Bank of Hoxie v. Meriwether
| Decision Date | 20 October 1924 |
| Docket Number | 183 |
| Citation | 265 S.W. 642,166 Ark. 39 |
| Parties | BANK OF HOXIE v. MERIWETHER |
| Court | Arkansas Supreme Court |
[Copyrighted Material Omitted]
Appeal from Lawrence Chancery Court, Eastern District; Lyman F Reeder, Chancellor; affirmed.
STATEMENT OF FACTS.
On the 22d day of March, 1922, T. J. Sharum brought this suit in equity against Gus Mitchell and the Bank of Hoxie to foreclose two mortgages given to him by Gus Mitchell on a certain lot in the town of Hoxie, Lawrence County, Arkansas.
The Bank of Hoxie was made a party on the ground that it claimed to have a mortgage against the same property. The Bank of Hoxie joined in the suit, and asked for a foreclosure of its mortgage against the property.
Subsequently C. J. Saenger filed an intervention and asked for the foreclosure of an equitable lien claimed by him against said property, on the ground that he had erected a party wall, and that the amount agreed to be given him for erecting said wall had not been paid.
It appears from the record that the intervener, C. J. Saenger being the owner of a certain lot in the business section of Hoxie, entered into a written agreement with E. P Richardson, the owner of the adjoining lot, for the erection of a party wall. The agreement was signed in duplicate on the 14th day of May, 1913, by the parties to it, and A. G. Allbright and A. G. Richardson signed the agreement as witnesses. The agreement recited that C. J. Saenger proposed to erect a two-story store building on his lot, with a side wall thirteen inches thick. It was agreed that one-half of the side wall should be erected on the lot of E. P. Richardson by C. J. Saenger, and that this wall should be known as a party wall, and should be owned in common by the owners of the respective lots on which it was situated.
It was further agreed that, inasmuch as Saenger was to pay the entire cost of the erection of the party wall, because his building was first to be constructed, and because Richardson was undecided whether he would erect a one or a two-story building on his lot, he should pay to Saenger one-half of the value of whatever part of the party wall he used, immediately upon the completion of the building on his lot.
It was further provided that the entire agreement should be made binding on the heirs or assigns of both parties. The agreement was neither acknowledged nor recorded.
After the party wall had been erected by Saenger, Richardson conveyed his lot to Gus Mitchell. In the summer of 1920 Gus Mitchell commenced and completed the erection of a two-story brick store building on his lot, and used the party wall as one side of the building. On August 20, 1920, Mitchell borrowed $ 6,000 from T. J. Sharum, and executed a mortgage on his lot to secure the payment thereof. On December 24, 1920, he borrowed $ 3,000 from the Bank of Hoxie, and executed a mortgage on said lot to secure the payment thereof. On February 21, 1921, he borrowed an additional sum of $ 2,623.37 from T. J. Sharum, and executed a mortgage on said lot to secure the payment of the same. All of these mortgages were duly filed for record when they were executed.
According to the testimony of C. J. Saenger, Gus Mitchell purchased his lot from E. P. Richardson in May, 1920. Mitchell began the erection of a two-story building upon the lot immediately after his purchase, and completed it in the summer of 1920. While the building was being constructed, Saenger entered into negotiations with Mitchell for the payment of his half of the party wall. Negotiations were pending for some time, and in October, 1920, a compromise was reached whereby Mitchell promised to settle with Saenger for the party wall in the sum of $ 1,068, which was estimated by these parties to be one-half of the value of the party wall.
A. G. Allbright, one of the subscribing witnesses to the agreement to build the party wall, was cashier of the Bank of Hoxie; but the record does not show whether he was cashier of the bank at the time he witnessed the agreement in 1913, or not.
It appears from the record that he was cashier of the bank in the summer of 1920, when Mitchell erected the two-story building on his lot. During the period of time while Mitchell was erecting the building on his lot, Saenger spoke to Allbright, at various times, about the amount which Mitchell should pay him for his half of the party wall, and Allbright at this time was cashier of the Bank of Hoxie. He was also cashier of said bank in December, 1920, when the bank lent Mitchell the $ 3,000 and took a mortgage on said lots to secure the payment of the same.
Mitchell made default in the payment of all of said mortgages, and also failed to pay Saenger for his half of the party wall. Subsequently Mitchell was adjudged a bankrupt.
T. J. Sharum had no notice of the party wall agreement between Saenger and Richardson at the time the mortgages were executed to him by Mitchell, the grantee of Richardson. In April, 1922, T. J. Sharum became the owner by purchase of the lot of Gus Mitchell on which one-half of the party wall in question is situated. At that time he had been fully advised as to the claim of Saenger with regard to the party wall.
The chancellor found the facts to be substantially as above stated, and declared that the real point in issue on the law of the case is the question of priority of liens between Saenger and the Bank of Hoxie. The chancellor was of the opinion that the Bank of Hoxie took its mortgage from Mitchell with notice of the equitable lien of Saenger upon the lot for one- half of the cost of the party wall, under the agreement providing for its erection. A decree in accordance with the finding of the chancellor was rendered. The foreclosure of the respective mortgages of T. J. Sharum and of the Bank of Hoxie, according to their priorities, was provided for in the decree.
It was further decreed that the written agreement between C. J. Saenger and E. P. Richardson constituted a covenant running with the land, and that Saenger had a lien upon the lot owned by Gus Mitchell as grantee of E. P. Richardson and the Bank of Hoxie, a purchaser from him with notice of the lien.
To reverse that decree the Bank of Hoxie has duly prosecuted an appeal to this court. T. J. Sharum has since died, and the cause has been revived in the name of his administrator and heirs.
Decree affirmed.
Ponder & Gibson, for appellant.
The agreement between Saenger and Richardson created only a personal obligation of Richardson for the payment of such part of the wall as he might use. (A). Because such is the legal construction of the contract. 78 Ark. 65; 54 N.Y. 444; 28 Ind. 37; 29 Misc. 81; 37 N.Y. 106; 161 Mass. 489; 31 N.Y.S. 851; 11 Miscel. Rep. 9; 81 Tex. 201; 46 Ga. 19; 57 Ind. 88; 10 Pa.St. 155; 102 Iowa 206; 159 N.W. 441; 17 Pick 538; 117 Mass. 387; 124 N.Y. 224; 115 Ill. 199. (B). Because the contract shows on its face that such was the intention of the parties. 102 Ind. 166; 120 Mich. 545; 81 Mo. 545; 26 Ill.App. 417. The party wall agreement between Saenger and Richardson did not create an incumbrance upon the land of Richardson. (A). Because such an agreement does not create an incumbrance which will constitute a breach of covenant against incumbrances. 37 N.Y. 106; 3 Daily 64; 43 N.Y.S. 328; 54 How. Pr. 340; 50 N.Y. 644; 31 Iowa 46; 7 Penn. Dist. R. 375. (B). That such an agreement does not give priority over other liens. 93 Ill. 359. No lien existed by reason of the party wall agreement. (A). Because the instrument creating such agreement was not recorded. See §§ 1516 and 8624, C. & M. Digest. (B). Because the agreement, not being recorded, the same did not constitute notice as against subsequent mortgagees or purchasers, even if they had actual notice thereof. 9 Ark. 112; 20 Ark. 190; 18 Ark. 105; 49 Ark. 457; 68 Ark. 168; 71 Ark. 517. Even if the party wall agreement created a covenant running with the land, or any other lien or easement on the land which could be enforced in equity, when the wall was used by Mitchell the covenant ceased to be a running one and became a personal covenant of Mitchell, and all parties dealing with the land thereafter were authorized to infer that payment or settlement had been made. 98 U.S. 56; 12 Ala. 159; 135 Mass. 151; 155 Mass. 79; 38 Bard. 191; 21 Wend. 123; Rawle, Covenants, 5 ed. § 204; 56 Miss. 700; 35 Sou. 218; 161 Mass. 487; 28 Pa. S.Ct. 587. If the agreement created a covenant which ran with the land, notice was not a requisite to its enforcement, and the lien of Saenger, being a first lien, and Sharum, holding the last mortgage and being the last purchaser, must discharge the Saenger lien, as well as the lien of the appellant. 20 Ohio St. 414; 44 La.Ann. 492; 24 La.Ann. 113; 27 La.Ann. 119; 1 La.Ann. 140; Simms on Covenants, 138 and 171; 1 Bradf. 40; 3 Cush. 500; 155 Mass. 444; 124 Mich. 545; 67 Minn. 25. If a lien of any kind in favor of Saenger was created by the agreement and notice was necessary to its enforcement, the fact that the wall was standing half on Mitchell's lot was notice to all parties dealing with the property, and placed them on inquiry. $ 86 Ill.App. 380. And the wall standing as it did was sufficient notice to put all upon inquiry as to his rights thereto. 129 Iowa 569; 105 N.W. 61; 10 Phila. 341; 33 Ark. 465; 34 Ark. 391; 35 Ark. 195; 47 Ark. 533; 41 Ark. 169; 145 Ark. 306. There was no special notice to the Bank of Hoxie such as would charge it solely, as knowledge acquired by a bank officer in his private capacity and not while acting for the bank, and which was not communicated to any other officers of the bank, is not imputed to it. 3 R. C. L. 477 and 478; 65 Ark. 543. If shown, it also had notice that a settlement by notes had been made, and relied thereon. Saenger, knowing of the...
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