Jefferson v. Edrington

• Court: Arkansas Supreme Court
• Writing for the Court: COCKRILL, C. J.
• Citation: Jefferson v. Edrington, 53 Ark. 545, 14 S. W. 99 (Ark. 1890)
• Decision Date: 05 July 1890
• Parties: JEFFERSON AND ANOTHER v. EDRINGTON AND ANOTHER

14 S.W. 99

53 Ark. 545

JEFFERSON AND ANOTHER v. EDRINGTON AND ANOTHER

Supreme Court of Arkansas

July 5, 1890

In 1874 Mrs. Nancy A. Edrington, widow and sole executrix of James H. Edrington, brought suit to cancel a mortgage executed by him at a time, as she alleged, when he was incapacitated by disease from attending to business. The mortgage conveyed to J. W. Jefferson, as trustee, two plantations, known as the "Fain" and "Whitmore" places, to secure debts due certain creditors therein named, he deed to be void upon payment of the debt and containing a power of sale upon default. The trustee answered, denying that the mortgage was executed at a time when Edrington was incapacitated from attending to business. The creditors secured by the mortgage answered likewise denying his incapacity, and filed a cross-bill asking that the mortgage be foreclosed and for the appointment of a receiver to collect rents. In accordance with the prayer a receiver was appointed pendente lite to lease and collect rents from the two plantations.

At the time of the execution of the Jefferson mortgage, there was a prior incumbrance on each of the plantations. In 1876 the holders of these liens petitioned to intervene, set up their prior claims, and prayed that the Jefferson mortgage be subordinated to their liens which they asked should be foreclosed.

Subsequently the cause was removed to the United States court, upon the petition of the trustee and the secured creditors in the Jefferson mortgage. A decree was subsequently rendered in favor of such secured creditors. Upon appeal to the Supreme Court of the United States, the removal was held improper and the lower court was directed to remand the cause to the State court. Pending this appeal and pursuant to the decree of the United States court, the two plantations were sold to one McComb and J. W. Jefferson, a person other than the trustee of the same name. The latter purchased McComb's interest, and entered into possession of the two plantations which he has held continuously since that time.

In 1880, Mrs. Edrington resigned her office as executrix, and made her final settlement which was confirmed by the probate court. John B. Driver was appointed administrator de bonis non, with the will annexed, of the J. H. Edrington estate. In January, 1885, after the cause was remanded to the State court, Driver, as administrator, filed a supplemental complaint, asking to intervene in the cause and alleging that Jefferson, not the trustee, owed the otherwise insolvent estate of J. H. Edrington for rents, including the sum of $ 6,000.00 by him unlawfully removed from the registry of the United States court, the sum of $ 48,000.00, which amount he asked the court to require him to pay to petitioner to be applied to the payment of the probated debts of the estate. The probated debts of the estate, the administrator alleged amounted to the sum of $ 48,500.00, excluding the probated claims which were secured by the Jefferson mortgage.

On January 17, 1885, Mrs. Edrington filed a cross-complaint, in which she set up the purchase by her with her own means of the two prior incumbrances on the Whitmore and Fain places and asked that she be subrogated to the rights of the original holders thereof; she alleged that J. W. Jefferson not the trustee, who now owned the debts secured by the Jefferson mortgage, had collected in rents the sum of $ 42,000.00, and had unlawfully withdrawn from the registry of the United States court the sum of $ 6,000.00, sums sufficient to pay off the debts secured by the Jefferson mortgage. She asked that she be subrogated to the rights of the original holders of the first liens.

J. W. Jefferson, not the trustee, answered the cross-complaint of Mrs. Edrington, alleging that he bought the two places in good faith under decree of the federal court; that he had entered into possession thereof, paid taxes, and made valuable improvements and repairs thereon; if his title should be found invalid, he asked judgment against the land for such improvements and repairs, for taxes paid, and that he be required to pay only three years' rents, as provided by the betterment act of March 8, 1883. He denied that he owed the estate of J. H. Edrington the sum of $ 42,000.00 for rents, or that he had obtained $ 6,000.00 from the registry of the federal court.

Jefferson, the trustee, and Jefferson, not the trustee, also filed an answer in which they alleged that Mrs. Edrington paid off the prior incumbrances with money of her husband's estate, and denied that she had paid them with her own means. They filed a cross-bill which alleged that Mrs. Edrington had taken certain improper credits and had withheld assets in her settlements, as executrix, with the probate court; that the estate was insolvent; and that the two plantations were inadequate to pay off the debts secured by the Jefferson mortgage. They asked that her account be surcharged and falsified.

Mrs. Edrington and the administrator filed an answer to the cross-bill, alleging that Jefferson, not the trustee, had purchased the land under a void decree pendente lite; that one of the claims secured by the Jefferson deed of trust was due to the Washington Fire and Marine Insurance Co., a defunct corporation which had no representative authorized to collect its claim.

Mrs. Edrington denied the charges of fraud in her accounts, and alleged that the question was concluded by her settlement with the probate court.

Driver, the administrator, filed a petition showing that he had purchased from the Phoenix Insurance Company, the assignee of the Washington Fire and Marine Insurance Company, the latter company's claim against the Edrington estate, for which he asked that credit be given to the estate.

The court dismissed the original complaint, found that Mrs. Edrington, with her own means, had paid off the prior lien on the Whitmore place, but held that she was estopped, as to the creditors claiming under the Jefferson mortgage, by the mortgage executed by her husband and herself; found that the first lien on the Fain place was paid out of funds of the J. H. Edrington estate; held that the claim of the Washington

Insurance Company was a valid claim, and that it had not been assigned to the Phoenix Insurance Co.; charged J. W. Jefferson, not the trustee, with the rents, and credited him with the taxes and necessary repairs; decreed that the Jefferson mortgage be foreclosed, and that Mrs. Edrington hold the Whitmore plantation for the lien paid off by her, subject to the Jefferson mortgage.

The cause was referred to a master to state an account. Pending this reference, Mrs. Edrington died; and the cause was revived in the name of W. B. Edrington as her executor, November 12, 1887. The master's report was filed and confirmed. All the parties have appealed to this court.

Decree reversed and cause remanded.

Myers & Sneed, John J. & E. C. Hornor and Compton & Compton for appellant Jefferson.

1. Jefferson, the trustee, is entitled to foreclose the lien of the trust deed for the sum of $ 28,754.21, with interest from March 16, 1874, at 8 per cent.

2. Jefferson, the trustee, is entitled to an allowance of a reasonable attorney's fee in the endeavor to execute the trust. 2 Dan., Chy. Pl. and Pr. (3d ed.), pp. 1466-1468; 93 Am. Dec., 393 and notes; 36 N.J.Eq. 287; 3 Wait's Ac. and Def., p. 149; 4 A. & E. R. R. Cas., 215.

This is the rule whether the beneficiaries are parties or not. 93 U.S. 352; 111 U.S. 684; 105 U.S. 527. "A trust estate must bear the expenses of its administration." See 4 Beav., 297; 4 Allen (Mass.), 474; 10 Wall. 493; 2 Perry, Trusts (2d ed.), secs. 894, 910, 912.

3. Jefferson, not the trustee, is entitled to the benefit of the betterment act of this State. He was in no sense a mortgagee in possession, but he entered in good faith, believing himself to be the owner, and he is entitled to credit for all expenditures for improvements made under such belief. Act March 8, 1883, sec. 1 et seq. He c ertainly entered under color of title. 11 Pet., 41; 1 Meigs, 207; 3 Wash., R. P., 139 (3d ed.); 35 Ill. 394; 35 Ill. 391; Wood on Lim., 525; 102 U.S. 461; 5 Cow., 546; 48 Ark. 184; 47 Ark. 528. To constitute color of title, it is not necessary that the deed be good; the statute was made to remedy bad titles. However groundless the supposed title, if the writing purports to convey, it affords color of title. Wood on Lim., p. 528; 47 Ark. 528; 18 How., 56; 20 Ark. 542; 34 Ark. 547; 62 Ala. 426; 1 Meigs, 207. A void deed confers color of title. 1 Meigs, 207; 34 Ark. 534.

Having entered under color of title, the only other question is, did he make the improvements believing himself to be the owner? See 45 Ark. 410, and 47 Ark. 528; 48 Ark. 184, as to this. Even if he was advised of the appeal, it was not notice of such an adverse claim as would deprive him of the benefit of the betterment act, because the reversal of a suit does not necessarily set aside a judicial sale. Rorer, Jud. Sales, sec. 138; 4 Dana, 20; 7 B. Mon. 57; 12 B. Mon. 471; 11 Ark. 519; Freem. on Judg., sec. 484; 44 Ill. 374; 18 B. Mon. 230; 1 Wall. 627. He was not bound to know that the court had no jurisdiction. See also 19 Bl. C. C., 94; 2 Ala. 256; 4 Humph., 362; 27 Minn. 60.

The act of March 8 is retrospective. 48 Ark. 103; 45 Ark. 410.

All improvements made in good faith should be set off against rents and profits. 6 Paige, 404; 1 Story, 478; 74 N.C. 603; 39 Md. 281; 16 B. Mon. 421; 2 J. J. Marsh, 516; 29 Mo. 52; 10 Ark. 87; 33 Ark. 490-536; 29 Ark. 47; 13 Lea, 587; 12 Lea 189. The only question is, were the improvements made in good faith? Constructive notice is not sufficient to prevent a bona fide holding, nor will lis pendens prevent an allowance for improvements made...