APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA, HONORABLE STUART L. TIEDE Judge.
The opinion of the court was delivered by: Zinter, Justice
[¶1.] A purchaser of a mortgage loan brought this declaratory action to invalidate a written satisfaction of its mortgage. The originating lender, who was servicing the loan, gave the satisfaction to a title company following payoff of the loan at a closing on a subsequent mortgage loan relating to the same property. The mortgage purchaser contended the satisfaction was invalid because it was not signed by the mortgagee identified in the mortgage. The mortgage purchaser also asserted claims of negligence against the title company. The circuit court granted summary judgment against the mortgage purchaser on all claims. We affirm.
Facts and Procedural History
[¶2.] Because we are reviewing a summary judgment, we restate the facts in a light most favorable to the mortgage purchaser. This lawsuit arose following the sale of mortgage loans by ACT Mortgage Capital, a loan originator, to NattyMac Capital LLC, a purchaser of mortgage loans in the secondary market. Although the mortgage loans were sold to NattyMac, ACT was contractually obligated to service the loans. The Master Loan Purchase and Sale Agreement (Master Loan Agreement) between these parties provided that ACT was "an independent contractor of [NattyMac]," and ACT was required to service the loans "on behalf of" NattyMac in accordance with loan servicing procedures. Loan servicing procedures included accepting loan payments.*fn1
[¶3.] NattyMac and ACT were members of Mortgage Electronic Registration Systems, Inc. (MERS). MERS is a nation-wide clearinghouse for mortgage loans. MERS was established by the mortgage banking industry to hold, assign, and transfer interests in mortgage loans. MERS's members contract with MERS to electronically register and track servicing rights and beneficial ownership interests that are sold in secondary markets. MERS facilitates the assignment of mortgage liens by acting as a "nominee" mortgagee of record.
[¶4.] This dispute developed following Dwight Duimstra's purchase of a residential property in Sioux Falls.*fn2 Duimstra's purchase was financed by one of the mortgage loans that was originated by ACT and subsequently sold to NattyMac. Under an agreement among NattyMac, ACT, and MERS, MERS was the named mortgagee in the mortgage, and ACT was designated as the loan servicer in the MERS system.
[¶5.] Less than two months after Duimstra's purchase, Duimstra agreed to sell the property to Rick and Ramona Pesek. According to a MERS manual, the usual procedure for a mortgage payoff required the servicer of the mortgage loan to provide a payoff amount to the closing agent. The servicer would then receive the payoff and execute a lien release. The lien release was to be executed by one of MERS's certifying officers. Nelson Haws, an officer of ACT, had been appointed by MERS as a certifying officer authorized to release mortgage liens, including the Duimstra mortgage.
[¶6.] In preparation for the Pesek closing, Rita Barfoth of Getty Abstract and Title Company called MERS to locate the servicer of the Duimstra loan. MERS informed Barfoth that the loan servicer was ACT. Barfoth then requested ACT to provide a payoff statement, which ACT provided. During the subsequent closing of Peseks' loan, Getty sent ACT a check in the amount necessary to pay the Duimstra loan in full. ACT endorsed the check and deposited the funds in its account.
[¶7.] Several days later, ACT sent Getty an executed satisfaction of the Duimstra mortgage. Nelson Haws had executed the satisfaction; yet, for unexplained reasons, the satisfaction indicated that the mortgage was satisfied "on behalf of" ACT rather than MERS, the mortgagee. Further, there was no assignment of record assigning the mortgage from MERS to ACT. Nevertheless, the satisfaction was recorded in the register of deeds office.
[¶8.] Although the Master Loan Agreement required ACT to forward the payoff to NattyMac, ACT absconded and did not pay NattyMac.*fn3 NattyMac subsequently filed this declaratory action against Peseks and their mortgage lender, First Dakota National Bank. NattyMac sought a declaration that the satisfaction of the Duimstra mortgage was a nullity and that NattyMac's mortgage remained valid. NattyMac also asserted two negligence claims against Getty. Peseks, First Dakota and Getty (Defendants) moved for summary judgment.*fn4 The circuit court granted the motion, concluding that notwithstanding the defect in the satisfaction, the mortgage was satisfied by the payment to ACT.
Satisfaction of the Mortgage
[¶9.] There is no dispute that MERS, rather than ACT, was identified as the mortgagee in the mortgage and there was no recorded assignment of the mortgage from MERS to ACT. Because the satisfaction was executed on behalf of ACT rather than on behalf of MERS (the mortgagee), NattyMac argues that the satisfaction was ineffective and the mortgage remained valid under two recording statutes. "Statutory interpretation and application are questions of law." Aspen Storage Inc. v. Flanagan, 2005 SD 107, ¶ 5, 705 NW2d 863, 864. We review the circuit court's conclusions of law de novo. Id.
[¶10.] SDCL 44-8-14 is a typical recording statute, providing that in order to be discharged on the register of deeds records, a satisfaction must be signed ...