Ross v. Hodges

• Citation: 157 S.W. 391,108 Ark. 270
• Parties: ROSS v. HODGES
• Decision Date: 12 May 1913
• Court: Supreme Court of Arkansas

157 S.W. 391

108 Ark. 270

ROSS v. HODGES

Supreme Court of Arkansas

May 12, 1913

Appeal from Greene Chancery Court; C. D. Frierson, Chancellor affirmed.

STATEMENT BY THE COURT.

This is a suit by appellees, against appellants, to have a vendor's lien declared and enforced on two hundred (200) acres of land in Greene County, Arkansas.

In March, 1909, E. M. Ross entered into a contract with the appellees, whereby he was to receive a deed to the lands in controversy, and in part consideration therefor was to transfer to the appellees certain real estate, designated in the briefs as the "Bertig lands." The Bertig lands at the time of the contract, were encumbered by a mortgage in favor of the Cotton Exchange Bank of Kennett, Missouri, for four hundred and fifty dollars ($ 450), with interest. At the time the contract was entered into Ross represented to the appellees that the mortgage on the Bertig lands would be released and that the mortgagee would take a new mortgage on the lands in controversy. In pursuance of the contract, D. D Hodges, one of the appellees, executed to Ross a warranty deed to the lands in controversy. On the 8th of May, 1909 Ross executed a warranty deed to R. P. Taylor, in pursuance of an agreement between them, which provided in part as follows:

"Whereas said first parties have contracted and agreed, and by these presents do hereby contract and agree, to procure, if possible, from each and every creditor of the said Southern Pole & Piling Company an agreement to accept said lands in full and complete settlement of all sums due to said creditors, and when said land shall have been sold and proceeds converted to money, and when the same shall be divided and paid to said creditors, and receipt in full and release thereupon executed to the said Southern Pole & Piling Company and to the said E. M. Ross, and said deed shall be placed of record the said conveyance shall be treated and considered as completed and final."

The Cotton Exchange Bank refused to satisfy the mortgage on the Bertig lands, and the appellees brought this suit, to have a vendor's lien declared and enforced against the lands in controversy, which had been conveyed to Ross as part consideration for the Bertig lands, and the stock of merchandise purchased by the appellees, of Ross, representing the Southern Pole & Piling Company.

It was shown that before the conveyance was made by Ross to Taylor, Ross informed him of the claim of four hundred and fifty dollars ($ 450), for which the land was mortgaged. Ross testified as follows:

"The conveyance to Taylor was on consideration that the creditors for whose benefit the conveyance was made could take their pro rata out of the price realized from the sale of the lands, and release all claims against me.

"The plaintiffs at that time held a mortgage on another place of mine (the Crunk place) to secure $ 272.50 of the indebtedness of four hundred and fifty dollars ($ 450). I paid off the mortgage of $ 272.50 on the Crunk place, but after I did so the question of satisfying this four hundred and fifty dollars ($ 450) mortgage came up, and I told Mr. Grady, one of the plaintiffs, that he could still hold the $ 272.50 mortgage against my farm. But in the meantime they brought this suit, and I made him give the mortgage to me.

"I have lived on the Crunk place since March, 1909. The place was worth about one thousand dollars ($ 1,000)."

The appellants, in their answer, after alleging the contract under which the deed to Taylor was executed, alleged as follows:

"Defendant, R. P. Taylor, states for himself and for said creditors, that neither he nor they nor any of them, had any knowledge of any right, claim, interest or lien, running in favor of the plaintiffs, or either of them, in and to the lands conveyed to them, in trust for the said creditors, prior to the institution of this suit. They state that the debts to the creditors, which constitute the consideration for the conveyance to Taylor, greatly exceed the value of the lands on which plaintiffs claim a lien."

On behalf of appellants, there was testimony tending to sustain the allegations of their answer.

The court found that the defendant, R. P. Taylor, "received the conveyance from Ross, with constructive notice of an agreement by E. M. Ross, to convey the Bertig lands to plaintiffs free from encumbrances, and that no new consideration passed to Ross for said conveyance."

The court divested the title to the Bertig lands out of the defendants, E. M. Ross and the Southern Pole & Piling Company, and decreed that the lands in controversy be sold and that the proceeds of the sale be applied towards the satisfaction of the claim of the Cotton Exchange Bank, and the case is here on appeal.

Other facts stated in opinion.

Decree affirmed.

Johnson & Burr, for appellant.

1. Where the facts show that the assignor receives some substantial advantage other than the assurance that the proceeds of the property will be applied to his indebtedness, a sufficient consideration is present to support the bona fides of an assignee unaffected with notice of prior liens.

When a creditor, in consideration of the assignment, releases the assignor from personal liability on the debt for the payment of which the assignment is made, the assignee is a purchaser for value and not bound by the undisclosed fraud of the assignor. 59 Miss. 111; 16 L. R. A. 664; Kent's Com. (12 ed.), 464. The chancellor's finding that the defendant Taylor was affected with constructive notice was wrong as a matter of law. Constructive notice could not have resulted except in consequence of want of consideration. 95 Ark. 586.

2. So much of plaintiff's claim as equals the amount due on the mortgage on the Crump place should be disallowed. If there has been no actual satisfaction of record, the mortgage still stands as security to the plaintiffs. 27 Cyc. 1433...