Morgan v. Kendrick

• Decision Date: 12 July 1909
• Citation: 121 S.W. 278,91 Ark. 394
• Parties: MORGAN v. KENDRICK
• Court: Arkansas Supreme Court

121 S.W. 278

91 Ark. 394

MORGAN v. KENDRICK

Supreme Court of Arkansas

July 12, 1909

Appeal from Cleveland Chancery Court; John M. Elliott, Judge affirmed.

Decree affirmed.

Woodson Mosley and Taylor & Jones, for appellants.

1. There was no way to revive the lien of the mortgage as to third parties, except by compliance with Kirby's Digest § 5399. This was not done.

2. There is no evidence to show fraud.

J. W Crawford and T. M. Hooker, for appellee.

1. The judgment of the circuit court is res judicata, as to the Morgans, on the question of the payments on the note and the statute of limitations. 76 Ark. 423; 57 Id. 500; 46 Id. 272; 55 Id. 536; 83 Id. 545; 74 Id. 320; 2 Black on Judgments, § 504; 1 Herman on Est. & Res Judicata, §§ 107-8. It binds all privies. 2 Black on Judgments, § 504; 75 Ark. 320; 83 Id. 545.

2. Kirby's Digest, § 5399, only applies to third parties who purchase in good faith for a valuable consideration. The sons paid nothing, and the deed to them was a fraud. 64 Ark. 317; 6 Wall. (U. S.) 310.

3. A chancellor's finding of facts will not be set aside unless clearly against the preponderance of the evidence. 68 Ark. 134; 68 Id. 314; 73 Id. 489.

OPINION

FRAUENTHAL, J.

The plaintiff below, J. J. T. Kendrick, instituted this suit on October 1, 1907, in the Cleveland Chancery Court for the purpose of confirming a sale of real estate made under and by virtue of a power of sale contained in a mortgage executed to him by W. J. Morgan, one of the defendants; and also to cancel a deed executed by said mortgagor to his two sons, George and Frank Morgan, the other defendants herein. On January 24, 1896, W. J. Morgan for a valuable consideration executed to the plaintiff his note for $ 563.95 due January 1, 1897, and bearing ten per cent. interest per annum from date until paid, and on the same day to secure the payment of said note executed to plaintiff a mortgage on the land in controversy. The mortgage was duly filed for record in April, 1896. The plaintiff alleged that payments were made by the maker on the note as follows: January 15, 1901, one dollar; July 7, 1902, two dollars; and that on June 11, 1906 the plaintiff indorsed a memorandum of said payments on the margin of the record of said mortgage, which was then duly attested. In May, 1906, the plaintiff sold the land under the power of sale contained in the mortgage; and in making said sale he complied with the terms of said mortgage and all requirements of the law. The plaintiff became the purchaser at that sale, and, although the period for redemption had expired, he did not execute a deed to himself under the sale for the reason that he did not think he had that power. He credited the amount of the bid upon the note; and on November 1, 1906, instituted a suit in the Cleveland Circuit Court against the defendant, W. J. Morgan, for the balance of said note. In that suit said Morgan denied making the above payments and pleaded the statute of limitation. Upon a trial and verdict of a jury a judgment was rendered in that case in favor of the plaintiff and against the defendant W. J. Morgan for the sum of $ 639.23 as the balance due on said note. On April 3, 1905, W. J. Morgan conveyed the said mortgaged land to his said two sons for the alleged consideration of $ 400; and this deed was filed for record on June 19, 1906. The plaintiff seeks to set aside said deed on the ground of fraud.

The defendants in their answer denied all allegations of payments and of fraud, and claimed that by reason of the failure to indorse the alleged payments on the margin of the record of the mortgage until after the note appeared to be barred by limitation and until after the execution of said deed the mortgage was invalid as to the defendants, George and Frank Morgan.

The chancellor found that the note was not barred by limitation; that the mortgage sale of the land was regular in all respects; that the alleged conveyance made by the mortgagor to the other defendants was fraudulent. He entered a decree, cancelling said deed and confirming the sale under the mortgage and quieting the title in plaintiff; and directed a commissioner of the court to execute a deed to plaintiff for the land.

In accordance with the pleadings the chancellor in said decree also reformed the description of a small portion of the land. From this decree the defendants have appealed to this court.

The sole defense in this suit is made by the defendants George and Frank Morgan, who claim an unincumbered title to the land by virtue of the conveyance from their father. Neither in the answer of the defendant W. J. Morgan, nor in the brief of appellants, is it contended that the said note secured by the mortgage is barred by the statute of limitation. The evidence sustains the finding of the chancellor that payments were made thereon by the maker as above set forth, and that on that account the note was not barred. That issue was also determined by the judgment of the Cleveland Circuit Court in the above mentioned suit founded upon said note. As is said in the case of National Surety Co. v. Coates, 83 Ark. 545, 104 S.W. 219, "a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction as a ground of recovery can not be disputed in a subsequent suit between the same parties or their privies; and, even if the second suit is for a different cause of action, the right, question or fact, once so determined, must, as between the same parties or their privies, be taken as conclusively established, so long as the judgment in the first suit remains unmodified." 12 Cyc. 1215.

The judgment of the Cleveland Circuit Court involved the question as to whether said note was barred, and it therefore became conclusive against the defendant W. J. Morgan and prima facie evidence against the other defendants; and with the other testimony in the case fully sustains the finding of the chancellor that the note was not barred.

But the defendants, who are the grantees in said deed, contend that on April 3, 1905, when they obtained said deed, the plaintiff had not made any indorsement of the payments on the margin of the record of said mortgage; and that therefore their rights could not be affected by the payments. Section 5399 of Kirby's Digest provides: "In suits to foreclose or enforce mortgages or deeds of trust, it shall be sufficient defense that they have not been brought within the period of limitation prescribed by law for a suit on the debt or liability for the security of which they were given. Provided, when any payment is made on any such existing indebtedness before the same is barred by the statute of limitation, such payment shall not operate to revive said debt to extend the operations of the statute of limitation with reference thereto, so far as the same affects the rights of third parties, unless the mortgagee, trustee or beneficiary shall, prior to the expiration of the period of the statute of limitation, indorse a memorandum of such payment with date thereof on the margin of the record where such instrument is recorded, which indorsement shall be attested and dated by the clerk."

The effect of that statute, as to strangers to the transaction is that when the debt secured by a mortgage is apparently barred by limitation, and...