Newald v. Valley Farming Co.

• Decision Date: 25 March 1918
• Docket Number: 246,338
• Citation: 202 S.W. 838,133 Ark. 456
• Parties: NEWALD v. VALLEY FARMING COMPANY
• Court: Arkansas Supreme Court

202 S.W. 838

133 Ark. 456

NEWALD v. VALLEY FARMING COMPANY

No. 246,338

Supreme Court of Arkansas

March 25, 1918

[Copyrighted Material Omitted]

Appeal from Clay Chancery Court, Western District; Chas. D Frierson, Chancellor; affirmed.

Decree affirmed. Motion for rehearing denied.

J. F Gautney and F. G. Taylor, for appellants.

1. Appellants have the right to pay their pro rata per acre of the mortgage and have their lands released. 127 Ark. 577; 141 U.S. 247; 41 Minn. 14; 27 Cyc. 1415-16; 20 A. & E. Enc. L 1070 and notes; 57 N.J.Eq. 539. This right to release may be exercised at any time before final decree. 41 A. 405; 41 Minn. 14; 63 N.W. 1012; 103 Iowa 301; 72 N.W. 531; 57 N.J.Eq. 539; 162 Ill. 426. It was not necessary to make a tender. 70 Ore.; 142 Pa. 321.

The stipulation entered into was only an extension of time of payment. 103 Ark. 484.

2. The court erred in rescinding the contracts of sale to appellants. There was no offer to put parties in statu quo. 25 Ark. 196; 59 Id. 251. The parties seeking rescission had full notice of the sales. 119 Mich. 343; 42 Neb. 87; 60 N.W. 391. The lands that Dorough-Newald Co. conveyed were conveyed after the contracts of sale were made and previous to the time of performance and there were no grounds of rescission. 29 A. & E. Enc. L. 667.

There was no evidence to sustain the decree in favor of John and Mary Gancell. The land sold the Blanars was not sold to Taylor or Morgan. As to the right to deduct the value of land lost by reason of the conveyance to Terry, see 47 Ark. 293.

3. The parties seeking rescission have no rights under the release provision of the mortgage even if they had a right to rescind.

4. The amount of the judgment is excessive.

D. Hopson, T. J. Crowder and G. B. Oliver, for appellee, Valley Farming Co.

1. The decree should be affirmed for non-compliance with Rule 9.

2. Appellee was not bound by the clause as to the release on payment of pro rata amount per acre. This was inserted without the knowledge or consent of appellee. Newald failed to pay the taxes and permitted the land to be sold, but received large rents. He made no improvements. He continued to sell lands after the suit to foreclose was commenced. His claim for damages is unfounded and without merit. He was not damaged.

As to the consideration for the deeds made see 13 Cyc. 613 (II).

The claims of the interveners are without merit. The conveyances were not in good faith. No tender was made.

3. Under the provision for release appellants have no rights. Par. 6 of the stipulation entirely supersedes this insertion made without authority. Appellants have never complied with their undertakings. Terry, Taylor and Morgan were not innocent purchasers. Their claims to release are without merit.

4. After suit to foreclose is begun the right to release ceases except on payment of the full debt. 92 N. Rep. 474; 84 Am. Dec. 726; 43 F. 552; 152 N.Y.S. 87; 36 N.J.Eq. 69. See also Jones on Mortg. (5th ed.) § 981, p. 987.

5. No payment nor tender was made under the stipulation.

G. B. Oliver, for the other appellees.

1. The action of Dorough-Newald Co. in selling and conveying the land to interveners without any reference to previous conveyances to appellees and the delivery of possession by said company to them amounts to a rescission, or rather the acceptance of the offer to rescind made in the complaint. Black on Rescission and Cancellation, etc., §§ 526, 528; Ib. 534; 39 Cyc. 1356, c. 1357.

2. Appellees tendered back a deed and offered to reconvey before suit. Black on Rescission and Cancellation, etc., § 630.

3. Appellees are entitled to rescission and a lien. The decree is right.

T. J. Crowder, D. Hopson and G. B. Oliver, for appellee, supplemental brief.

1. The decree of January 20, 1916, was final and the transcript was not lodged within six months.

2. The decree is not excessive. If any error was made, it was a misprision of the clerk and can be corrected.

STATEMENT OF FACTS.

This was a suit in equity to foreclose a mortgage on real estate. Certain persons who had purchased tracts of land after the execution of the mortgage were allowed to become parties and asked that their contracts for the purchase of the lands be set aside on account of fraud practiced upon them by the mortgagors. Still other persons who had purchased some of the lands from the mortgagors since the execution of the mortgage were allowed to intervene for the purpose of asserting their rights to have the lands purchased by them released from the mortgage by the payment of certain sums.

On the 31st day of March, 1914, the plaintiff, Valley Farming Company, conveyed to the defendant, L. J. Newald, a large tract of land in the western district of Clay County, Arkansas, consisting of something over 8,000 acres; about five hundred acres of which were cleared and in cultivation. The consideration was $ 85,000, evidenced by the promissory notes of L. J. Newald and S.E. Newald, his wife. Of these notes one was for $ 5,000, due six months after date; four were for $ 15,000, each due respectively twelve, eighteen, twenty-four and thirty months after date and the remaining note was for $ 20,000, due thirty-six months after date. The notes bore the date of March 31, 1914, and on that date L. J. Newald and S. E. Newald executed a mortgage to the Valley Farming Company on the lands to secure the payment of these notes. Said mortgage contains the following provision:

"It being expressly agreed by and between the Valley Farming Company and L. J. and S. E. Newald, or assigns, that upon paying the pro rata amount per acre of this mortgage any part or parcel of the land covered by said mortgage shall be released."

According to the contention of the plaintiff the draft of the mortgage submitted to its officers did not contain this provision and evidence was introduced tending to show that the provision was inserted in the mortgage without the knowledge and consent of the plaintiff and was not discovered until after the mortgage was filed and recorded. The plaintiff at once caused the following notice to be entered on the margin of the record where said mortgage was recorded:

"Notice is hereby given that the clause contained in this mortgage providing for the release of the portion of the lands therein conveyed upon the payment of the pro rata amount per acre of the indebtedness was inserted without his knowledge or the authority of the undersigned, and that no such release will be given unless satisfactory consideration is paid and arrangement hereinafter made. This 30th day of April, 1914.

(Signed)

"Valley Farming Company.

"By J. M. Hoffman, President."

The original bill of foreclosure in this case was filed on the 23d day of November, 1914. The question of whether or not the release above referred to was contained in the mortgage and was placed there without the consent of the mortgagee was made an issue by the answer tendered by the mortgagors. Evidence was introduced by the mortgagee to show that the release was placed there without its knowledge and consent and by the mortgagors to show that it was placed in the mortgage by the agreement of the parties. On the 8th day of October, 1915, at the October term of the chancery court the following order was entered of record:

"On this October 8, 1915, comes the plaintiff by their attorneys T. J. Crowder and D. Hopson, and the defendants, Dorough-Newald Company, L. J. Newald and S. E. Newald, by their attorneys, Ben M. Goldberg, C. W. Terry and F. G. Taylor, and submitted to the court for its approval their agreement and adjustment of all controversies herein involved as follows:

"It is stipulated and agreed that all matters in this controversy be settled on the following basis:

"First. The marginal notice heretofore caused to be placed on the record of the mortgage herein sought to be foreclosed shall be ordered canceled and expunged from the record.

"Second. The defendant shall pay or cause to be paid on or before ninety days from this date one-half of the amount due for and on account of the notes past due, and interest on the remaining notes secured by said mortgage, including the amount heretofore paid by plaintiffs for the drainage taxes on said land in the sum of $ 1,898.60, together with interest on the said last mentioned sum at the rate of 6 per cent. per annum from the first day of December, 1914, and further agrees to pay the remaining one-half of the said amount in 180 days from this date. Said amounts shall bear interest at the rate of 6 per cent. from this date until paid.

"Fourth. It is agreed that in figuring interest on the notes now due, that the same is to be figured at straight simple interest from date of said notes to the present date, at the rate of 6 per cent. per annum. That the interest afterwards shall be computed according to the terms and conditions of the notes.

"Fifth. That the defendant shall be allowed in full for all its claim for damages the sum of $ 7,500, same to be credited of this date. The said allowance is to be made and credited upon the $ 15,000 note secured by the mortgage in controversy herein, which matures on the 31st day of March, 1916, the payment of which is extended until the 30th day of June, 1916. That said credit of $ 7,500 is to be credited upon said note heretofore described, when and not until the balance of the $ 15,000 note, with interest, is paid. The said credit, however, is not to be allowed unless the amount of said note is paid on or before the 30th day of June, 1916.

"Sixth. The plaintiff shall release all lands heretofore sold, except the lands sold to Seigel, on payment of $ 17.50 per acre, the first sixteen tracts described in the defendant's exhibit 8 to be released when and during the...