                    NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                              File Name: 11a0134n.06

                                                   No 09-4448
                                                                                      FILED
                               UNITED STATES COURT OF APPEALS                      Mar 01, 2011
                                    FOR THE SIXTH CIRCUIT                     LEONARD GREEN, Clerk


In re: JOHN E. ROBERTS                                  )
       JUDY K. ROBERTS                                  )
       HONOR M. FRIESNER, JR.                           )
                                                        )
                  Debtors,                              )
-----------------------------------------------------   )
CLYDE HARDESTY,                                         )
WILLIAM TODD DROWN,                                     )   ON   APPEAL    FROM     THE
                                                        )   BANKRUPTCY APPELLATE PANEL
                  Appellants,                           )
                                                        )
v.                                                      )
                                                        )
CITIFINANCIAL, INC.,                                    )
                                                        )
                  Appellee.                             )



         Before: DAUGHTREY, CLAY, and WHITE, Circuit Judges.



         MARTHA CRAIG DAUGHTREY, Circuit Judge.                   In this consolidated appeal, we

are asked to reverse the decisions of the bankruptcy court denying the Trustees’ request

to avoid the Debtors’ mortgages with the Creditor, CitiFinancial, Inc., based on allegedly

defective certificates of acknowledgment in the mortgage documents. The bankruptcy

judge held in each case that the certificates complied with Ohio law, and the Bankruptcy

Appellate Panel summarily affirmed the bankruptcy judge’s decisions. The Trustees now

request that we set aside the rulings in CitiFinancial’s favor. We conclude, as did the
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Panel, that the bankruptcy judge’s well-reasoned and well-articulated opinion correctly

applies relevant Ohio law and must, therefore, be affirmed.


       The crux of the disagreement between the Trustees and the Creditor in these two

cases is whether the phrase “executed before me,” which was used in both certificates of

acknowledgment at issue, is the substantial equivalent of the phrase “acknowledged before

me” in the certificate of acknowledgment required by OHIO REV. CODE ANN . § 5301.01(A)

in order to validate a transfer of land. The language in question appears at the bottom of

pre-printed forms provided by CitiFinancial in each case, as follows:


       Executed before me on ___ day of ______ by _________, the individuals
       who, under penalty of perjury in violation of Section 2921.11 of the Ohio
       Revised Code, executed the foregoing instrument and that they did examine
       and read the same and did sign the foregoing instrument, and the same is
       _____ free act and deed.


       Under the Bankruptcy Code, a trustee has the same rights that a bona fide

purchaser for value would enjoy under applicable state law, whether or not such a

purchaser actually exists. 11 U.S.C. § 544(a)(3). Ohio law dictates that defectively

executed transfers of land are not binding on any subsequent bona fide purchasers for

value who take the land without knowledge of such a transfer. See OHIO REV. CODE ANN .

§ 5301.25(A). Thus, standing in the shoes of a hypothetical bona fide purchaser, a trustee

can avoid a mortgage that was improperly executed under Ohio law. The trustee, however,




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has the burden of demonstrating that the mortgage was improperly executed. See Simon

v. First Union Mort. Corp. (In re Burnham), 231 B.R. 270, 274 (Bankr. N.D. Ohio 1999).


       For a mortgage to be executed properly under Ohio law, it must be signed by the

mortgagor; it must be acknowledged by the mortgagor before an authorized official, such

as a notary public; the official must certify the acknowledgment; and the official must

subscribe his or her name to the certificate of the acknowledgment. See OHIO REV. CODE

ANN . § 5301.01(A). A statutory short form set out in OHIO REV. CODE ANN . § 147.55

requires only the statement that “[t]he foregoing instrument was acknowledged before me

this (date) by (name of person acknowledged),” followed by the signature of the person

taking the statement. Section 147.55 also makes it clear, however, that “authorization of

the forms in this section does not preclude the use of other forms.” Thus, under OHIO REV.

CODE ANN . § 147.54(c), “[t]he form of a certificate of acknowledgment . . . shall be accepted

in this state if . . . [t]he certificate contains the words ‘acknowledged before me,’ or their

substantial equivalent.”


       Helpful in determining whether alternate terminology is the substantial equivalent

of the phrase “acknowledged before me,” is the existence of a definition of the phrase

“acknowledged before me” in the Ohio Code that includes four elements:


       (A) The person acknowledging appeared before the person taking the
       acknowledgment;
       (B) He acknowledged he executed the instrument;

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       (C) In the case of . . . [a] natural person, he executed the instrument for the
       purposes therein stated;
       (D) The person taking the acknowledgment either knew or had satisfactory evidence
       that the person acknowledging was the person named in the instrument or
       certificate.


OHIO REV. CODE ANN . § 147.541. Thus, although use of the phrase “acknowledged before

me” is not mandatory, the language of the instrument should communicate effectively the

four-part meaning attributed to the phrase “acknowledged before me” in the Ohio Code in

order to be the substantial equivalent of the required language. See Geygan v. World

Savs. Bank, FSB (In re Nolan), 383 B.R. 391, 395-96 (B.A.P. 6th Cir. 2008) (finding that

the phrase “witness my hand” is not the substantial equivalent of “acknowledged before

me,” because the former phrase did not encapsulate the four-part definition of the latter

phrase).


       In this case, the bankruptcy judge carefully analyzed the language of the certificate

used in the CitiFinancial documents to determine whether it imparted a meaning that is

substantially equivalent to the four-part meaning of “acknowledged before me” as defined

in the Ohio Code. The judge determined that the first two required elements, appearance

and acknowledgment, were easily met in this instance. As to the appearance requirement,

the judge noted that the phrase “before me” indicates that the mortgagors were physically

in the presence of the person who was to acknowledge their signing, in this case a notary

public. Moreover, the pertinent definition of “execute” is “[t]o make (a legal document) valid



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by signing; to bring (a legal document) into its final, legally enforceable form.” Black's Law

Dictionary (9th ed. 2009). As to the requirement of acknowledgment, the judge held that,

under Ohio law, one who signs a document in the presence of another acknowledges his

signature to the witness, absent some contrary evidence. See Wayne Bldg. & Loan Co.

v. Hoover, 231 N.E.2d 873, 876 (Ohio 1967) (“It follows that, where a notary public

witnesses a signing by the mortgagor, there has been an acknowledgment of such signing

before such notary public”). In this case, there is no evidence to suggest that the Debtors

did not sign in the presence of the notary.


       Satisfaction of the third requirement – an acknowledgment that the instrument was

executed for the purposes stated therein – is not as clear from the language “executed

before me.” But, the bankruptcy judge noted that additional language in the CitiFinancial

certificate established that the individual Debtors, by name, had “examine[d] and read [the

mortgage] and did sign the foregoing instrument . . . [of] their free act and deed.” The

judge therefore concluded that the mortgagors “executed the Mortgage for the purposes

therein stated and . . . the notary public so certified.” Hardesty v. Citifinancial, Inc. (In re

Roberts), 402 B.R. 808, 816 (Bankr. S.D. Ohio 2009).


       With regard to the final requirement, certification of the signers’ identity, the

bankruptcy judge pointed to the two standards that govern certification by a notary public

under the Ohio statute: first, that “[t]he person acknowledging appeared before [the notary]

and acknowledged he executed the instrument” and, second, that “[t]he person

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acknowledging was known to the person taking the acknowledgment, or that the person

taking the acknowledgment had satisfactory evidence that the person acknowledging was

the person described in and who executed the instrument.” OHIO REV. CODE ANN . § 147.53.

The judge further observed that the notary in this case had certified not only execution by

the named individuals but had also referred to them by name as “the individuals who . . .

executed the foregoing instrument . . . .” We conclude that this double reference is an

indication of satisfactory knowledge of identity that is equally as strong as that provided by

the statutory short form, which recites simply that “[t]he foregoing instrument was

acknowledged before me this (date) by (name of person acknowledged).”


       The bankruptcy judge also pointed out that a notary public is, under Ohio law, a

public officer and that “[t]he rule is generally accepted that, in the absence of evidence to

the contrary, public officers . . . will be presumed to have properly performed their duties

and not to have acted illegally but regularly and in a lawful manner.” Hardesty, 402 B.R.

at 815 (quoting State ex rel. Bocucuzzi v. Cuyahoga County Board of Commissioners, 860

N.E.2d 749, 753 (Ohio 2007)). In light of this presumption, and in view of the language

contained in the acknowledgment, the bankruptcy judge reasonably concluded that the

notary public’s certification was based upon satisfactory evidence of the mortgagors’

identities.


       As a result, the bankruptcy judge held that under the circumstances of this case, the

language “executed before me” was the substantial equivalent of “acknowledged before

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me.” She also suggested that, obviously, the better practice would be to utilize the precise

language in OHIO REV. CODE ANN . § 147.55, which carries the state legislature’s imprimatur

and would avoid future disputes of the kind that produced this litigation. Nevertheless, the

judge reasonably concluded that in this case “the Trustee ha[d] not carried his burden of

proving the avoidability of the Mortgage” and entered judgment in favor of CitiFinancial.


       Because we find that the record fully supports this conclusion as a matter of state

law, we AFFIRM.




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