Cazort & Mcgehee Company v. Dunbar

• Decision Date: 12 July 1909
• Parties: CAZORT & MCGEHEE COMPANY v. DUNBAR
• Court: Arkansas Supreme Court

121 S.W. 270

91 Ark. 400

CAZORT & MCGEHEE COMPANY v. DUNBAR

Supreme Court of Arkansas

July 12, 1909

Appeal from Crawford Chancery Court; J. Virgil Bourland, Chancellor reversed.

Decree reversed and cause remanded.

Jesse London and Winchester & Martin, for appellants.

1. Judgment against the sureties by consent does not bar them from any benefit under the mortgage. The right to foreclose accrued as soon as Ella Sharp failed and refused to perform the judgment. 25 Ark. 170; 23 Id. 530. The mortgage was a contract for indemnity, and failure to satisfy the judgment gave the sureties the right at once to enforce the contract. 23 Ark. 530. The liability was fixed by the judgment of the Supreme Court affirming the judgment below. The failure of the principal to satisfy the judgment perfected the right of the sureties to enforce indemnity. 16 Ark. 83; 56 S.W. 7; 43 Iowa 86.

2. If the mortgage contains enough to embrace the liability intended to be secured, and to put a person examining the record on notice, and to direct him to the proper source of information, it is sufficient. 46 Ark. 70; Jones on Mortg. (5th Ed.) §§ 380, 384. The mortgage protects the parties to the extent of the amount they were compelled to pay. Cases supra.

Ira D Oglesby, for appellees; Edwin Hiner, of counsel.

1. Ella Sharp did not convey the land as her separate property, but only released dower and homestead rights. The exhibits to the complaint control and determine plaintiff's right of recovery. 68 Ark. 263.

2. Ella Sharp was not a party to the suit in which a consent judgment was rendered, and she is not bound. The complaint shows no condition broken authorizing them to foreclose against a bona fide purchaser. The complaint does not show the necessary facts to constitute a cause of action. There is no showing that the conditions of the mortgage were broken, and that by reason thereof the sureties were required to pay the judgment. Jones on Mortg. §§ 1213, 1314; 44 Wis 489; 16 Ark. 83; 23 Id. 530; 25 Id. 170; 56 S.W. 7.

OPINION

FRAUENTHAL, J.

The plaintiffs, Cazort & McGehee Company and another, instituted this suit in the Crawford Chancery Court against the defendants, E. C. and W. T. Dunbar, seeking to foreclose a mortgage executed to plaintiffs by John and Ella Sharp on real estate which was subsequently conveyed by the mortgagor, Ella Sharp, to the defendants.

To the complaint the defendants interposed a general demurrer, which was incorporated in their answer. This demurrer was sustained by the chancery court; and, the plaintiffs declining to plead further, the complaint was dismissed; and from the order of dismissal the plaintiffs bring this appeal.

The complaint, in substance, alleged that in a certain cause pending theretofore in the Crawford Chancery Court, wherein Henry L. Fitzhugh, trustee, was plaintiff and John Sharp and Ella Sharp were defendants, a decree was rendered in favor of the plaintiffs in that suit, and the defendants appealed therefrom to the Supreme Court; and on August 1, 1903, executed a supersedeas bond with the plaintiffs in the present case as sureties thereon; that said decree was by the Supreme Court affirmed in part and reversed in part; "that the said Ella Sharp failed and refused to perform that part of the judgment of the lower court which was affirmed by the Supreme Court;" that afterwards said Fitzhugh, trustee, instituted suit in the Crawford Circuit Court against these plaintiffs upon said supersedeas bond, and on July 3, 1907, recovered judgment against these plaintiffs for the sum of $ 2,500 and costs amounting to $ 7.75; and that on October 15, 1907, the plaintiffs paid said judgment; that, in order to secure the plaintiffs by reason of the execution by them of said supersedeas bond as such sureties, the said John Sharp and Ella Sharp, on August 1, 1903, executed to them a mortgage on certain real estate, which was duly acknowledged by them, and that the mortgage was duly filed for record on August 11, 1903; that thereafter on June 6, 1905, the said Ella Sharp conveyed said real estate to the defendants. And the plaintiffs in this complaint prayed for a foreclosure of said mortgage and a sale of the land to reimburse them for the amount paid by them on said supersedeas bond and judgment; and they prayed "for such other relief, general and special, as the facts may justify and as to the court may seem fit." Copies of the supersedeas bond, mortgage and judgment referred to in the complaint were made exhibits thereto and also the deed from Ella Sharp to defendants. These exhibits are the foundation of this action, and they are therefore a part of the record of this suit, and will control the averments of the complaint. Beavers v. Baucum, 33 Ark. 722; American Freehold Land Mortgage Co. v. McManus, 68 Ark. 263, 58 S.W. 250.

By the provisions of the supersedeas bond the said John Sharp and Ella Sharp as principals, and these plaintiffs as sureties, did covenant, amongst other things, the following: "Also that they will satisfy and perform the judgment or order appealed from in case it should be affirmed and any judgment or order which the Supreme Court may render or order to be rendered by the inferior court not exceeding in amount or value the original judgment or order."

The indebtedness clause in the said mortgage executed by John and Ella Sharp to plaintiffs is as follows: "Whereas, the said Cazort & McGehee Company have become sureties on a supersedeas bond given by John Sharp and Ella R. Sharp to supersede a judgment in favor of Henry L. Fitzhugh in the sum of four thousand dollars. Now, if said John Sharp and Ella R. Sharp shall satisfy said judgment, if affirmed, or any judgment rendered against them by the Supreme Court in this cause, then this bond shall be void, but if they fail to do so, then the said grantees or their assignee, agent or attorney in fact, shall have power to sell said property at public sale to the highest bidder, for cash." etc.

It is contended by the defendants that the complaint does not state facts sufficient to show that any condition of said mortgage has been broken, so as to authorize a foreclosure; that this is an indemnity mortgage; that the condition of said mortgage would only be broken in event that the Supreme Court affirmed the judgment appealed from and rendered judgment in the Supreme Court against the makers of the supersedeas bond, and the mortgagors did not then satisfy such judgment and the mortgagees did pay same; and they contend that such allegations are not made in the complaint.

In determining whether the complaint in this cause states sufficient facts to constitute a cause of action, every fair and reasonable intendment must be indulged in to support it. If a cause of action can be reasonably inferred from the allegations, then it is not subject to a general demurrer. If the averments are imperfect, incomplete or defective, the proper mode of correction is not by demurrer but by a motion to make the allegations more definite and certain. Upon a general demurrer being interposed to a pleading the test...