Central Life Ins. Co. of Illinois v. Thompson
| Decision Date | 17 November 1930 |
| Docket Number | 237 |
| Citation | 33 S.W.2d 388,182 Ark. 705 |
| Parties | CENTRAL LIFE INSURANCE COMPANY OF ILLINOIS v. THOMPSON |
| Court | Arkansas Supreme Court |
Appeal from Little River Chancery Court; C. E. Johnson, Chancellor reversed in part.
STATEMENT BY THE COURT.
This action was brought by appellant to foreclose a mortgage securing a note held by it on certain lands in Little River County, Arkansas, and from the decree denying appellant the right to a judgment against one of the appellees, who had assumed the payment of the mortgage debt, the appeal is prosecuted.
The facts are, briefly, that Poindexter and others, the owners of 1,270 acres of land in Little River County, Arkansas negotiated a loan on October 25, 1917, from the Conservative Loan Company of Little Rock, in the sum of $ 15,000 executing a promissory note therefor with interest coupons attached due 5 years after date, bearing interest from date until paid at 6 per cent. per annum. On the same day the parties executed a mortgage to the loan company to secure the payment of the note. On the 5th of January, 1918, the Conservative Loan Company sold and transferred the note and mortgage to appellant company.
Before the date of maturity of the note on October 25, 1922, Poindexter and others, the mortgagors, sold and conveyed the lands to Floyd Thompson and Louis Heilbron, as tenants in common, subject to the mortgage and on the 1st day of November, 1922, said vendees, Thompson and Heilbron, executed their "mortgage renewal agreement" whereby, in consideration of the extension by the appellant company of the loan from the 1st day of November, 1922, until the 1st day of November, 1927, they stipulated and agreed to pay the principal of the Poindexter note when due, with interest at the rate of 6 per cent. per annum payable annually from November 1, 1922, until November 1, 1927, and, as evidence of the installments of interest referred to Thompson and Heilbron executed their 5 interest coupon notes, each for the sum of $ 900 to appellant company due respectively on the first days of November, 1922 to 1927.
On March 8, 1927, the arrangement between Thompson and Heilbron for the ownership and farming of these and other lands was dissolved, the lands owned by them jointly were partitioned and Heilbron conveyed by warranty deed to Thompson, in consideration of $ 1 and the assumption by him of all the outstanding indebtedness secured by mortgage or deed of trust, the lands in controversy, which had theretofore been conveyed to them by Poindexter and others. The principal of appellant company's loan, under the terms of the extension agreement executed by Thompson and Heilbron, again became due on the 1st day of November, 1927. Shortly before said date Floyd Thompson, after his partition of their lands with Heilbron and his assumption of this debt, procured an extension of the loan, which was finally consummated for two years, agreeing to pay 7 per cent. interest therefor and certain of the interest notes due at maturity and taxes. Thompson wanted to take up the old loan and execute a new mortgage and notes, but the appellant company preferred to continue the loan, upon the payment of taxes, without the execution of any new papers of such extension agreement, and did so. Heilbron was not informed of the extension agreement between Thompson and appellant, and did not assent thereto, claiming he had no knowledge of such extension until foreclosure was threatened and payment of the loan demanded of him. Neither did he ever notify appellant company of his transfer of his interest in the lands to Thompson, who assumed the payment of the mortgage debt. The lands had depreciated in value from November 1, 1927, from 20 to 25 thousand dollars, by reason of overflows and not being cultivated, to about ten thousand dollars at the time demand was made upon Heilbron and the foreclosure proceeded with.
The Texarkana National Bank to which Thompson had conveyed his interest in the mortgaged lands along with other lands in a settlement made with the bank of his indebtedness to the bank, was made a party to the foreclosure suit, and Thompson by cross-complaint contended that the bank had assumed to pay the mortgage debt of appellant, and should be required and held to do so under its executed contract of settlement with him.
The court decreed a foreclosure, rendered personal judgment against Thompson for the amount of the mortgage debt, and held that appellant was not entitled to recover judgment against Heilbron, and denied Thompson recovery against the Texarkana National Bank. Appellant excepted to the ruling of the court in not holding Heilbron personally liable and in refusing to render judgment against him, and from this decree the appeal is prosecuted by appellant; Thompson appealing also from the decree denying him relief against the bank.
Decree reversed in part and cause remanded, and affirmed in part.
Arnold & Arnold and King, Mahaffey, Wheeler & Bryson, for appellant insurance company.
H. M. Barney and Frank S. Quinn for Thompson; J. M. Carter and B. E. Carter, for Texarkana National Bank; James D. Head for Louis Heilbron.
OPINION
KIRBY, J., (after stating the facts).
Appellant insists that the chancellor erred in refusing to render a personal judgment against Louis Heilbron, upon his obligation to pay the indebtedness due under the mortgage, upon foreclosure thereof; while it is contended for Heilbron that upon his conveyance of the lands to Floyd Thompson, who assumed the debt, he became thereby only a surety for Thompson, and was released from the payment of the debt by appellant's granting Thompson an extension of time for payment of the loan, without his assent or notice to him thereof.
In Wallace v. Hammonds, 170 Ark. 952, 281 S.W. 902, the court held, that a purchaser of lands from the mortgagor, who assumed or agreed to pay the mortgage indebtedness, would become personally liable therefor, saying: "It is well settled in this State that, where a purchaser of mortgaged lands from the mortgagor assumes and agrees to pay the mortgage thereon, he becomes personally liable therefor, which liability inures to the benefit of the mortgagee, who may enforce it in an appropriate action. Felker v. Rice, 110 Ark. 70, 161 S.W. 162; Walker v. Mathis, 128 Ark. 317, 194 S.W. 702; Kirby v. Young, 145 Ark. 507, 224 S.W. 970; and Beard v. Beard, 148 Ark. 29, 228 S.W. 734.
It has also been held, that an agreement, between the purchaser of mortgaged lands with the mortgagor, to pay the mortgagor's debt to the mortgagee, may be rescinded without the latter's knowledge or consent, where no privity of contract has been established by the mortgagee's acceptance of the purchaser as the debtor; but such agreement cannot be rescinded by reconveyance to the mortgagor without consent of the mortgagee, after the latter has been notified of such assumption and has extended the time of making the payment to the purchaser, and the property has, meanwhile, decreased in value. McCown v. Nicks, 171 Ark. 260, 284 S.W. 739.
The lands were conveyed by the mortgagors to Thompson and Heilbron, subject to the mortgage only, without the...
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