Cumberland Bldg. & Loan Ass'n v. Sparks

• Decision Date: 02 November 1900
• Parties: CUMBERLAND BUILDING & LOAN ASS'N et al. v. SPARKS et al.
• Court: U.S. District Court — Eastern District of Arkansas

106 F. 101

CUMBERLAND BUILDING & LOAN ASS'N et al. v. SPARKS et al.

United States Circuit Court, E.D. Arkansas.

November 2, 1900

G. B Webster, for complainants.

Norton & Prewett, for defendants.

On the 1st of May, 1894, one Bray, as trustee for the Oliver heirs held a valid mortgage on the property in controversy for $1,800, executed by G. N. Sparks and Pamelia Sparks, his wife, to whom the property then belonged. On the 25th of March, 1895, the said G. N. Sparks, being a stockholder of the Southern Saving Funds & Loan Company, procured a loan from said corporation for the sum of $2,000, for which he executed his promissory note, and, in order to secure the same, executed a mortgage on the land in controversy to A Moore Berry, as trustee for said association. The acknowledgement to this mortgage was fatally defective, in not conforming to the statute of the state of Arkansas. It was, however, duly recorded on the 12th of February, 1900, in the proper county. The money procured on this second mortgage from the Southern Saving Funds & Loan Company was used by Sparks in paying off the prior mortgage. On the 17th of May 1897, Sparks and wife sold the land in controversy, for a valuable consideration, to his co-defendants J. W. and O. N. Killough, who had actual notice of the existence of the mortgage on the land, and also actual notice that the acknowledgment thereof was defective, and that the same was so recorded. On November 18, 1896, the Southern Saving Funds & Loan Company transferred all of its assets to the complainant corporation, the Cumberland Building & Loan Association, including the mortgage in suit. Complainants' evidence shows that J. W. and O. N. Killough paid for the property partly by a half interest in a stock of goods, partly by paying Sparks' indebtedness to Day & Bailey, partly for taxes which he had advanced for Sparks, partly by a debt which Sparks owed O. N. Killough, and a small amount in cash, amounting in the aggregate to about $2,500.

ROGERS District Judge.

Section 5091 of Sandels & Hill's Digest of the Statutes of Arkansas, regulating mortgages, provides:

'Every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time the same is filed in the recorder's office, and not before; which filing shall be notice to all persons of the existence of such mortgage.'

The supreme court of Arkansas, in Main v. Alexander, 8 Ark. 112, in construing this statute decided:

'(1) that a mortgage is good between the parties, though not acknowledged and recorded; but under our registry act it constitutes no lien upon the mortgaged property, as against strangers, unless it is acknowledged and recorded as required by the act, even though they may have actual notice of its existence. (2) The registry of a mortgage without acknowledgment does not constitute such constructive notice to the world as contemplated by the act.'

This decision was rendered at the July term of 1848, and it has been followed by an unbroken line of decisions from that time down to the present day. Hannah v. Carrington, 18 Ark., at page 105; Jacoway v. Gault, 20 Ark., at page 193; Carnall v. Duval, 22 Ark., at page 136; Jarratt v. McDaniel, 32 Ark.,at page 598; Neal v. Speigle, 33 Ark.,at page 68; Martin v. O'Bannon, 35 Ark.,at page 68; Ford v. Burks, 37 Ark.,at page 94; Mitchell v. Wade, 38 Ark., at page 385; Dodd v. Parker, 40 Ark.,at page 537; Martin v. Ogden, 41 Ark. 186; Wright v. Graham, 42 Ark. 148; Watson v. Lumber Co., 49 Ark. 83, 4 S.W. 62; Cross v. Fombey, 54 Ark. 179, 15 S.W. 461; Milling Co. v. Mikles, 61 Ark. 123, 32 S.W. 493. These decisions, and some others which might be cited to the same point, establish a rule of property in Arkansas. In Ford v. Burks, supra, the court said:

'This ruling has been on the language of the statute, and has not become a rule of property, which cannot be safely disputed, save by the prospective operation of a statute.'

There is no rule better established than that the settled decisions of a state in relation to a state statute, local in its character, establishing rules of property, will be followed by the federal courts. There is a collation of cases upon this subject, embracing almost every variety of case, to be found in volume 1 of the Digest of the United States Supreme Court Reports, published by the Lawyers' Co-operative Publishing Company in 1894, beginning at page 529. They are too numerous to cite. They begin with Polk v. Wendell, 9 Cranch, 87, 3 L.Ed. 665, and end at Amoskeag Bank v. Ottawa, 105 U.S. 667, 26 L.Ed. 1204.

It is needless to say that the...