Bank of Mulberry v. Sprague

• Court: Arkansas Supreme Court
• Writing for the Court: SMITH, J.
• Citation: Bank of Mulberry v. Sprague, 47 S.W.2d 601, 185 Ark. 410 (Ark. 1932)
• Decision Date: 21 March 1932
• Docket Number: 205
• Parties: BANK OF MULBERRY v. SPRAGUE

47 S.W.2d 601

185 Ark. 410

BANK OF MULBERRY v. SPRAGUE

No. 205

Supreme Court of Arkansas

March 21, 1932

Appeal from Franklin Chancery Court, Ozark District; C. M. Wofford Chancellor; reversed.

Reversed and cause remanded.

Starbird & Starbird, for appellant.

G C. Carter, for appellee.

SMITH J. KIRBY, J., dissents.

OPINION

SMITH, J.

This suit was brought by Sprague and his wife to foreclose a mortgage given to them by W. W. Mahan and wife to secure a note payable to their order for the sum of $ 400, dated March 8, 1916, and due twenty-four months after date. The complaint was filed April 14, 1930, and alleged that the property mortgaged was an undivided one- eighth interest in the land described, which Mahan had inherited from his father, W. Mahan. On the back of the note there appeared the following indorsements: "$ 80 Sept. 26, 1918. Rec'd of F. L. Wagner eighty dollars. (Signed) Herbert Sprague. April 4, 1920. Rec'd of F. L. Wagner forty dollars. (Signed) Herbert Sprague. May 27, 1921. $ 140. Rec'd of F. L. Wagner one hundred forty dollars. (Signed) Herbert Sprague. $ 60. Dec. 15, 1922. Rec'd of F. L. Wagner sixty dollars. (Signed) Herbert Sprague. $ 50. Nov. 23, 1925. Rec'd fifty dollars."

It is apparent that, but for this last payment, the note was barred by the statute of limitations when the suit was brought. It will also be observed that all the payments were signed as having been received by Herbert Sprague, whereas the last payment is not so signed, and was written in pencil, and the other payments are indorsed in ink. The mortgage was also made an exhibit to the complaint, and it appears to have been filed for record March 16, 1916, and to have been duly recorded.

An intervention was filed July 14, 1930, by the Bank of Mulberry, in which it was alleged that F. L. Wagner had purchased the interests of all the heirs of W. Mahan, and had on June 5, 1927, mortgaged the entire tract to the bank to secure a note due June 15, 1930, on which there was due an unpaid balance of $ 1,261.21. This mortgage was not introduced in evidence, but its execution and validity were admitted in open court.

The intervener alleged that the mortgage sought to be foreclosed was barred by the statute of limitations, and prayed the court to adjudge that fact, and that intervener's mortgage be declared a first lien, and that it be ordered foreclosed as such.

Wagner filed an answer, in which he adopted the recitals of the intervention, and specifically denied that he had made the alleged payment, or any payment, credited on the note as having been made on November 23, 1925. Counsel for plaintiff offered the note in evidence, but no witness gave any testimony concerning it, and no one testified that the alleged payment of November 23, 1925, had in fact been made.

Only three witnesses testified in the case, but, before calling any witness, plaintiff introduced three letters from Wagner to Sprague, but no witness testified that Wagner had written them, or that Sprague had received them. These letters relate to the debt to Sprague, and promised to pay it, and two of them refer to remittances therein made. The last of these is dated 12-15, 1922, and stated that a check for $ 60 was enclosed. There is no reference to the alleged payment made in 1925 in any of these letters; in fact, none of them bore a date later than 1922.

The first witness called was the clerk and recorder, who identified the mortgage record in which the mortgage to Sprague was recorded, and he stated that there appeared on the margin of the record the same indorsements which were found on the back of the note, set out above. This marginal indorsement was not signed by Sprague, or his wife, or by any one for either of them, or by any other person, and was not attested by the clerk or his deputy. No name whatever was signed on the record. The clerk testified that he knew nothing about these indorsements except that they were on the record, and that he had just seen them on the day of the trial for the first time.

A vice president of the bank was the next witness called. He introduced the note of Wagner to the bank, and stated the balance due on it.

The third and last witness called was J. D. McIlroy, who testified that he had been a deputy clerk for fifteen years, but had "quit working the 14th of February, 1927, or 1928." This witness was shown the indorsements on the margin of the record and stated that they were in his handwriting. But he did not remember when or by what authority he made the indorsements. Being asked when the indorsements were made, he answered that he did not know, and, when asked about "How many years back"? he answered: "I cannot say." He knew nothing whatever about the payments, and could only identify his writing, but stated that "Some one gave me the information." He did not recall why he had failed to attest the indorsement on the record.

This is a brief but complete summary of the pleadings and testimony in the record before us, and upon this record a decree was rendered ordering the foreclosure of plaintiff's mortgage as prior to that of the bank, and this appeal is from that decree.

The decree of the court below contains the recital that Wagner had purchased "subject to the note and mortgage of the plaintiff and assumed the payment of plaintiff's mortgage in writing as a part of the purchase price of the lands mentioned in plaintiff's mortgage." No pleading filed in the case contained any such allegation, and there was no testimony on that subject except only the unidentified letters addressed to Sprague and signed by Wagner. The deed to Wagner from Mahan was not offered in evidence, and no testimony was offered concerning that instrument.

The letters from Wagner to Sprague, above referred to, were offered in evidence without objection, and, if it be said that this failure to object to their introduction rendered them competent, they prove only that Wagner recognized that the mortgage to Sprague from his grantor of an undivided eighth interest was then a subsisting lien on the land, it not then being barred by the statute of limitations. He bought this eighth interest subject to this mortgage, because that mortgage was of record when he purchased, and it was, of course, necessary for him to pay the debt there secured, or cause it to be paid, to clear his title of this outstanding incumbrance. However, the last of these letters was written more than seven years before the suit was filed to foreclose the mortgage.

Laying aside all questions of pleadings and of evidence, and, assuming that all testimony offered was competent, and that all pleadings were amended to conform thereto, although no request to that effect was made, we have left certain questions of law.

The first of these relates to the alleged payment of November 23, 1925, the only payment made within five years of the date of the filing of the suit. The complaint alleges that this payment was made. The answer denied that fact. Neither pleading was verified. The note itself showed only that the payment was indorsed on its back. No witness testified concerning this payment. This payment having been alleged and denied, the burden was on the plaintiff to show that it had, in fact, been made.

In the case of Taylor v. White, 182 Ark. 433, 31 S.W.2d 745, it was said: "The fact of a part payment, which was relied upon to stop the running of the statute of limitations, was denied by (defendant) White, and the burden was therefore upon the plaintiff to prove that fact." A number of cases were there cited in support of this statement of the law, and many others to the same effect might also be cited.

There is no proof that the payment was made except the indorsement thereof on the note, and this does not suffice to prove the payment. It was held in the case of Johnson v. Spangler, 176 Ark. 328, 2 S.W.2d 1089, 59 A. L. R. 899, to quote a headnote in that case, that: "Where payments were relied upon to stop the running of the statute of limitations, the burden of proof is on the party alleging it to show by other evidence, in addition to the indorsement on the note, that the payment was in fact made." See also, to the same effect: Alston v. State Bank, 9 Ark. 455; Slagle v. Box, 124 Ark. 43, 186 S.W. 299.

We are therefore of the opinion that the note from Mahan to Sprague was barred under the record thus made by the statute of limitations at the time of the institution of the suit to foreclose the mortgage given to secure it, and for this reason the decree of the court below must be reversed.

We are also of the opinion that the mortgage from Mahan to Sprague was barred, as against the intervener, the Bank of Mulberry, through failure to comply with the provisions of § 7408, Crawford & Moses' Digest, under the record before us.

It is provided by this § 7408, Crawford & Moses' Digest that in suits brought to...