Duke v. State

• Decision Date: 22 October 1892
• Citation: 20 S.W. 600
• Parties: DUKE <I>et al.</I> v. STATE.
• Court: Arkansas Supreme Court

20 S.W. 600

DUKE et al. v. STATE.

Supreme Court of Arkansas.

October 22, 1892.

Appeal from Pulaski chancery court; DAVID W. CARROLL, Chancellor.

The state of Arkansas, for the use of the Real-Estate Bank, against Charles T. Duke and others, to foreclose a stock mortgage. From a decree foreclosing the mortgage, defendants appeal. Affirmed.

W. S. McCain, for appellants. W. E. Atkinson, Atty. Gen., and Chas. T. Coleman, for the State.

MANSFIELD, J.

This was a proceeding prosecuted by the state under the act of January 16, 1861, to foreclose a mortgage executed to the Real-Estate Bank by Stephen Gaster in the year 1837. The mortgage conveyed certain lands then owned by Gaster, and it was given to secure the payment of his bond to the bank for the sum of $30,000. The debt did not mature until 1861, and the mortgage expressly provided that the lands should remain in the possession of Gaster until they should be "legally sold," to satisfy it. He continued to occupy the lands until his death, which occurred in the year 1858 or 1859. His heirs then took possession of the property, and held it until 1866, when it passed into the hands of his administrator, who was appointed in that year. The administrator continued in possession until the year 1868, when he sold the lands, under an order of the probate court, for the payment of Gaster's debts. The sale was confirmed, and the purchasers, under whom the appellants claim, took possession under the administrator's deed. For convenience, some of the appellants are designated in the abstract of the record as the "Carltons," and all the others, with the exception of Mabel Wells, are referred to as the "Wells heirs." It appears that a bill to foreclose the mortgage was filed in 1867. To this Gaster's administrator filed a demurrer, and the record shows that it was dismissed without prejudice, on motion of the attorney general, in 1872. The bill in the present suit was filed in 1876. In accordance with the provisions of the act under which it was brought, it was exhibited against the lands embraced in the mortgage, and not against any claimant of the lands or other person. But in 1883 the Wells heirs appeared, and filed an answer to the bill, and a cross complaint against the Carltons. The answer pleaded accord and satisfaction, averring that in 1872 their ancestor, D. S. Wells, and the persons under whom the Carltons claim, paid the attorney general $2,000, which he accepted in full satisfaction of the mortgage debt. The cross bill, after stating that partition of the lands had been made between the heirs of D. S. Wells and the Carltons, prayed that whatever should be found due on the mortgage, if anything, might be apportioned to the lands of the several claimants, so that each owner would bear a proper proportion of the whole sum adjudged against all the lands. On the 14th of May, 1890, the Wells heirs filed an additional answer, in which they pleaded in bar of the suit seven years' adverse possession of the lands, and demurred to the complaint, stating, among other grounds of objection to it, that the claim of the state is stale, and barred by limitation. A few weeks later the record shows that they requested the court to permit them to withdraw their previous offer to submit to judgment, but it does not appear whether the court took any action upon this request. The fourth section of the act of 1861 provides that, when the bill to foreclose is filed, the clerk shall make an entry in his record, stating the general objects of the bill, and "what lands it proposes to subject to foreclosure, and under what mortgage;" and that a copy of such entry, attested by the clerk, and duly published in the manner required by the act, "shall be taken as notice to the mortgagor, and to all persons claiming under him, and to all occupants of the lands, of the beginning and pendency of the suit." The same section provides for the publication of such record entry by "four successive weekly insertions in a newspaper published at Little Rock." This order was not made until 1890. It was published on the 6th of February in that year, and, under the provisions of the statute, its publication was the commencement of the suit against so much of the lands as was held by the Carltons and Mabel Wells, neither of whom had previously entered an appearance. In 1890, after the publication of the order, the Carltons filed an answer, claiming the lands held by them under the probate sale, and pleading the statute of limitations of five and seven years. They also pleaded the staleness of the demand, and demurred to the complaint. On the 14th of May, 1890, Robertson, the guardian of Mabel Wells, who was then a minor, filed a motion to quash the service by publication, on the ground that it was not due process of law, and that the provision of the statute authorizing it violates articles 5 and 14 of the constitution of the United States. No action was taken upon this motion, or upon the demurrer, until the cause was finally heard, when they were overruled. The finding of the chancellor was general, and to the effect that the suit was not barred by the statute of limitations nor by the staleness of the demand. A decree was accordingly entered, foreclosing the mortgage, and condemning the lands to sale; and from that judgment this appeal is prosecuted.

The appellants do not question the state's right to foreclose the stock mortgages given to the Real-Estate Bank, and it is not controverted by the appellee that, in actions brought for that purpose, the attitude of the state is such that her suit may be barred by the statute of limitations. Calloway v. Cossart, 45 Ark. 81. As no point is made against the sufficiency of the facts stated in the complaint to constitute originally a cause of action, and the other questions raised by demurrer are also presented by answer, it is unnecessary to rule specially or separately upon the action of the court in overruling the demurrer.

The facts on which the chancellor acted, so far as they do not appear in the pleadings, are to be ascertained from the deposition of W. T. Wells, introduced by the appellants, and from an agreed statement of the parties. In addition to some of the facts already stated, Wells testified that Gaster cultivated the lands embraced in the mortgage continuously for more than 15 years before his death, and that since the spring of 1865 they have been occupied and cultivated without interruption by Gaster's heirs and administrator, and the persons claiming under them, and that such persons have all claimed to own the lands in fee simple, under the administrator's conveyance; that about 1871 or 1872 the Carltons and Wellses "made some settlement of the mortgage sued on, and procured a suit then pending for foreclo sure * * * to be dismissed;" and that "after that time the claimants and occupants of the lands always considered the matter as settled" until this suit was brought. It was admitted that the claim of the occupants to own the lands, as mentioned by Wells, was made with a knowledge that the mortgage had been given and never foreclosed, and that the claimants "had never in terms acknowledged or repudiated" the mortgage. It was also admitted that the "settlement" mentioned by Wells was a dismissal of the suit first brought to foreclose the mortgage, and that it "was procured by paying to the person then occupying the office of attorney general a certain sum of money, said to be $1,200," and that "the parties holding possession of the lands knew that the attorney general did not have authority to accept this as a settlement of the mortgage." It is conceded that the payment referred to was not an accord and satisfaction, and it is relied upon only as matter of evidence, tending to show that, at the time it was made, the possession of the appellants became adverse to the mortgage, if it had not been so before.

1. In the case of Whittington v. Flint, 43 Ark. 504, it was held that the "possession of the mortgagor, or his privies, including his grantees with notice, will not be adverse, nor bar an action by the mortgagee for foreclosure or for possession of the land, unless there has been an open and explicit disavowal and disclaimer of holding under the mortgagee's title, and assertion of title in the holder brought home to the mortgagee." To the same effect is the decision of this court in Ringo v. Woodruff, reported in the same volume, (Id. 469.) In the latter case it was held that "to constitute adverse possession against a mortgagee it is not sufficient that the mortgagor, or those holding under him, occupy, use, improve, and pay taxes on the premises, as their own absolute property, but the possession must be in open denial of the mortgagee's title, and accompanied with such acts or declarations of the holders as are sufficient to put the mortgagee on notice that they claim and hold in hostility to his rights."

It is plain that the facts on which the defense of limitation by adverse possession is based in this case are of no greater weight or significance than those held insufficient to establish an adverse holding in the cases cited above. The continued possession of Gaster was in the exercise of a right which he had by the express terms of the mortgage, and it is not claimed that the statute of limitations was ever put in motion during his lifetime. The purchasers at the probate sale bought with notice of the mortgage incumbrance, and therefore acquired only the equity of redemption. The possession which they took of the property was entirely consistent with the mortgagee's rights, and they and their vendees, including these appellants, are presumed to have held in subordination to the mortgage, in the absence of some "overt act of hostility" to it of which the mortgagee had notice. Ringo v. Woodruff, 43 Ark. 491; Whittington v. Flint, Id. 521. The transaction with the attorney general was not such an act, nor can the state be...