MidCountry Bank v. Krueger

The Kruegers (defendants) mortgaged both the Krueger properties and a separate Hinshaw property to MidCountry Bank (plaintiff) to secure a loan; the recorder's office correctly labeled, numbered, and imaged the mortgage, but its digital index mistakenly listed only the Krueger properties, omitting the Hinshaw property, even though the actual imaged mortgage document correctly included it. The Kruegers later sold the Hinshaw property to Cherolyn Hinshaw without disclosing MidCountry's mortgage, and Hinshaw took out her own mortgage on it; after the Kruegers defaulted, MidCountry sought to foreclose on all three properties, and the dispute turned on whether the indexing error meant the mortgage was never properly recorded, leaving Hinshaw a good-faith purchaser without notice. The trial court found improper recording and ruled for Hinshaw, but the appeals court reversed, and Hinshaw appealed to the Minnesota Supreme Court.