House v. Long
Decision Date | 22 April 1968 |
Docket Number | No. 5--4258,5--4258 |
Citation | 244 Ark. 718,426 S.W.2d 814 |
Parties | , 5 UCC Rep.Serv. 236 A. F. HOUSE, Trustee, Appellant, v. James R. LONG et al., Appellees. |
Court | Arkansas Supreme Court |
Wright, Lindsey & Jennings, by Isaac A. Scott, Jr., Little Rock, for appellant.
Catlett & Henderson, and Robinson, Thornton, McCloy & Young, Little Rock, for appellees.
This litigation involves the priority of liens among a purchase-money mortgage, a construction money mortgage, various mechanics' and materialmen's liens and a security agreement involving certain fixtures in thirteen different dwellings.
The defendant Long, a builder, had arranged for financing with Modern American Mortgage Company for approximately forty residences to be constructed primarily in Beverly Hills Addition to the City of Little Rock, Arkansas. On each lot purchased by Long, purchase-money mortgages were given in amounts varying from $2,750.00 to $3,200.00, and in addition, separate construction money mortgages in the amount of $10,000.00 were given on each lot. Both the purchase and construction money mortgages and the notes which they secured were subsequently assigned in trust to the appellant, A. F. House. Construction was not begun until these mortgages were placed of record.
On ten of the thirteen residences in question, arrangements were made to disburse the proceeds of the construction money loans through Beach Abstract and Guaranty Company. Disbursements on the other three were through Standard Title Company. The procedure established required Long to submit to the disbursing agent each week a list of the laborers, mechanics and materialmen who were entitled to payment and the amounts thereof on each house. An officer of Modern American would then inspect the premises to determine whether construction had progressed sufficiently to justify the requested disbursement. If so, funds would be sent to the disbursing agent, and Long would execute a separate note for each disbursement. Individual checks would be issued to each laborer, mechanic or materialman in the amount shown on the list and delivered to them by Long.
Cross-appellant, Arkansas Louisiana Gas Company, had entered into a separate contract with Long to sell a heating and airconditioning unit, a cooling tower, a kitchen range and oven and to install the duct work in each house. A blanket security agreement was executed on November 30, 1964, but was never recorded. Security agreements on individual lots were also executed as the goods were delivered, but these also were not recorded. It was not until December 27, 1965, approximately two months after construction had ceased and Long's insolvency was generally known, that additional security agreements were executed and recorded.
The chancellor held that the language of the construction money mortgages did not unqualifiedly commit the mortgagee to make the advances so as to afford it priority over the mechanics' and materialmen's liens. He further held that the transaction between Arkansas Louisiana Gas Company and Long created a purchase-money security interest in collateral other than inventory which was not perfected within ten days after the debtor received possession as required by Ark.Stats. 85--9--312(4) (Repl.1961) in order to give it priority over conflicting security interests.
Accordingly, the chancellor established the priorities in the following order: (1) Purchase-money mortgage; (2) mechanics' and materialmen's liens; (3) construction money mortgage; (4) the security interest of Arkansas Louisiana Gas Company. From this decree, A. F. House, Trustee, and Arkansas Louisiana Gas Company have appealed.
The pertinent language in each of the thirteen construction money mortgages in question is as follows:
It was the view of the trial court that this language was insufficient under our decisions requiring such a recitation to leave the mortgagee no option in the matter of making advances. See Lyman Lamb Co. v. Union Bank of Benton, 237 Ark. 629, 374 S.W.2d 820, and that the conduct of the parties left it to the discretion of the lender whether to make such advances. We are unable to agree with this conclusion.
The provision plainly recites that upon acceptance and recordation of the mortgage, the grantee (mortgagee) is 'absolutely' and 'unconditionally' bound to make the advances. Had the recitation stopped at the end of the first sentence, we presume there would have been no quarrel with it. If, therefore, there is any deficiency in the provision, it must be created by the last sentence which provides that 'such advances will be made as requested by the grantor as such work progresses.' We do not believe that this language grants the mortgagee any option in the matter. On the contrary, whatever options there are rest with the mortgagor. If he causes the work to progress and requests the advances, the mortgagee has no choice other than to make them.
There is no necessary vice in a disbursement procedure keyed to the progress of construction. In Ashdown Hardware Co. v. Hughes, 223 Ark. 541, 267 S.W.2d 294, the construction money mortgage provided for advances to be made upon completion of each of a series of tourist cabins. The unconditional nature of the commitment was sustained when attacked by a materialmen's lien holder seeking priority.
The precise language in question here was approved in Planters Lumber Co. v. Wilson, Co., 241 Ark. 1005, 1100, 413 S.W.2d 55, a case decided after the entry of te decree from which this appeal was taken. Although in that case the principal question was the priority of a construction money mortgage to the extent that funds secured by it were withheld as payment for the lot and for interest, this Court stated that the language of the mortgage absolutely and unconditionally bound the mortgagee to make advances as the work progressed.
We hold that the language in the construction money mortgages unconditionally required Modern American to make advances to Long and that they should take priority over the mechanics' and materialmen's liens.
Arkansas Louisiana Gas Company has filed a cross-appeal asserting that the chancellor did not accord it the priority to which it is entitled. We believe...
To continue reading
Request your trial-
Childs v. Philpot
...such suit is brought and not necessarily the person ultimately entitled to the benefit of the recovery. A. F. House, Trustee v. Long, 244 Ark. 718, 426 S.W.2d 814. Under Ark.Stat.Ann. § 27--806. (Repl.1962) all persons may join in one action as plaintiffs if they assert any right to relief ......
-
Mers v. Southwest Homes of Arkansas
...Addition, 347 Ark. 879, 894, 69 S.W.3d 33, 44 (2002) (quoting Black's Law Dictionary 773 (7th ed. 1999)); see also House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968). The encumbrance created by the deed of trust may be described as a lien. See, e.g., First Am. Nat'l Bank of Nashville v. Boo......
-
Carroll County v. Eureka Springs School Dist. No. 21
...that the county can best discharge claims of those entitled to the funds Eureka Springs was ordered to return. In House v. Long, 244 Ark. 718, 426 S.W.2d 814 (1968), we The real party in interest, therefore, is generally considered to be that person who can discharge the claim on which suit......
-
Sarna v. Fairweather
...without written assignment to sue in his own name under the statute. Webster v. Carter, 99 Ark. 458, 138 S.W. 1006. In House v. Long, 244 Ark. 718, 426 S.W.2d 814, recognizing that the primary purpose of our statute was to prevent harassment of defendants by different suits upon the same ca......