Caldwell v. Hall

• Citation: 1 S.W. 62,49 Ark. 508
• Parties: CALDWELL v. HALL
• Decision Date: 19 June 1886
• Court: Arkansas Supreme Court

1 S.W. 62

49 Ark. 508

CALDWELL v. HALL

Supreme Court of Arkansas

June 19, 1886

APPEAL from Lee Circuit Court in Chancery, M. T. SANDERS, Circuit Judge.

Decree reversed and cause remanded.

Sanders & Husbands for appellants.

The finding of the Chancellor that the $ 500 note was paid by appellee, is clearly contrary to the evidence. The court will review the findings of facts by the court, and if clearly against evidence will reverse. Nolen v. Hardin, 43 Ark. 318.

When the maker of a note is found in possession of it, the presumption is that the note is paid. The counter presumption is equally strong, that as long as the holder of the note retains possession of it, the presumption is that the note is not paid. 65 Ga. 221. Not only this, but there is another presumption in favor of appellant, and a very strong one that when the holder of a note receives from the maker another note either on himself or other parties, for the payment of the original note, the presumption is, that such note or notes are so received as collateral or additional security and not as absolute payment or satisfaction of the original note.

These presumptions can only be overcome by strong evidence of a contrary intention, and there is none in this case. See 84 Ill. 183; 58 Ind. 221; 85 Penn., 244; 53 Ind. 279; 68 Ga 281; 56 id., 214; 51 Miss. 84; 5 Neb. 433; 51 Miss. 631; 50 Cal. 162; 14 Kan. 164; 66 Ill. 351; 28 Ark. 166; 27 id., 374; 29 id., 496.

H. N Hutton for appellee.

OPINION

COCKRILL, C. J.

This is an appeal from a decree canceling a mortgage, and enjoining the trustee named in the instrument from executing a power conferred upon him by its terms to sell the mortgaged premises for the purpose of paying off the mortgage debt. The suit was brought by the mortgagor against the trustee and beneficiaries under the mortgage. The court found, in substance, that the mortgage debt had been paid and decreed accordingly.

The proof upon which the case was heard was not full nor satisfactory on either side. The mortgage is not made a part of the record and some obvious facts that would render the solution of the questions presented easier are only vaguely hinted at in the testimony. The case is brought here, however, for determination, and upon the whole we are able to gather about this state of facts from the conflicting data that are given:

Mrs Hall, the appellee was the owner of a tract of land in Lee county, which she desired to cultivate in 1880. To enable her to procure supplies on a credit to make a crop she executed the mortgage in question upon the land and the crop to be raised thereon in that year, in favor of a merchant named Brooks, to secure her note for $ 500, payable to the merchant's order in the following autumn, and delivered the note and mortgage to him, as security for the payment of the supply account she was to contract. An account was thereafter opened upon the merchant's books with Mrs. Hall and her son jointly. No explanation is given of the son's connection with the transaction. It is not contended, however, that Mrs. Hall's indebtedness was less than the face of the note, and further than that we need not inquire. The lands produced a poor crop and the merchant's account exceeded the amount of the mortgage security. Only a partial payment was made on the debt. The proof is conflicting as to the amount of this payment. On the part of Mrs. Hall it is said that eight heavy bales of cotton worth $ 250 were delivered to the mortgagor to be credited on the mortgage debt, but the only witness who testified to the fact does not profess to have delivered the cotton himself or to have been present when it was delivered. On the other hand, the merchant testifies that only seven bales were delivered to him and that the gross receipts therefor were $ 227.35. He is positive in his statement as to the number of bales received, and is aided in arriving at his conclusion as to the amount the cotton realized, by his contemporaneous book entries showing the date of the receipt of each bale, its weight and the price per pound realized. These facts render his statements as to the amount and value of the cotton received more trustworthy than the statements in round numbers made by the appellee's witness. But the merchant further testifies that he paid for picking and getting the cotton into market the sum of $ 147.75; that the net proceeds of the sale amounted to only $ 79.60, and that this was the amount for which credit was given. The correctness of these figures was not denied and the statement is therefore taken as true.

It is a well-settled principle in equity that one who has a lien on a growing crop may advance what is fairly necessary to prevent the waste or destruction of the security, and may retain the advances thus made out of the proceeds of sale before crediting any portion of his debt. Hughes v. Johnson, 38 Ark. 285; Fry v. Ford, 38 Ark. 246. This appears to be what the merchant did in this instance.

There can be no question where the application of this payment of $ 79.60 should be made. The fund arose from a sale by the mortgagee, or from the appropriation of the value of a part of the mortgage security; and, without the consent of the mortgagor, the creditor could not divert it from the partial extinguishment of the mortgage debt. Turner v Greer, 47 Ark. 17, 14 S.W. 383. The nearest approximation we can make to the date of this payment is January 1, 1881, and the sum of $ 79.60 should have been credited on the mortgage as of that date. Shortly after this time Mrs. Hall rented out her lands for the year 1881 for the sum of $ 400. The total indebtedness to the merchant for supplies at this time amounted to $ 1400. Mrs. H. offered the rent notes retained by her to the merchant as collateral security for what she owed him. At his suggestion these notes were surrendered by Mrs. Hall to the tenants who had executed them, and a new note for the total amount of the rent was taken, payable directly to the merchant, with a view of having the tenants attorn to him. He afterwards caused one of the tenants to execute a mortgage in his favor upon the crop...