Neas v. Whitener-London Realty Company

• Decision Date: 14 June 1915
• Docket Number: 54
• Citation: 178 S.W. 390,119 Ark. 301
• Parties: NEAS v. WHITENER-LONDON REALTY COMPANY
• Court: Arkansas Supreme Court

178 S.W. 390

119 Ark. 301

NEAS v. WHITENER-LONDON REALTY COMPANY

No. 54

Supreme Court of Arkansas

June 14, 1915

Appeal from Mississippi Chancery Court, Osceola District; Charles D Frierson, Chancellor; reversed.

Decree reversed and cause remanded.

J. W Rhodes, Jr., and W. J. Lamb, for appellants.

1. In this case the distinction between a deed and a mortgage or deed of trust is to be observed, in this: If one sells and conveys land by deed to another, and a third party, with knowledge of such sale, afterward buys the same land from the grantor in the first deed, he obtains no interest in the land, even though the deed was not recorded, but this is not true of a mortgage. A mortgage may be good between the parties, though not acknowledged or recorded, but it constitutes no lien upon the mortgaged property as against a stranger unless it is acknowledged and recorded, or, in this State, filed for record, and this is true even though the third party had actual notice of its existence. Kirby's Dig., §§ 763, 5396; 9 Ark. 112; 20 Ark. 190; 18 Ark. 105; 49 Ark. 459; 68 Ark. 168; 25 Ark. 152; 41 Ark. 186; 56 Ark. 88.

2. A description which omits the range in which the land lies, and contains no other words of description by which the land sought to be conveyed can be identified, does not constitute when filed or recorded, constructive notice of what land was intended to be conveyed. 41 Ark. 70; 43 Ark. 350; 54 Ark. 91; 35 Ark. 470, 477, 478, and cases cited; 30 Ark. 660; 3 Ark 58; 51 N.E. 243; 41 N.E. 1054; 61 P. 820, 822; 33 So. 21, 22; 34 So. 602; 38 So. 957; 28 S.W. 551, 552; 24 S.W. 502; 34 N.W. 871; 46 N.Y. 384, 7 Am. Rep. 355; 51 Am. Dec. 769, 782, 783; 48 Ark. 419-425; 2 Devlin on Deeds (3 ed.), § 654; 20 Ia. 121, 89 Am. Dec. 517; 8 Vt. 172, 30 Am. Dec. 459; 110 Am. St. Rep. 924-932.

A mortgage can not be constructive notice of anything not contained in it; and the recording of this deed is constructive notice of that only which would become actual notice to one who read the deed or had actual knowledge of what it contained. Warvelle on Abstracts (3 ed.), § 62; 7 Cal. 292; 10 Vt. 555; 1 Johns Ch. 288.

Hawthorne & Hawthorne, for appellee.

The mortgage or deed of trust sufficiently describes the lands. They were in two townships in the same range, and the range number having been mentioned once, it would follow that all the lands were in the same range, unless they were described as being in a different range; but as a matter of precaution appellee asked for a reformation. 57 So. 836. If, however, the description as given was not in itself sufficient, there was at least enough there, when taken in connection with other facts appearing on the record, the deed from appellee to Lilly, and the timber deed from appellee to Chapman & Dewey Land Company, in both of which these same lands were correctly described, to put appellants upon inquiry, and a mere casual inquiry would have disclosed that the sections in question were in range 8 east. 87 Ark. 492; 108 Ark. 490; 50 Ark. 327; 35 Ark. 103; 70 Ark. 253; 2 N.E. 735; 54 Ark. 158; 51 Ark. 410; 52 Ark. 278; Id. 371; 111 Ark. 368; 46 Ark. 70.

If Neas was a purchaser for value without notice of appellees mortgage at the time he paid Lilly the $ 5,000 balance, he had constructive notice of the pendency of the suit of appellee and others to foreclose a vendor's lien and deed of trust in the United States District Court, which was filed, and a summons was issued and served on Lilly more than a month prior to the date this payment was made by Neas to Lilly. 25 Cyc. 1478; 134 F. 503.

OPINION

SMITH, J.

Appellee, Whitener-London Realty Company, hereinafter designated as the realty company, was the plaintiff below, and instituted this suit for the purpose of reforming and foreclosing a deed of trust executed in its favor by one O. R. Lilly. The realty company conveyed to Lilly on October 25, 1910, a large body of land, all of which was situated in township 13 north, range 8 east, Mississippi County, Arkansas, except two sections numbered 26 and 35, which were situated in township 12 north, range 8 east. This deed recited that it was subject to a timber contract theretofore made by the realty company with the Chapman & Dewey Lumber Company. The deed to Lilly recited that the consideration of $ 34,947 had been fully paid. On March 3, 1911, Lilly executed to W. B. Flannigan, as trustee for the realty company, a deed of trust to secure notes aggregating the sum of $ 17,298.50, the balance due on the purchase price of the lands. This trust deed accurately described the lands lying in township 13 north, range 8 east, but described sections 26 and 35, as being in township 12 without giving any range number. Lilly was indebted to appellant D. H. Robinson in the sum of $ 6,000, and to secure the payment of this sum, which was evidenced by a promissory note for that amount, and which note was assigned to, and is now owned, by one J. W. Pumphrey, executed a deed of trust on said sections 26 and 35 in township 12 north, range 8 east. The date of this deed was April 12, 1911. Lilly later negotiated a trade with appellant Neas for the sale of section 35, township 12 north, range 8 east, for a consideration of $ 8,500, and executed a deed to Neas conveying said section of land on the 14th day of October, 1911. The deed of trust from Lilly in favor of the realty company was filed for record on the 23d day of March, 1911, while the deed to Lilly from the realty company was filed on the 14th of March, 1911, and all of the other conveyances herein mentioned were filed for record subsequent to those dates.

When Neas was negotiating with Lilly for the purchase of the section above described he procured an abstract of title to that section of land, which was made by a competent abstracter, and from the certificate of this abstracter it appears that the abstract purported to show all conveyances and liens of every kind affecting said land. There is some proof in the record to the effect that Robinson and Lilly were associated together in business, and that after taking a deed of trust in his favor on both sections 26 and 35 to secure the payment of the $ 6,000 due him from Lilly, Robinson thereafter, without any consideration, released his deed of trust insofar as section 35 was concerned. But it was shown that he considered Lilly as solvent, and he stated that he would have satisfied his deed of trust entirely had he been requested so to do. It is not necessary, however, to review the transactions between Lilly and Robinson, as the court below made no finding that Robinson was not an innocent purchaser except insofar as he was affected with constructive notice of the prior deed of trust from Lilly to Flannigan, as trustee.

The realty company filed suit in the Federal Court at Jonesboro on the 28th of March, 1912, in which it asked a reformation of the deed of trust to Flannigan by the insertion of the omitted range, and a foreclosure of that instrument; but this suit was never prosecuted to a final decree, and was dismissed on the 28th day of December, 1912. During the pendency of this suit in the Federal Court, Neas paid to Lilly the balance of the purchase money due on section 35, but Neas had not been made a party to this suit in the Federal Court, and had no actual knowledge of its existence.

The court below held that the registration of the deed of trust from Lilly to Flannigan was constructive notice of its existence, and that it constituted a lien prior to the subsequent conveyances. There is no circumstance in proof to support a finding that Neas was not a bona fide purchaser for value, and while there are some circumstances in proof which tend in a measure to show that Robinson may not have been, yet the chancellor did not make that finding of fact, nor is it now contended that the evidence is sufficient to establish that fact, but it is urged that both Robinson and Neas had such constructive notice of the Flannigan deed of trust that the conveyances to them must be held subject to that lien. The determination of the correctness of this view is, therefore, the question in the case.

Section 762 of Kirby's Digest provides that every instrument of writing affecting the title, in law or equity, to any real or personal property which is required by law to be acknowledged, or proved and recorded, shall be constructive notice to all persons from the time the same is filed for record in the office of the recorder of the proper county.

Section 763 of Kirby's Digest provides that no instrument of writing for the conveyance of any real estate, or by which the title thereto may be affected in law or equity shall be good or valid against a subsequent purchaser of such real estate for a valuable consideration, without actual notice thereof; or against any creditor of the person executing such deed, bond or instrument, obtaining a judgment or decree, which by law may be a lien upon such real estate, unless such deed, bond or instrument, duly executed and acknowledged, or approved, as is or may be required by law, shall be filed for record in the office of the clerk and ex-officio recorder of the county where such real estate may be situated.

Section 5396 of Kirby's Digest provides that every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time the same is filed in the recorder's office for record, and not before; which filing shall be notice to all persons of the existence of such mortgage.

The description of sections 26 and 35 in the Flannigan deed of trust was insufficient to convey the legal title to those lands. It is shown without dispute that there were lands in township 12 north, in addition to those in range 8 east there being...