Bank of Hampton v. Wright

• Decision Date: 07 October 1929
• Docket Number: No. 8318.,8318.
• Citation: 35 F.2d 321
• Parties: BANK OF HAMPTON v. WRIGHT.
• Court: U.S. Court of Appeals — Eighth Circuit

35 F.2d 321 (1929)

BANK OF HAMPTON v. WRIGHT.

No. 8318.

Circuit Court of Appeals, Eighth Circuit.

October 7, 1929.

J. W. Warren, of Camden, Ark., for appellant.

Silas W. Rogers, of El Dorado, Ark., and C. E. Wright, of Magnolia, Ark., for appellee.

Before VAN VALKENBURGH and COTTERAL, Circuit Judges, and SCOTT, District Judge.

COTTERAL, Circuit Judge.

The appellant complains of the disallowance in bankruptcy of a secured claim, consisting of a note and a mortgage on a lot in Hampton, Ark., which were presented to the referee for the stated purpose of an offer to accept a conveyance of the lot in discharge of the debt. The mortgage was filed for record on April 25, 1927, in Calhoun county, Arkansas, where the lot was situated, and, while it does not appear, we assume this antedated the bankruptcy petition more than four months.

The trustee refused the offer and applied for a sale of the property free of liens, because of an alleged equity above the mortgage, which by a response the appellant denied. Later the trustee objected to the claim on the grounds that the mortgage was not authorized by the bankrupt corporation, was made only by individuals, and the acknowledgment of the instrument was defective, and hence it was not entitled to be recorded and did not effect notice to creditors. On a hearing of the objections, the referee disallowed the claim as a security, holding the mortgage was not signed or sealed by the bankrupt corporation, and was not made or acknowledged in its name. The District Judge affirmed that order on review, and the bank appeals.

The mortgage recites that it is made by C. I. Abbott, president, and W. R. Reddin, secretary, of the Abbott Company, and bears only the signatures of those officers, with the word "Seal" opposite each name, The acknowledgment indorsed on the instrument is as follows:

"Acknowledgment.

"State of Arkansas, County of Calhoun.

"Be it remembered, that on this day came before me, the undersigned, a circuit clerk within and for the county aforesaid, duly commissioned and acting C. I. Abbott, president, and W. R. Reddin, secretary, of Abbott Company, a corporation to me well known as the grantor, in the foregoing deed, and stated that they had executed the same for the consideration and purposes therein mentioned and set forth.

"Witness my hand and seal as such circuit clerk on this 11th day of February, 1927.

"R. N. Lyon, Circuit Clerk."

Section 1521, C. & M. Dig. Stat. of Arkansas, provides:

"The acknowledgment of deeds and instruments of writing for the conveyance of real estate, or whereby such real estate is to be affected in law or equity, shall be by the grantor appearing in person before such court or officer having the authority by law to take such acknowledgment, and stating that he had executed the same for the consideration and purposes therein mentioned and set forth."

Section 1526 of said Digest, prescribes the form of a corporate acknowledgment in these terms:

"All deeds, conveyances, deeds of trust, mortgages and other instruments in writing affecting or purporting to affect the title of any real estate situated in this state and executed by corporations, the form of acknowledgment shall be as follows:

"State of ______ "County of ______

"On this ______ day of ______, 19__, before me, ______, a notary public (or before any officer within this state or without the state now qualified under existing law to take acknowledgments), duly commissioned, qualified and acting, within and for said county and state, appeared in person the within named ______ and ______ (being the person or persons authorized by said corporation to execute such instrument, stating their respective capacities in that behalf), to me personally well known, who stated that they were the ______ and ______ of the ______, a corporation, and were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of said corporation, and further stated and acknowledged that they had so signed, executed and delivered said foregoing instrument for the consideration, uses and purposes therein mentioned and set forth.

"In testimony whereof, I have hereunto set my hand and official seal this ______ day of ______, 19__.

"All deeds or instruments affecting or purporting to affect the title to land executed in the above and foregoing form shall be good and sufficient."

Section 7381 of the Digest reads as follows:

"Every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time the same is filed in the recorder's office for record, and not before; which filing shall be notice to all persons of the existence of such mortgage."

The District Judge, after quoting from the case of O'Neill v. Lyric Amusement Co., 119 Ark. 454, 178 S. W. 406, and noticing the title of a trustee in bankruptcy, held as follows:

"The lien of the mortgage in question must be determined by the law of Arkansas. By the decision of the Supreme Court of Arkansas, a mortgage defectively acknowledged is not entitled to record, and even though recorded creates no lien as against creditors of the mortgagor.

"Under the Bankruptcy Law, section 75, title 11, U. S. C. 11 USCA § 75, the trustee is vested with all rights, remedies and powers of a judgment creditor holding an...