[30ASR2d175]
v.
ROSALIA AUMAVAE, IOSEFO
TALOLO, and AMERIKA SAMOA BANK, Defendants
__________________________
AMERIKA SAMOA BANK and
IOSEFO TALOLO, Cross-Claimants
v.
ROSALIA AUMAVAE,
Cross-Defendant
High Court of
Land and Titles Division
LT No. 3-95
[1] A grantor cannot deed land he or she
does not own, the deed for which is entirely outside the grantor’s individually
owned land.
[2] Although
reformation of a deed may be in order if, for example, the fact that the deeded
land was outside the grantor’s individually land was a mistake, reformation is
not available where overriding factors are present. An overriding factor includes the procurement
of the grantor’s signature through fraud.
[3] The traditional elements of actual
fraud in contract or tort are (1) a false representation or concealment of a
material fact, (2) made with knowledge of its falsity, (3) with the intent to
induce the person to whom it is made to act upon it, and (4) such person acted
in reliance upon the representation (5) to his damage.
[4] If the fraud
goes to the inception or execution of the agreement, so that the promisor is
deceived as to the nature of his act, and actually does not know what he is
signing, mutual assent is lacking, and the agreement is void.[30ASR2d176]
[5] A
mortgagee for value, and without notice of any defect is entitled to
protection as a bona fide encumbrancer.
Before
Counsel: For Plaintiff, Charles V. Ala`ilima
For
Defendants/Cross-Claimants Iosefo Talolo and Amerika Samoa Bank, William H.
Reardon
For
Defendant/Cross-Defendant Rosalia Aumavae, Pro Se
Opinion and
Order:
Plaintiff Molipopo Mailo ("Molipopo") brought
this action to void a deed of land to defendant/cross-defendant Rosalia Aumavae
("Rosalia"), a mortgage of the land by Rosalia to
defendant/cross-claimant Amerika Samoa Bank ("ASB"), foreclosure of
the mortgage, and sale of the land to defendant/cross-claimant Iosefo Talolo
("Talolo"). We preliminarily
enjoined consummation of the sale to maintain the status quo, pending the
decision.
Molipopo, ASB and Talolo were present during the
trial with their counsel. Rosalia was
duly served with non-resident process on the cross-complaint but did not appear
at the trial.
FACTS
Molipopo is a 59-year old widow. In 1969, Molipopo and her husband acquired
several acres of land, named "Seugaali`i," in
Rosalia is Molipopo's niece, and they shared a
mother-daughter relationship, particularly at times during Rosalia's
childhood. In 1989, Rosalia requested
Malipopo to designate but not convey a portion of "Seugaali`i" on
which Rosalia's brother could build a house upon returning from overseas. Molipopo pointed out an area adjacent to her
store for this purpose. Rosalia
contemporaneously gave Molipopo $1,000 for current living expenses. Molipopo also signed a paper on Rosalia's
representation and her belief that [30ASR2d177] her signature would be used to
obtain necessary permits for the construction.
The paper was blank, except for nonessential printing.
Rosalia transformed the blank paper into a warranty
deed of 0.25 acres of individually owned land, assertedly within
"Seugaali`i," from Molipopo to her, dated
Rosalia defaulted on the loan repayment, and under
the agreement, ASB foreclosed the mortgage nonjudicially. ASB obtained a resurvey during the
foreclosure proceedings. ASB then learned
that the plot as originally surveyed was entirely outside of any land owned by
Molipopo and was actually located a substantial distance westward. It also learned that the plot as resurveyed
bisected Molipopo's store.
When Molipopo found out about Rosalia's default, she
sought ASB's assistance to save her property.
She deposited $500 with ASB to further this effort. ASB apparently considered accepting Molipopo
as the loan obligor, but ultimately made the executive decision that she was
unable to assume the debt and foreclosure sale to another was necessary to
protect its interests. ASB refunded the
$500. Molipopo commenced this action
after Talolo became the expectant purchaser of the land in 1994. Talolo is one of Molipopo's neighbors.
DISCUSSION
[1-2] A grantor cannot deed land he
or she does not own. The deed in this
case described land totally outside Molipopo's individually owned land. Reformation may be in order if this circumstance
was, for example, a mistake. However, in
this case, overriding factors are present.
Molipopo signed a blank paper, which was procured by Rosalia's
misrepresentations and later converted into a deed.
[3-4] The traditional elements of
actual fraud in contract or tort are (1) a false representation or concealment
of a material fact, (2) made with knowledge of its falsity, (3) with the intent
to induce the person to whom it is made to act upon it, and (4) such person
acted in reliance upon the representation (5) to his damage. See, e.g., Pinney
& Topliff v. Chrysler Corp., 176 F. Supp. 801, 803 (S.D. Cal. 1959). If the fraud goes to the inception or
execution of the agreement, so that promisor is deceived as to the nature of
his act, and actually does not know what he is signing, mutual assent is
lacking, and the agreement is void. See, e.g., Development Bank v. Ilalio, 5
A.S.R.2d 1 (Trial Div. 1987); Trout v. Taylor, 32 P.2d 968 (
We are persuaded under the totality of evidence in
this case that Rosalia took undue advantage of her familial relationship with
Molipopo. Rosalia clearly and knowingly
misrepresented the fact that she sought designated but not conveyed land for
her returning brother's house and obtained Molipopo's signature for
construction permits on blank paper. She
wanted Molipopo to act upon her concealed purpose of acquiring title in her
name to a portion of Molipopo's land.
Molipopo acted in expectation of Rosalia's honest dealing and now faces
loss of the falsely deeded plot.
We find no facts under the evidence showing that
Molipopo either ratified the deed or is estopped from denying its validity as a
result of her negligence, laches, or other cause. See Green, 346
P.2 at 478-79. We can only
conclude that Molipopo was actually defrauded and that as between her and
Rosalia the agreement is void.
[5] Ordinarily, ASB would have intervening
third person rights in this transaction.
A mortgagee for value and without notice of any defect is entitled to
protection as a bona fide encumbrancer. See,
generally, Osbourne, Law of Mortgages at 316-35 (2d ed. 1971).
Unquestionably, ASB gave value when it loaned Rosalia $15,000. Registration of the deed to Rosalia served to
give all, including ASB, notice of the conveyance. A.S.C.A. § 37.0210(b); Vaimoana
v. Tuitasi, 18 A.S.R.2d 88, 96 (Appellate Div. 1991).
However, as ASB
later discovered, the land described was not the land [30ASR2d179] actually
intended to be conveyed and mortgaged.
Unless reformed, the deed conveyed nothing to Rosalia. We think that ASB was under a duty to ensure
that land described in a deed and mortgage to secure a loan was actually owned
by the mortgagor and, failing to inquire, is constructively notified of the
defect and acted at its peril. See National Resources, Inc. v. Wineberg, 349 F.2d 685, 690
(9th Cir. 1965).
Moreover, since the deed was absolutely
void by reason of Rosalia's fraud upon Molipopo, ASB is not protected as a bona
fide encumbrancer, even though it acted in good faith. See Trout, 32 P.2d
at 970; Bryce, 55 P.2d at 489.
ASB must seek recovery from Rosalia, who occasioned
the fraudulent loss under the evidence before the court. See Trout, 32 P.2d
at 970; Green, 346 P.2d at 479.
Rosalia has been served with process and is in default on the
cross-complaint. However, ASB has not
yet moved for a default judgment against her.
She was also not of record noticed of the trial. Accordingly, we can only leave the
cross-complaint pending at this time.
ORDER
1. The deed
by Molipopo to Rosalia, mortgage by Rosalia to ASB, foreclosure proceedings,
and sale of the land by ASB to Talolo are void.
2. The Clerk
of Courts shall have a certified copy of the judgment registered with the Territorial
Registrar.
3. The
cross-complaint by ASB against Rosalia remains pending.
It is so ordered. [1]
********
1 Besides further illustrating Rosalia's deceit in creating the deed, we also make special note of the notary's dishonesty. His notarial act falsely states that Molipopo personally appeared and acknowledged her signature. The acknowledgement is in the customary form. Although not statutorily required for the validity of deeds, acknowledgements are commonly used in deeds in this jurisdiction. False acknowledgements corrupt and mock the procedure and should not be tolerated. Unfortunately, unlike every other American jurisdiction, our Legislature has yet not seen fit to regulate notaries. As a result, notaries cannot be sanctioned, criminally or civilly, at least with any specifically directed statutory penalties. [30ASR2d178]
[1] Editor’s Note: Mailo v. Aumavae, 31 A.S.R.2d __ (Land
& Titles Div. 1996)(order clarifying and amending
part of opinion and order), amends the language of the first two paragraphs on
this page.