Deming Inv. Co. v. Echols

• Decision Date: 07 February 1916
• Docket Number: (No. 166.)
• Citation: 183 S.W. 165
• Parties: DEMING INV. CO. v. ECHOLS et al.
• Court: Arkansas Supreme Court

Page 165

183 S.W. 165

DEMING INV. CO. v. ECHOLS et al.

(No. 166.)

Supreme Court of Arkansas.

February 7, 1916.

Appeal from Crawford Chancery Court; W. A. Falconer, Chancellor.

Suit by S. P. Echols and others against the Deming Investment Company. From a decree for complainants, defendant appeals. Affirmed.

S. P. Echols and others, appellees, brought this suit against the Deming Investment Company to cancel certain mortgages given by said Echols and wife upon lands in Crawford county, to secure the payment of certain loan notes, commission, and expenses as a cloud upon the title to the land, alleging that the notes were wholly without consideration; that no loan had been procured or money furnished, in accordance with the agreement made with agents of said company to procure the loan. It was alleged: That the notes and mortgages were delivered to a local agent of the Deming Investment Company at Ft. Smith, Ark. — two mortgages upon the said real estate, the one to secure the principal sum of $9,000, and the other to secure the interest upon said sum. That he received no money upon said contemplated loan, and said local agents of the investments "agreed to deliver up to him said mortgages and two coupon notes described therein," which were executed and delivered to said agent at the time said mortgages were executed, but that said mortgages and notes were not delivered to him. That, when he had sold said real estate to Sam Harper, he wrote the agent of the investment company at Ft. Smith, asking a return of the loan papers, and received no reply to the demand, and that on the 31st of December the investment company filed said mortgages for record in Crawford county, which constituted a cloud upon his title, and that of his vendee.

The investment company answered and denied that appellee had sold the land to Harper, and alleged that the conveyance to him was made after the recording of the mortgages and with full knowledge of the rights of said company. It denied that its local agents agreed to deliver up to plaintiff Echols the mortgage and coupon notes described in the complaint, and that the mortgages executed to it, described in the complaint, constituted a cloud upon the title to plaintiff's land, or that the same was executed without consideration. It alleged by way of cross-complaint: That Echols and wife executed and delivered to it a contract in writing to secure a loan for them in the sum of $9,000, "and did agree to furnish a good and marketable title to said property, and to execute a security for the loan of said money, a good and valid first mortgage upon the land described in the complaint," and further that said Echols agreed to pay the specified consideration for its services in procuring said loan, and that the second mortgage was executed to secure the amount of the consideration agreed upon. That it had performed all the terms and conditions of the contract upon its part, had secured and offered to Echols the sum of $9,000, "upon condition that said plaintiff furnish a good and marketable title to said real property, and to remove all prior incumbrances therefrom," so that the said mortgage securing the said sum of $9,000 should be a first and prior lien upon said property, and it offered to procure said money, and pay the same to plaintiff upon "the performance by plaintiff of the terms and conditions of said contract." It was alleged that it had performed all the terms and conditions of the contract "except to pay to said plaintiff the said sum of $9,000," and that it was prevented from making payment of said sum by the wrongful acts of said plaintiff Echols in failing and refusing to furnish a good and marketable title to said real property, and remove the liens and incumbrances therefrom, as covenanted in said contract. It then set out the mortgage and notes for security of the commission for procuring the loan, alleging that it constituted a valid and subsisting lien, and asked for foreclosure thereof, for the amount claimed to be due as commission.

Appellees answered the cross-complaint, alleging: That Yadon & Dobbins, two loan brokers, undertook to procure for him a loan of $13,000 upon the real estate described, and shortly represented that they could procure a loan on the property of $9,000, that it could be procured from the Deming Investment Company, and that said brokers knew the liens upon the real estate offered as security, and the amount and character thereof, "and assured him that, notwithstanding the lien, they could procure him the loan upon his said real estate, and that, if they failed to secure a loan from said Deming Investment Company for him, they would return to him the papers." That he relied upon the representations and executed the notes and mortgages. That no loan was procured, and that said agent informed him in August that he had failed to get the loan, and would return the contract and notes and mortgages to him, but did not do so, although demand was made therefor. The answer alleged, also, that "at the time he made the application for the loan, and executed the contract, notes, and mortgages, it was distinctly understood and agreed by and between him and the said Yadon & Dobbins, the agents of the Deming Investment Company, that if the loan was not made the papers so executed were to be null and of no effect, and were to be returned to him"; and that said agreement was known to the Deming Investment Company when the papers so executed were forwarded by their agent, and were accepted by it with that understanding. The other allegations of the cross-complaint were denied.

It appears from the testimony that Echols desired to procure the loan upon the lands to pay off some incumbrances; that he bought the land from W. T. Dunbar, against whom his brother Ed Dunbar had procured a judgment, which had to be satisfied. He went to the agents of the Deming Investment Company at Ft. Smith, told them the purpose for which the loan was desired, and they agreed to procure it by the 1st of August. The terms were agreed upon, and the agents told him that he would not be hurt in any way if the loan was not procured; if he did not get the money, he would not have to pay anything, and that the papers would be returned to him. About the 1st of September, the agents told him they could not get the money, and he then began negotiating the sale with Sam Harper, and heard nothing from the investment company about the loan from September 1st until in December....