Security Trust Co., of Freeport v. Martin

• Decision Date: 03 December 1928
• Docket Number: 20
• Citation: 12 S.W.2d 870,178 Ark. 518
• Parties: SECURITY TRUST COMPANY OF FREEPORT v. MARTIN
• Court: Arkansas Supreme Court

12 S.W.2d 870

178 Ark. 518

SECURITY TRUST COMPANY OF FREEPORT v. MARTIN

No. 20

Supreme Court of Arkansas

December 3, 1928

Appeal from Conway Chancery Court; W. E. Atkinson, Chancellor reversed.

STATEMENT OF FACTS.

This is a suit by George C. Martin against the Security Trust Company of Freeport, Illinois, and others, to obtain a decree vacating a discharge of the vendor's lien on real estate which was alleged to have been made by mistake.

The facts, as shown by the evidence in the record, we find to be as follows:

George C. Martin conveyed to J. S. Hendricks eighty acres of land for $ 2,555.92. Notes were given for the purchase price of the land, and they were described in the deed. Subsequently it was decided that Hendricks should obtain a loan, and with the proceeds thereof pay off the purchase price of the land to Martin. Looking to this end, Hendricks made an application to F. B. Collins Investment Company of Oklahoma City Oklahoma, to obtain such a loan, and was to pay therefor a brokerage fee. The F. B. Collins Investment Company secured a loan for Hendricks from the Security Trust Company of Freeport, Illinois. It was the understanding that Martin should release upon the record his lien for the purchase price in order that Hendricks might obtain this loan, and Martin did execute such release. The Security Trust Company of Freeport mailed to the F. B. Collins Investment Company of Oklahoma City, Oklahoma, its check for $ 2,008, payable to that company. The application of the borrower was received by the F. B. Collins Investment Company at its office at Oklahoma City, Oklahoma, and accepted by it there. An abstract of title to the land was received by it there, and these were forwarded to the Security Trust Company at Freeport, Illinois, and accepted by it there. The amount of the loan was transmitted by it to the F. B. Collins Investment Company at Oklahoma City, Oklahoma. After the loan was made and the money advanced by the Security Trust Company, the F. B. Collins Investment Company, for the benefit of J. S. Hendricks, sent a check to George C. Martin payable to J. S. Hendricks and M. H. Dean, its local agent at Morrilton, Arkansas, in the county where the land in question was situated, for $ 799.52. J. S. Hendricks agreed to pay the F. B. Collins Investment Company $ 296.33 for its services in negotiating said loan. The F. B. Collins Investment Company became insolvent, and its check was never paid. Other facts will be stated or referred to in the opinion.

The chancellor found the issues in favor of the plaintiff, and a decree was entered of record in accordance with the findings of the chancellor. The Security Company of Freeport has appealed.

Decree reversed and case remanded.

Evans & Evans, for appellant.

Dean Moore & Brazil, for appellee.

OPINION

HART, C. J., (after stating the facts).

The decree of the chancellor was wrong in so far as the rights of the Security Trust Company of Freeport are concerned.

The theory upon which Martin brought this suit is that he released his vendor's lien in order that Hendricks might obtain a loan and pay him the balance of the purchase price on the land. The parties did not intend that the release would be effective until Martin received the money in satisfaction of the amount of the lien. In making this contention, they rely upon the general rule that, where a mortgage or other lien on real estate has been released or satisfied through mistake, it may be restored in equity and given its original priority as a lien. 41 C. J. 586.

It is equally well settled that such relief cannot be obtained to the injury of the intervening rights of an innocent third party, who relied upon the release, unless he is chargeable with notice of the mistake or will not be prejudiced by the reinstatement. 41 C. J. 586 and 587, and cases cited in notes 42 and 43; Sheldon v. Holmes, 58 Mich. 138 24...