Horn v. Hull

• Decision Date: 05 October 1925
• Docket Number: 148
• Citation: 275 S.W. 905,169 Ark. 463
• Parties: HORN v. HULL
• Court: Arkansas Supreme Court

275 S.W. 905

169 Ark. 463

HORN v. HULL

No. 148

Supreme Court of Arkansas

October 5, 1925

Appeal from Union Chancery Court, Second Division; George M. LeCroy Chancellor; affirmed.

STATEMENT BY THE COURT.

Appellants brought this suit in equity against appellees to set aside a decree of foreclosure and sale thereunder by the commissioner of certain lands in Union County, Ark., and also to set aside certain deeds executed by the purchaser at the foreclosure sale to subsequent purchasers of said lands.

Appellants interposed several defenses to the action. J. M. Wells Samuel A. Martin, and J. R. B. Moore originally owned the lands involved in this suit and gave a deed of trust in favor of D. D. Hull, Jr., to secure an indebtedness to him of $ 27,000 and the accrued interest and a balance of $ 4000 due him on a judgment against them. The lands included in the deed of trust comprised 3875 acres, and are set out in the complaint. Wells, Martin and Moore entered into a contract with Leo, Harry, and Ben P. Horn to sell and exchange said lands with them for their equities in certain real estate owned by them in Memphis, Tenn., and the balance to be paid in money. Pursuant to this contract, Leo, Harry, and Ben P Horn executed to Wells, Martin and Moore, eighteen promissory notes aggregating $ 58,575, all dated February 15, 1915, and extending over a period of ten years. Leo, Harry, and Ben P Horn executed a deed of trust to said lands to W. E Patterson, trustee, to secure said indebtedness. The notes and deed of trust were at once indorsed and assigned by Moore, Wells and Martin to D. D. Hull, Jr. in lieu of the original deed of trust to said lands to him from Moore, Wells and Martin. On December 9, 1915, Leo, Harry and Ben P. Horn conveyed said lands to S. L. and J. C. Cockroft, who assumed to pay off the indebtedness to D. D. Hull, Jr. Default was made in the payment of the first note for $ 3000, which was due on February 1, 1916. Default having been made in the payment of the first note, under the terms of the deed of trust, the whole indebtedness aggregating $ 58,575 became due and payable. On the 7th day of July, 1916, D. D. Hull, Jr., and W. E. Patterson, trustee, filed a bill in the chancery court of Union County, Ark., against Leo, Harry, and Ben P. Horn and S. L. and J. C. Cockroft and J. M. Wells, Samuel A. Martin and J. R. B. Moore, to foreclose said deed of trust. J. R. B. Moore and J. M. Wells were personally served with summons. Moore made default but Wells defended the suit to some extent. The three Horns, two Cockrofts and Samuel A. Martin were proceeded against as non- residents, and the decree recites that they were constructively summoned by publication of a warning order and by service upon each of them of a certified copy of the complaint with the summons attached.

On the 9th day of September, 1916, a decree of foreclosure was entered of record, and time was fixed in the decree for the payment of the indebtedness in the sum of $ 51,599.50. The decree recited that if this amount together with the amount found due for taxes with interest on each sum be not paid on or before October 18, 1916, a commissioner appointed for that purpose, should proceed to sell the lands pursuant to the terms of the decree and apply the proceeds of sale as directed by the court. The report of sale recites that the lands were sold on November 21, 1916, to D. D. Hull, Jr. A commissioner's deed was executed to D. D. Hull, Jr., the purchaser of the lands described in the decree, on March 5, 1917, and this deed recites that it was presented in open court for approval and by the chancery court examined and approved. The clerk's certificate shows that the commissioner's deed was filed for record April 11, 1917, and recorded on the same day. On the first day of June, 1917, D. D. Hull, Jr., executed a deed to said lands to Thomas Polk and Harry Ezzell for a consideration recited to be partly in cash and partly on a credit.

On February 21, 1921, Harry Ezzell executed to his two sons, Harry Ezzell, Jr., and Sharp Ezzell a deed conveying to them an undivided two-thirds of an undivided one-half interest in said lands. During the years 1921 and 1922 Polk and Ezzell executed oil and gas leases to a part of said lands. In May, 1920, S. L. Cockroft died intestate, leaving his widow and seven children. For some time prior to his death he had not lived in Memphis, Tenn., where Leo, Harry, and Ben P. Horn have lived during all the time embraced by the matters in this lawsuit. S. L. Cockroft died somewhere out west on May 6, 1920. Sometime prior to the death of S. L. Cockroft, Leo, Harry and Ben P. Horn had endeavored to effect a settlement with him with the view of having him pay off the mortgage indebtedness and conveying the lands back to them. The Horns found out from Cockroft that the deed of trust on the lands in controversy had been foreclosed, and they had been endeavoring to get Cockroft to pay off the indebtedness secured by the deed of trust in order that they might file a suit to set aside the decree of foreclosure and to recover the lands. After S. L. Cockroft died, the attempted settlement was delayed because one of Cockroft's boy had gone to the World War, and two of them were minors. The settlement was not effected until sometime in July or August, 1923, when the Horns procured deeds from the widow and all the Cockroft children. The present suit was instituted on September 7, 1923. Oil was discovered in and around El Dorado, Union County, Ark., in 1921, and the land has greatly increased in value since that time. About twenty-one wells have been drilled on the lands in controversy and at a conservative estimate lands in dispute are now worth five or six hundred thousand dollars.

Other facts will be stated and discussed under appropriate headings in the opinion.

The chancellor made a general finding as to all matters of law and fact in favor of appellees, who were the defendants in the chancery court. It was therefore adjudged and decreed by the court that the complaint of appellants, who were plaintiffs in the court below, be dismissed for want of equity.

The plaintiffs, Leo, Harry, and Ben P. Horn, have duly prosecuted an appeal to this court and are designated appellants here.

Decree affirmed.

R. C. Brown, for appellant.

Patterson & Rector, for appellee.

OPINION

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

It may be stated at the outset that the court did not err in refusing to vacate the original foreclosure decree on application of the appellants in that action under § 6266 of Crawford & Moses' Digest. The statute provides that a defendant constructively summoned, and who does not appear, may at any time within two years, and not thereafter, after the rendition of the judgment appear in open court and move to have the action retried. In such cases there is no right of redemption from the sale of the mortgaged property, and the only remedy for the defendant is that afforded by the statute, to have a retrial of the cause and, if successful, to obtain an order on the plaintiff for a restitution of the proceeds of the sale of the property. Gleason v. Boone, 123 Ark. 523, 185 S.W. 1093.

It was also held in that case that mere inadequacy of price is no ground for setting aside a judicial sale unless it is so gross as to raise a presumption of fraud or unfairness. This rule has been repeatedly declared by this court and has been so uniformly adhered to that a further citation of cases in support of it is unnecessary.

In this connection it may be stated that the property was sold under the foreclosure decree before the discovery of oil and gas in the territory where they were situated and before the lands had risen in value at all. There is no testimony in the record tending to show that the price at which they were sold was grossly inadequate. Indeed, the attending circumstances point to the contrary.

In January 1915, Wells, Martin and Moore, who then owned the lands involved in this suit, sold them to appellants for the equities which appellants owned in certain property in Memphis, and the further consideration that appellants would assume certain indebtedness on the property owed by the grantors to D. D. Hull, Jr. Appellants then sold the property to the Cockrofts upon consideration that they should assume the mortgage indebtedness to D. D. Hull, Jr. They knew that the original indebtedness to D. D. Hull, Jr., was past due when they bought the lands from Wells, Martin and Moore. Appellants also knew that D. D. Hull, Jr., had canceled the old indebtedness in consideration that they should assume the amount of it and execute a new mortgage or deed of trust to him. They knew that the Cockrofts had assumed the indebtedness, and that one of the notes became due in February, 1916. They are presumed to have read over the deed of trust and to have known that the failure to pay this note made the whole of the indebtedness due and payable. They resided in Memphis at the time the foreclosure decree was rendered, and their general inattention to the matter shows that they did not anticipate any great increase in the value of the lands. Indeed, the increased value was due solely to the discovery of oil and gas in that territory in 1921, which was several years after the lands were sold under the foreclosure...