Cook v. Union Trust Co.

• Citation: 51 S.W. 600,106 Ky. 803
• Parties: COOK v. UNION TRUST CO. et al. [1]
• Decision Date: 10 June 1899
• Court: Court of Appeals of Kentucky

51 S.W. 600

106 Ky. 803

COOK v. UNION TRUST CO. et al. ^[1]

Court of Appeals of Kentucky.

June 10, 1899

Appeal from circuit court, Mason county.

"To be officially reported."

Action by Harriett W. Cook against A. M. Bramel and others to enforce a vendor's lien. Judgment giving priority to a mortgage lien of the Union Trust Company, and plaintiff appeals. Reversed.

A. M J. Cochran, for appellant.

Thos R. Phister, for appellee.

WHITE J.

In January, 1875, the executors of A. Hord sold and conveyed to A. M. Bramel certain lands in Mason county for a consideration in cash and with some deferred payments payable in one and two years from date. The deed to Bramel reserves a lien for these unpaid notes. These two notes were assigned to appellant, Cook. In March, 1891, Bramel executed a mortgage on this land to appellee, the Union Trust Company to secure a loan made by it. In September, 1892, Bramel executed a deed of general assignment of all his property for the benefit of all his creditors. Payments were made on these two notes of appellant annually up till 1892. In July, 1893, this action was brought by appellant, Cook, seeking a judgment and decree of foreclosure to satisfy the vendor's lien. Appellee trust company was made a party as well as the assignee under the deed of assignment. No defense was made by Bramel or his assignee; but appellee trust company filed its answer and cross petition, and asserted its mortgage lien as being prior to that of appellant by reason of the fact that more than 15 years had elapsed since the notes of appellant had become due. Appellant, by reply, denied the priority of appellee's mortgage lien, and alleged the fact of payments made by Bramel each year since 1877, and that her notes were not barred, and, further, when appellee took its mortgage 15 years had not elapsed from the maturity of the notes for which a lien was retained in the deed to Bramel. The court sustained a demurrer to this reply, and, appellant failing to plead further, judgment was rendered for the sale of the property, giving the appellee trust company priority. From that judgment this appeal is prosecuted. It is conceded that as to Bramel and his assignee in trust for the benefit of creditors the appellant has a lien on the land by reason of the payments made by Bramel, and that as to part of the judgment there is no contest.

It is contended for appellant that the payments made by Bramel operated to extend from that date the notes, and that the lien is but an incident of the debt, and as long as the debt is not barred the lien exists, and, being a vendor's lien, is superior to all other liens.

On the other hand, it is contended that as to vendees and mortgagees without actual notice, as appellee is alleged to be, the lien does not exist longer than the statutory time that will bar the debt. That the vendee or mortgagee is entitled to know by an inspection of the records for a period of 15 years next before whether there exists any liens, and, if none, within that time then as to such vendee or mortgagee no lien will exist. It is insisted that the payments on the note operate to extend the statutory bar only as between the payor and payee, and will not extend it as to vendees and mortgagees without at least actual notice of such payments and extensions. To support the contention of appellee, and which was followed by the lower court, we are referred to the cases of Tate v. Hawkins, 81 Ky. 578, and Kendall v. Clarke, 90 Ky. 179, 13 S.W. 583. The facts of the case of Tate v. Hawkins, as stated by the court in the opinion, are: In 1862 Hawkins executed a note due March, 1863, to one Jennings, his vendor, for the balance of purchase price of land. In 1864 this note was assigned to Tate. On the date of this assignment of the note Hawkins sold and conveyed the land for cash consideration to Basket. In 1875 Basket sold for cash consideration the land to Milner. In 1881 an action was brought by Tate against Hawkins and Milner, seeking to recover the note and enforce the vendor's lien claimed. Indorsements on the note showed that there was payment made March, 1873, and another March, 1878. Thus the note as to Hawkins was not barred by limitation. The court, per Lewis, J., said: "By the terms of the statute, the action of appellant on the note was barred fifteen years after the note matured, and he had then lost his right to maintain the action for the enforcement of the lien. If appellee Milner is now to be deprived of the safeguard provided by law, and upon the faith of which he purchased and paid for the land, it is to be done by an obstruction to the running of the statute, and a recognition of the cause of action after it had by law ceased to exist, made by Hawkins without his consent or notice to him. *** The lien is a charge upon the land, which it is not the policy of the law, nor in accordance with the analogy of the law, should exist longer than the statutory existence of the note; and, if reasons were necessary to justify this salutary and necessary principle, they are afforded by the circumstances of the case."

In the case of Kendall v. Clarke the court, by Lewis, J., said: "It is obvious more than fifteen years had elapsed from the time the note fell due until the action was instituted; but, to avoid the plea of limitation, a credit of $18.80 indorsed on the note as of January 2, 1882, is relied on, and seems to have been considered by the lower court sufficient for the purpose. Whatever may be the operation of the credit so far as Royse, while living, and his personal representative and devisees afterwards, might have been, it certainly did not nor should have the effect to continue, beyond the period of 15 years, the lien on that part of the land purchased by appellant Campbell; for it was expressly decided by this court in Tate v. Hawkins, 81 Ky. 577, that, while a partial payment made by the original vendee on a note for the purchase money within 15 years would have the effect, as to him, to suspend operation of the statute of limitation between accrual of cause of action on the note and date of payment, the rule could not be applied to the prejudice of a remote vendor nor a party to the transaction. Consequently the statute of limitation is, as to Campbell, clearly a bar, and it was error to enforce the alleged lien on, and subject to satisfaction of the note, any portion of the original tract owned by him." The note in the Kendall Case was payable December, 1869, and the action was brought May, 1885. The date of Campbell's purchase, as shown by an examination of the record, was before the statutory bar and before the payments that elongated the statute of limitation as a bar,--facts similar in every way to Tate v. Hawkins.

These cases, appellee contends, are conclusive of the question that the judgment of the lower court is the law. We are referred by appellant's counsel to the cases of McCracken Co. v. Mercantile Trust Co., 84 Ky. 344, 1 S.W. 585; Hughes v. Edwards, 9 Wheat. 489; Ewell v. Daggs, 108 U.S. 149, 2 S.Ct. 408; Perkins v. Sterne, 23 Tex. 561; Duty v. Graham, 12 Tex. 427; Flanagan v. Cushman, 48 Tex. 241; and Sanger v. Nightingale, 122 U.S. 176, 7 S.Ct. 1109.

In the case 84 Ky. 344, 1 S.W. 588, it is said: "There is no statute of limitations as to liens. If the claim becomes barred, the lien dies with it. If the claim could be made an incident of the lien, then the statute of repose would be defeated. As the claim no longer legally existed, the lien had nothing to support its existence." This case was a tax lien, which was barred in five years. In the case of Bank v. Thomas (Ky.) 3 S. W. 12, the court said "The mortgage was a mere incident to the debt, and given to secure its payment; and, when the right of recovery as to the debt itself is gone, the lien to secure it necessarily goes with it. The stipulations of the mortgage are not independent covenants upon which a recovery can be had regardless of the debt, to secure the payment of which the mortgage was given. The liability of appellee is on the original paper as the drawer; and, when that liability ceases, the covenants in the mortgage, having created no new right, except the lien, cannot be looked to as extending the liability from 5 to 15 years." In the case of Prewitt v. Wortham, 79 Ky. 287, the court said: "The rule in this state in reference to mortgages, whether on personal or real estate, is that they are mere securities for the debt. No title passes to the mortgagee and no right is acquired by the mortgagee, except as an incident to the debt. When the debt to secure which the mortgage was given is barred by statute, the incident goes with the principal,...