, which is to protect a bona fide
purchaser against unregistered encumbrances. Ohio courts have regularly upheld certificates of title
as conclusive as to the state of title when the holder of an encumbrance seeks to enforce an
unregistered charge against a third party who was without notice of the charge. See Bavely, 273 B.R.
at 102-03; Kincaid, 9 Ohio App. 3d at 147; Curry, 133 Ohio St. at 59-60. However, land registration
was not designed to aid a mortgage company in expanding contractual rights against either owners
of registered land or bankruptcy trustees who stand as bona fide purchasers. Furthermore, the Panel
has found, and Accredited has cited, no case that has permitted contractual rights to be expanded


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when the certificate of title reflects a greater right than provided under the mortgage document.

       The proposition that a certificate of title cannot reflect an encumbrance greater than that
which the mortgage deed provides finds support in Ohio Revised Code §§ 5309.47 and 5309.48.
Section 5309.47 provides, in relevant part:

       Whenever any registered land or interest therein is intended to be charged or made
       security in favor of any mortgagee, the mortgagor shall execute a mortgage deed. . . .
       Every mortgage deed and instrument of encumbrance shall contain a pertinent
       description of the land and an accurate statement of the interest intended to be
       mortgaged, charged, or encumbered, and when registered shall operate as a lien or
       charge upon and bind the land covered thereby for the period ending twenty-one
       years after the maturity of the last secured debt or obligation. (Emphasis added).


And § 5309.48 provides that the county recorder must, when a mortgage is filed, enter “a memorial
accurately stating the purport and nature of the lien or charge created.”

       The Morgesons’ certificate of title notes five charges, and the location of the instruments
creating the charges. One charge is an easement against the property. Although the certificate notes
the easement exists, the certificate does not give a description of the exact location or the use of the
easement. Similarly, a prescriptive covenant binds the Morgesons’ land. The certificate of title
notes the covenant, but again, does not state how the covenant binds the land.

       Although the Ohio courts have not interpreted the meaning of the word “accurately” as used
in §§ 5309.47 and 5309.48, in practice, it appears that a memorial noting the existence of a lien or
charge is accurate so long as it is properly identified (i.e. mortgage, easement, etc.) and the location
of the recorded underlying document is correctly set forth so that a party may determine the extent
of the lien or charge. Both the purport, or “meaning synthesized or synopsized,” Merriam-Webster
Third New Int’l Dictionary 1847 (1986), and the nature of the lien or charge are then accurately
memorialized.

       Accredited’s reliance on Ohio Revised Code § 5309.77, which states that a mortgage
instrument dealing with registered land takes effect only as a contract and as authority for
presentation to the county recorder to place a memorial on the proper certificate of title, does not
lend support to its position. Since the mortgage deed takes effect as a contract between the parties,


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the deed must be interpreted according to Ohio contract law.

       Tina Morgeson signed the document as “spouse, signing only to release her dower interest.”
The notary also signed the document, acknowledging that Tina Morgeson was signing only to release
her dower interest. “In construing a written contract, the court’s paramount objective is to ascertain
and give effect to the parties’ intention.” Rosepark Prop., Ltd. v. Buess, 167 Ohio App. 3d 366, 375
(2006) (citing Aultman Hosp. Assn. v. Cmty. Mut. Ins. Co., 46 Ohio St. 3d 51, 53 (1989)). The intent
of the parties to a contract is presumed to reside in the language they chose to employ in the
agreement.” Kelly v. Med. Life. Ins. Co., 31 Ohio St. 3d 130, syllabus ¶ 1 (1987). When contract
terms are unambiguous, the courts will not, in effect, create a new contract by finding an intent not
expressed in the clear contractual language. Alexander v. Buckeye Pipe Line Co., 53 Ohio St. 2d
241, 246 (1978). Since both the signature page and the notary page of the mortgage document stated
that Tina Morgeson was signing only to release her dower interest, the clear language of the contract
evidences Tina Morgeson’s intent only to release her dower interest.

       Nevertheless, Accredited contends that even if the underlying mortgage is considered, there
is, at best, a dispute of fact as to Tina Morgeson’s intent due to inconsistencies within the mortgage
document itself. Specifically, Accredited points to language in the mortgage that defines “Borrower”
as both David and Tina Morgeson. The mortgage then provides that “[B]orrower is the mortgagor
under this Security Instrument.” Accredited argues that these provisions are inconsistent with the
typewritten notation below Tina Morgeson’s signature that she signed only to release her dower
interest. The Panel disagrees. A dower interest is an alienable interest that may be conveyed as
security for a loan. Cf. Standard Fed. Bank v. Staff, 168 Ohio App. 3d 14, 23-24 (2006) (finding that
a debtor’s conveyance of dower rights through signing a mortgage became effective with the close
of his bankruptcy case). Thus, naming Tina Morgeson as a mortgagor/borrower is not inconsistent
with language limiting her conveyance to her dower interest only.

       Further, Accredited was a party to the contract. Accredited failed to object to the language
restricting the release of Tina Morgeson’s one-half interest at the time the contract was executed.
In opposing the Trustee’s motion for summary judgment, it was incumbent upon Accredited to
present some evidence that would rebut the presumption arising from the clear language of the
mortgage instrument that Tina Morgeson’s intent was only to release her dower interest. To the


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extent that the certificate of title reflects a mortgage that encumbers the entire interests of both
debtors, such is not evidence of Tina Morgeson’s intent to encumber her full one-half interest
because she was not responsible for placing that notation on the certificate.2 As stated above, the
notation on the certificate of title serves to place bona fide purchasers on notice that the property is
subject to an encumbrance. The notation on the certificate of title does not serve to enlarge an
encumbrance beyond the mortgage deed.

        Accredited also argues that the bankruptcy court lacked jurisdiction to correct any error made
by the county recorder because the time for appealing the action of the recorder had run.3 Accredited
relies on Ohio Revised Code §§ 5309.43 and 5309.83, which authorize appeals to the Ohio court of
common pleas by persons aggrieved by the county recorder’s action. Such persons “may, within
three days thereafter, file with the recorder a written notice of intention to appeal, and shall, within
ten days thereafter, file in the court of common pleas a petition setting forth the matter complained
of . . . .” Ohio Rev. Code § 5309.83. However, as one Ohio court explained:

        While conferring upon [the county recorder] full power-judicial or otherwise-to
        render the initial decision as to what shall and what shall not appear upon the records
        of his office, the legislature carefully refrained from giving him the power to
        adjudicate the rights of the parties. Under no circumstances does his decision
        preclude the assertion of a title. The claimant may appeal as provided in section
        8572-79, General Code [now Ohio Revised Code § 5309.83], but is not required to
        do so in order to preserve his title. By section 8572-87, General Code [now Ohio
        Revised Code § 5309.91],4 he may assert his title at any subsequent time by civil
        action as though no hearing had taken place before the recorder. All section 8572-79,
        General Code, does is to vest the recorder with administrative power and provide for
        a judicial review of his action. And we are of the opinion that the limitation of time
        of notice to the recorder of intention to appeal was not imposed as a condition upon
        invoking the jurisdiction of the court, but rather as a provision to protect the recorder


        2
          It is not clear to the Panel that the memorial on the certificate of title stating that the
mortgage is against the “present owner” means that it is against the entire interests of the present
owners. To the extent that “present owner” refers to both owners where the certificate of title
reflects more than one owner, and where one owner conveys only a dower interest, as in this case,
the mortgage is still against both owners’ interests, although not both owners’ entire interests.
        3
          As discussed in the previous footnotes, it is not clear that the county recorder actually did
err by stating that the mortgage is against “present owner.”
        4
        Section 5309.91 provides that “[a]ll charges upon registered land, or any interest in such
land may be enforced as provided by law, except as provided by section 5309.02 to 5310.21.”

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       and to enable him to efficiently administer his office. The action of the recorder in
       cancelling the memorial has none of the attributes of conclusiveness and finality
       under any circumstances that are the hallmarks of culminating judicial action. While
       imperfectly expressed and leaving much to implication, it seems that the purpose of
       the provision was to establish a continuity in the proceeding and thereby prevent the
       intervention of the rights of innocent transferees that might take place before a lis
       pendens could be created by recourse to the ordinary remedies. . . . To hold that
       failure to file notice within three days was intended to close the door to the court by
       appeal and at the same time leave every other approach to the court open would seem
       to be attributing to the legislature an intent contrary to the general spirit of the land
       registration law.
Pa. R.R. Co. v. Kearns, 71 Ohio App. 209, 212-213 (1943). Thus, the fact that the Morgesons did
not file a notice of intention to appeal followed by a petition in common pleas court does not
preclude the Trustee from asserting Tina Morgeson’s rights in the property. The Bankruptcy Code
clearly confers jurisdiction on the bankruptcy courts to determine property of the bankruptcy estate.
28 U.S.C. §§ 1334(a) and 157(b); see Burks v. ABN AMRO Mortgage Group, Inc. (In re Price), No.
06-1158, 2007 WL 1429137, *1 (Bankr. S.D. Ohio March 14, 2007) (finding that, in challenging the
validity of an underlying mortgage against registered land, the trustee is not required to initiate a
proceeding in state court and that the bankruptcy court has jurisdiction to determine the validity of
liens on property of the estate).

                                       V. CONCLUSION

       Accredited’s claim that the certificate of title is conclusive over the underlying mortgage
document, thus extending its mortgage to both debtors’ one-half interests in the subject property, is
without merit. Ohio’s Land Registration Act protects bona fide purchasers from “hidden liens and
secret equities.” Curry, 133 Ohio St. at 158. The Act does not permit a mortgage company to
expand its interest in property beyond the mortgage document. Therefore, the mortgage document
determines the actual interest held by Accredited, and because the clear language in the mortgage
document reflects Tina Morgeson’s intent only to release her dower interest, Accredited’s interest
extends only to David Morgeson’s one-half interest in the property. The bankruptcy court’s decision
is, therefore, AFFIRMED.




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