Deming Inv. Co. v. Bank of Judsonia, (No. 89.)

• Decision Date: 11 January 1926
• Docket Number: (No. 89.)
• Citation: 278 S.W. 634
• Parties: DEMING INV. CO. v. BANK OF JUDSONIA et al.
• Court: Arkansas Supreme Court

278 S.W. 634

DEMING INV. CO. v. BANK OF JUDSONIA et al.

(No. 89.)

Supreme Court of Arkansas.

January 11, 1926.

Appeal from White Chancery Court; John E. Martineau, Chancellor.

Suit by the Deming Investment Company against the Bank of Judsonia, J. C. Rhew, and others. From the decree dismissing the complaint against the defendants named, plaintiff and defendant last named appeal. Reversed and remanded, with directions.

The Deming Investment Company brought this suit in equity against Thos. W. Taylor and others to foreclose a mortgage on real estate. The suit was filed on February 1, 1924. J. C. Rhew, one of the defendants, filed an answer in which he stated that he had rented the land from Thos. W. Taylor and was in possession of it; that he had executed his promissory note in the sum of $300, due and payable on November 1, 1924, for the rent of said land for the year 1924. The Bank of Judsonia filed an answer in which it claimed that Thos. W. Taylor had transferred the rent note of J. C. Rhew to it in good faith for value received. The decree of foreclosure was entered of record on March 10, 1924. The chancery court found that the mortgage indebtedness of Thos. W. Taylor to the Deming Investment Company amounted to $2,460.83, and a decree of foreclosure was entered for that amount. A commissioner was appointed to sell the mortgaged property, if payment was not made within 60 days. It was also decreed that a receiver be appointed to rent the property to J. C. Rhew for the year 1924 for the sum of $300, and the Bank of Judsonia was directed to deposit in the registery of the court the rent note of J. C. Rhew for $300 payable to Thos. W. Taylor for the rent of said land for the year 1924 and transferred by said Taylor to the Bank of Judsonia.

Default having been made in the payment of the mortgage indebtedness, the commissioner sold the land pursuant to the decree of the court on the 9th day of June, 1924, and the Deming Investment Company became the purchaser at the sale for the sum of $1,000. The report of sale was approved by the court on the 8th day of September, 1924. The receiver did not qualify as such until the 28th day of June, 1924, and on that day subscribed to an oath as receiver and also filed the bond required by the court. The chancery court found that J. C. Rhew was not liable to the plaintiff or to the receiver for the rent of the land for the year 1924, but that he was liable to the Bank of Judsonia on his rent note. It was therefore decreed that the complaint of the plaintiff Deming Investment Company against J. C. Rhew and the Bank of Judsonia be dismissed for want of equity. To reverse that decree, the plaintiff and J. C. Rhew have duly prosecuted an appeal to this court.

Cul L. Pearce and John E. Miller, both of Searcy, for appellants.

W. D. Davenport, of Searcy, for appellees.

HART, J. (after stating the facts as above).

In Gailey v. Ricketts, 123 Ark. 18, 184 S. W. 422, it was held that the purchaser of land at a commissioner's sale in partition, in the absence of a reservation of the rent or the right to growing crops, acquires, upon confirmation of the sale, a right to the same. This court has also held that a purchaser at a mortgage foreclosure sale is entitled to possession and to the rents and profits including ungathered crops, after notice to quit and the demand for rents and profits has been made. Oliver v. Deffenbaugh, 166 Ark. 118, 265 S. W. 970. Reliance is placed upon the principles of law decided in these cases for a reversal of the decree and the direction to pay the whole of the $300 rent note to the plaintiff. We do not regard the principles of law decided in these cases as controlling here, for the reason that in neither of them were the rights of a bona fide purchaser of the rent note involved. An assignment of a rent note by the lessor to a bona fide purchaser for value before the transfer of the reversion by him operates as a severance of the rent from the reversion. Therefore, in such cases the rent cannot pass to the grantee of the reversion. Cheatham v. J. W. Beck Co., 96 Ark. 230, 131 S. W. 699. In the application of this rule to a case like Gailey v. Ricketts, supra, where the rights of a purchaser at a commissioner's sale in a partition suit were under consideration, it would be said that the holder of the rent note would be protected. In such a case the owners of the land would have the absolute...