Newport v. Chandler
| Decision Date | 28 February 1944 |
| Docket Number | 4-7268 |
| Citation | 178 S.W.2d 240,206 Ark. 974 |
| Parties | Newport v. Chandler |
| Court | Arkansas Supreme Court |
Appeal from Carroll Chancery Court, Western District; Lee Seamster Special Chancellor.
Affirmed.
F E. Riddle and R. R. Linker, for appellant.
Robert L. Butt, for appellee.
The primary question presented by this appeal is whether under the circumstances disclosed by the record a warranty deed and a contract permitting the grantors to reacquire title constituted a mortgage. The contract was signed by appellant, W. E. Newport, and the appellee, and provides that appellants: "have agreed to sell and have sold to the party of the second part (appellee) and the party of the second part has agreed to purchase and has purchased the following described property, to-wit:
"Front lot 2 and 2 feet off the east side of front lot 3 on the south side of south Main street; front lot 2 and 2 feet off the east side of front lot 3 on the north side of First street, south of Main street, extending from Main street to First street in block 156, Riley & Armstrong's Survey in the city of Eureka Springs."
The consideration of the above sale is $ 900 cash in hand, and the parties hereto agree as follows:
On the same day appellants executed the warranty deed, which together with a copy of the contract was delivered to the escrow agent.
At the expiration of the nine months period mentioned in the contract, to-wit, July 19, 1941, appellants were unable to pay the $ 900 and interest, and appellee agreed to extend the time, as evidenced by an indorsement on the copy of the contract left with the escrow agent, as follows:
The property described in the contract consisted of a lot located in Eureka Springs, Arkansas, upon which is situated a brick and stone building, known as the Basin Springs Bath House. This building, erected some 40 or 50 years ago, is 42 feet wide by 80 feet in length, and consists of a basement and three stories. The building is situated on a mountain side, and the first story thereof consists of two-store buildings, which front on and are entered from Main street. The second and third stories of the building consist of rooms which originally were used in connection with the operation of a bath house. The second story of the building is on a level with Spring street, which is higher up the mountain side than Main street. A bridgeway extends from the building across Main street to Spring street so that the second story of the building can be entered directly from Spring street. The evidence is undisputed that the building originally was well constructed, and that the cost of such construction was quite large.
Appellants had owned said building for about 20 years, and operated a grocery store and meat market on the first floor thereof, and occupied some of the rooms on the second floor as living quarters. The building was in poor repair. Appellants were indebted to a bank in Eureka Springs in the sum of $ 600, secured by a mortgage on this building. Newport undertook to obtain a renewal of the indebtedness and sought also to have the principal of the loan increased to $ 1,000. The bank declined to grant him the increase and also insisted as a condition for renewal that there be a reduction in the amount of the original indebtedness. Newport thereupon contacted several persons who frequently loaned money, and sought a loan of $ 1,000, offering the property as security. In all of these efforts he was unsuccessful, and finally he approached appellee. Appellant Newport testifies that he advised appellee that he desired to obtain a loan of $ 900, and that appellee agreed to make the loan. He says: "I told him I wanted to give him security for his loan and would verify it out with a warranty deed." He testifies that the warranty deed and contract were prepared by appellee's attorneys and were brought to him by appellee to be signed; that he demurred because the instruments did not appear to be a mortgage, and that appellee assured him that it was just another form of mortgage, and acting upon that assurance appellants signed the instruments; that at no time did he ever make appellee a proposition to sell the property at any price, and that there was no agreement between him and appellee for the sale of such property.
Appellee, on the other hand, denied that he made a loan to or took a mortgage from appellants; he testified that he refused to take a mortgage, but advised appellant that he would buy the place and sell it back to him at the end of nine months, and that the papers were drawn by Mr. Bare in the office of Bare & Swett in the presence of both Mr. Newport and the witness, and that the papers as drawn revealed the true agreement between the parties. During the nine-month period appellants were unable to obtain the money necessary to pay appellee for a reconveyance of the property, and they sought further time. Newport testifies that appellee first demanded $ 300 as consideration for an extension, but being convinced that appellants had no such sum finally agreed to grant an extension to September 1, 1941, on condition that appellants would give him all of the furniture. Appellee denies that he demanded the $ 300 or the furniture, but he says that Newport stated that he wouldn't need the furniture if he lost the building, and offered to include the furniture in the security if the extension was granted, and that the extension was granted on the conditions set out in the notation indorsed on the copy of the contract held by the escrow agent.
Appellants failing to make the payment in accordance with the terms of the extension agreement, appellee secured from the escrow agent the warranty deed and took formal possession of the property on September 3, 1941. Mr. Newport testifies that this deed was delivered over his protest, but that Newport says that appellee asked him to suggest what rental he should pay, and that he suggested $ 25 per month, but that appellee stated he wanted to be lenient, and he would let him have the property for $ 8 per month; that he occupied the premises for 2 months and paid the $ 16 rental. After taking possession of the property appellee began to make repairs and improvements thereon. Appellant Newport admits that he was aware that appellee was making these improvements. The record discloses that Newport voluntarily moved out of the building and surrendered possession to appellee, and that until the filing of this suit some 16 months later he asserted no claim to any interest in the building or an equity of redemption.
Witness Lamar testified that Newport told him that he had given up, and was going to turn the property over to appellee and quit; that witness saw Newport again some two weeks after he had turned the building over to appellee, and that Newport at that time told him that he wished he had turned it over a long time ago; that appellee had treated him fair and like a brother, and that he hoped appellee could make some money out of the property.
Reference to the testimony relating to the market value and the rental value of the property will be hereinafter set out.
The trial court found that, under the circumstances, the transaction constituted an absolute conveyance and not a mortgage to secure a debt. Appellee suggested, however, that he was willing that appellants should recover the property if they fully reimbursed him for all sums laid out, together with interest thereon, and asked the court to state an account thereof. In compliance with such request the court found that the sum of $ 2,745.20 represented the net amount to which appellee was entitled and allowed appellants 60 days within which to...
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