Grayson v. Hughes

• Decision Date: 10 November 1924
• Docket Number: 227
• Citation: 265 S.W. 836,166 Ark. 173
• Parties: GRAYSON v. HUGHES
• Court: Arkansas Supreme Court

265 S.W. 836

166 Ark. 173

GRAYSON v. HUGHES

No. 227

Supreme Court of Arkansas

November 10, 1924

Appeal from Ouachita Chancery Court, First Division; J. Y. Stevens Chancellor; affirmed.

STATEMENT OF FACTS.

Appellees brought this suit in equity against appellants to cancel certain deeds and oil and gas leases whereby the title to the lands described in the complaint was divested out of appellees and invested in appellants.

Appellants claimed title to the lands in themselves, and appellant, P C. Grayson, interposed the further defense that he was an innocent purchaser for value of the lands.

The lands in controversy comprised 200 acres, and originally belonged to Sam A. Hughes. On April 14, 1917, Sam A. Hughes and Maria Hughes, his wife, executed a deed of trust to said lands to Sam Pruett, trustee, to secure the payment of an indebtedness of $ 1,286.41 to Lester & Haltom. In August 1918, Sam A. Hughes died intestate in Ouachita County Arkansas. At the date of his death he resided with his wife on the lands in controversy and occupied them as his homestead. No part of the mortgage indebtedness above set forth had been paid at the date of his death.

On the 9th day of January, 1919, Maria Hughes, the widow of Sam A Hughes, and Charlie Hughes and Ada Bell, his son and daughter, executed a quitclaim deed to said lands to Jim Hughes, another son of the said Sam A. Hughes. The consideration recited in the deed is the balance due on the mortgage on the lands and the further consideration of $ 10. The lands in question were sold by Sam Pruett, as trustee, in accordance with the provisions of the power of sale contained in the deed of trust, and Jim Hughes became the purchaser at the sale for $ 1,500. On the 17th day of May, 1919, Sam Pruett, as trustee, executed a deed to said lands to Jim Hughes.

In addition to the facts recited above, this deed also recites that Lester & Haltom had transferred the deed of trust under which the lands were sold, together with the notes secured by them, to P. C. Grayson. On the 11th day of June, 1919, Jim Hughes and his wife executed a deed of trust to said lands to Sam Pruett, as trustee, to secure P. C. Grayson in the sum of $ 1,500. On the 16th day of May, 1919, Jim Hughes gave an oil and gas lease on said lands to J. H. Hughes for the term of five years. On January 20, 1920, Jim Hughes executed a deed of trust to said lands in favor of P. C. Grayson to secure him in the sum of $ 2,800. On the 12th day of June, 1920, Jim Hughes and wife executed a deed to P. C. Grayson to a one-half interest in all the oil, gas and minerals on said lands. On the 26th day of October, 1920, Jim Hughes and wife executed a deed to P. C. Grayson to 120 acres of said land, and the consideration recited in the deed is $ 1,200. On April 26, 1920, Jim Hughes and wife sold one-eighth of the oil, gas and minerals in said lands for the sum of $ 2,000. Out of this money he paid P. C. Grayson $ 1,500 and kept the balance. Jim Hughes owed P. C. Grayson $ 2,800, including the $ 1,500 borrowed from him to satisfy the mortgage given by Sam A. Hughes to Lester & Haltom.

According to the testimony of Maria Hughes, she signed the quitclaim deed to her son, Jim Hughes, to the lands in question in order to pay off the mortgage which she and her husband had executed on the lands in favor of Lester & Haltom. She does not know why Jim Hughes bid in the lands in his own name at the sale of Pruett, trustee, on May 17, 1919. She knows nothing about the mortgage given by her son, Jim Hughes, to P. C. Grayson. in June, 1919. She gave her son no authority to execute this mortgage, and did not know anything about her son executing the second mortgage to Grayson to secure a note of $ 2,800. She did not give him any authority to execute this mortgage. She did not know anything about her son conveying one-half of the oil, gas and minerals on said lands to P. C. Grayson in June, 1920. She did not know anything about the conveyance by Jim Hughes to P. C. Grayson of 120 acres of the said lands in October, 1920. She and her son, Jim Hughes, have both been living on the lands since before her husband's death, but they have lived in separate houses.

According to the testimony of Charlie Hughes, his brother, Jim, asked him to sign the quitclaim deed in order to enable him to raise the money with which to pay off the mortgage which had been executed by their father. It was the understanding that he was to get his share in the lands after the mortgage had been paid off. He did not give Jim Hughes any authority to sell the lands or any part of them, except to pay off the mortgage indebtedness of their father.

According to the testimony of Ada Bell, she executed a quitclaim deed to the lands to her brother, Jim Hughes, for the purpose of raising money with which to pay off the mortgage indebtedness of their father. Jim Hughes gave her a contract that, as soon as the mortgage was raised on the place, he would deed her share back to her.

Ewell Johnson, the husband of another daughter of Sam A. Hughes, testified that Jim Hughes said that he had sold some mineral rights on the lands for $ 2,000 and had redeemed the place from Mr. Grayson.

According to the testimony of Jim Hughes, he took charge of the affairs of his father after his death, at the request of his mother and brothers and sisters, in order to settle the mortgage indebtedness of his father and a few other debts. Lester & Haltom transferred the mortgage in their favor to P. C. Grayson because they wanted their money. The witness borrowed the money from P. C. Grayson to pay this mortgage, and he paid to Lester & Haltom the sum of $ 1,286.41 in full of their mortgage indebtedness. He made this payment early in 1919, before the lands were sold under the power of sale contained in the mortgage. The witness paid $ 1,500 for the property at the mortgage foreclosure sale, in order to get title to the lands. He insisted on Grayson having the lands sold under the power of sale contained in the mortgage, and borrowed the $ 1,500 from Grayson with which to pay for the lands at the sale. P. C. Grayson claimed to be an innocent purchaser for value of the lands from Jim Hughes, and the evidence on both sides on this point will be abstracted under an appropriate heading in the opinion.

The chancellor was of the opinion that the title of the purchaser of the one-eighth interest in the oil and gas in said lands under the deed executed to them by Jim Hughes should be in all things confirmed.

The chancellor was also of the opinion that the deed of trust executed by Jim Hughes to P. C. Grayson to secure the payment of $ 1,500 owed on the mortgage indebtedness of Sam A. Hughes had been paid off, and that P. C. Grayson had knowledge of the equities of the plaintiffs at the time he purchased one-half of the oil, gas, and minerals in the lands, and at the time he purchased 120 acres of the lands. It was decreed that said deeds be declared null and void.

It was also decreed that the quitclaim deed given to Jim Hughes by Maria Hughes, the widow of Sam A. Hughes, deceased, and Charlie Hughes and Ada Bell, his son and daughter, should be canceled.

P. C. Grayson and Jim Hughes have duly prosecuted an appeal to this court.

Decree affirmed.

Gaughan & Sifford, for appellant.

1. Where suit is filed alleging that the holder of a legal title to land had notice of some secret equity, the burden is on the plaintiff to sustain that allegation. 35 Ark. 100. If the defendant, claiming to be an innocent purchaser, proves that he paid a valuable consideration for the property, the burden then shifts to the plaintiff to show that he had notice of the secret equity. 129 Ark. 305; 108 Ark. 490; 145 Ark. 121; 134 Ark. 241. There is no showing of fraud or collusion on the part of Grayson with Jim Hughes to defraud the heirs, nor is there any finding by the court to that effect. Grayson's position is sustained, we think, by act 444, approved March 27, 1919, Acts 1919, p. 327, § 1. Surely plaintiffs have no greater rights in this instance, where the deed was made straight to Jim Hughes, grantee, than they would have had if it had been made to Jim Hughes, trustee, or as trustee.

2. The interest of Charlie Hughes and Ada Bell, at least, should be charged with their part of the value of improvements made by Jim Hughes. A tenant in common making necessary repairs is entitled to contribution. 31 Ark. 559; 68 Ark. 534; 121 Ark. 107.

Thos. W. Hardy, for appellees.

1. Jim Hughes, at the trustee's sale, acquired no right, title or interest in the lands adverse to the appellees, his cotenants, other than to demand contribution. 55 Ark. 104; 145 Ark. 189. The latter or either of them had the right to redeem within twelve months after the trustee's sale. C. & M. Digest, § 7407. The receipt, within twelve months, by Jim Hughes, of $ 2,000 from a one-eighth of the mineral rights from the land, was clearly a redemption of the land, and extinguished any right or claim he might have had against his mother, brother, sister and nieces for contribution. The defeasible title of Jim Hughes was abrogated, and the deed of trust became void. 40 Ark. 275; 65 Ark. 133; 43 Ark. 504. Jim Hughes could not in any way take advantage of appellees in the purchase at the trustee's sale, or in receiving the money from the sale of mineral rights; what he did was for the benefit of the cotenants as much as for himself. 49 Ark. 242; 68 Ark. 542; 144 Ark. 49.

2. Appellees charge in their complaint that Grayson had knowledge of the title of Jim Hughes and the rights and equities of the appellees in the land. The possession of Maria Hughes was equivalent to notice. 76 Ark. 25; 152 Ark 232; 162 Ark. 140. Grayson's long residence in the immediate neighborhood of...