Shaw v. Polk

• Decision Date: 13 February 1922
• Docket Number: 147
• Citation: 237 S.W. 703,152 Ark. 18
• Parties: SHAW v. POLK
• Court: Arkansas Supreme Court

237 S.W. 703

152 Ark. 18

SHAW v. POLK

No. 147

Supreme Court of Arkansas

February 13, 1922

Appeal from Clay Chancery Court, Western District; Archer Wheatley Chancellor; affirmed.

STATEMENT OF FACTS.

On the 19th day of March, 1920, appellants brought this suit in equity against appellees to cancel and set aside a deed to forty acres of land on the ground that the proceedings in the mortgage foreclosure sale under which appellees purchased were void. Appellees interposed the plea of res judicata and the statute of limitations.

The forty-acre tract of land in controversy was the homestead of John Denton, who died intestate in Clay County, Ark., on January 11, 1912. He left surviving him M. J. Denton, his widow, and appellants, who were his children and sole heirs at law. At his death there were two valid mortgages against the land; one for § 700 to the New England Securities Company, and the other for something over § 400 to J. A Wheatley. Soon after Denton died W. D. Polk purchased the Wheatley mortgage, and then obtained a deed to the land from Mrs. M. J. Denton for the consideration of § 100 recited in the deed. W. D. Polk went into possession of the land, and soon afterwards entered into an agreement with Albert Powers one of the appellees, whereby Powers was to purchase the land at a foreclosure sale of the Wheatley mortgage and to pay off the mortgage of the New England Securities Company.

On September 8, 1913, W. D. Polk brought a suit in equity against appellants to foreclose the mortgage on the NE 1-4 of the NW 1-4 of section 14, township 20 N., range 3 E., in Clay County, Ark., given by John Denton, Linda Denton, his wife John Denton, Jr., and Mat Denton to J. A. Wheatley to secure the payment of three promissory notes of § 153.63 each. The three said notes and the said mortgage are made exhibits to the complaint. The mortgage describes the land as the SE 1-4 of the NW 1-4 of sec. 14, township 20 N, range 3 E, of Clay County, Arkansas, and the record shows that this is the correct description of the land in controversy. The said notes and mortgage given to secure the same were duly transferred by Wheatley to Polk before the foreclosure proceedings were instituted.

On the 9th day of October, 1913, a decree of foreclosure was duly entered of record in the chancery court, and it contained the same misdescription of the land as the complaint. The same misdescription is also contained in the notice of sale of the land by the commissioner, and the report of sale and deed to the purchaser by said commissioner. The report of sale which was confirmed by the chancery court shows that Albert Powers became the purchaser of the land for the sum of § 1,000.

On the 7th day of September, 1915, W. D. Polk filed a pleading against appellants in the same chancery court in which he instituted the foreclosure proceedings above referred to. He sets forth in detail the mistake in the description of the land in the foreclosure proceedings and sets forth the correct description of the land. He asks that the mistake be corrected and for a cancellation of the former sale. He further asks that the land described in the mortgage be sold in satisfaction of the mortgage debt.

On the 8th day of October, 1915, a new decree was entered of record in the chancery court for the foreclosure of the land described in the mortgage, and the decree recites that the court finds that the defendants named therein had all been served with personal summons more than twenty days before the first day of the present term, and that they have not appeared or answered. It then decreed that the sale under the former foreclosure proceedings be set aside, and that the land under its correct description be sold by a special commissioner named in the decree. The property was ordered sold on the terms and in the manner provided in the original decree.

On the 9th day of November, 1915, the commissioner made his report of sale, and in the land described as the SE 1-4 of the NE 1-4 of section 14, township 20 north, range 3 east.

On the 8th day of October, 1918, Albert Powers filed his petition in the same chancery court in which he stated that he purchased the land at said sale, but that by mistake the land was described in the notice of sale and the report thereof as the SE 1-4 of the NW 1-4, instead of the NE 1-4 of the NW 1-4, of section 14, etc. He asks that the sale be set aside, and the land be ordered resold under its correct description.

On the same day the court granted his petition and ordered the land to be re-advertised and sold to cure the errors in the former sale. The land was again advertised and sold by the commissioner, and Albert Powers again became the purchaser at the sale. The land was correctly described in the notice of sale and the report thereof. The commissioner was ordered to execute a deed to the purchaser, which was accordingly done and the deed approved in open court on the 4th day of March, 1919. The land was sold this time for § 755. Powers paid off the first mortgage in favor of the New England Securities Company. Polk and Powers have been in the possession of the land since sometime in 1912, and its rental value has varied from § 300 to § 400 per annum since that time. At the time of the death of John Denton all his children were of age except appellant, Minnie Shaw. The proof of appellants is not clear, whether she became of age in May, 1916, or 1917. Minnie Shaw has been married three times, and appellees introduced in evidence her affidavit to procure a marriage license dated March 8, 1916, in which she stated her age to be twenty-one. Again in an affidavit for a marriage license, dated Nov. 1, 1920, she states her age to be twenty-five years.

The chancellor found the issues in favor of appellees, and it was decreed that the complaint of the plaintiffs be dismissed for want of equity, and that the title of appellee, Albert Powers, be quieted in the forty acres of land in controversy.

Decree affirmed.

To reverse that decree appellants have duly prosecuted this appeal.

Pope & Bowers, for appellants.

The widow's deed to Polk amounted to an abandonment of the homestead, and possesion thereof then inured to the child Minnie. 44 Ark. 496; 40 Id. 393. The possession of Polk and Powers, therefore, was that of a mortgagee in possession. Powers was a mortgagee in possession from the beginning, since he went into possession under Polk and later held his possession as a purchaser at a void foreclosure sale. 7 L. R. A. 273; 64 L. R. A. 320; 142 Ark. 320.

Their right to possession ceased when the rents and profits extinguished the mortgage debt, which occurred at the end of the crop year, 1918. To proceed with a sale or pretended sale after the indebtedness was paid, was constructive fraud. 12 R. C. L. 230-231; Smith, Law of Fraud, § 1.

Appellants are entitled to the land, unless they are barred by limitations, or unless appellees are entitled to have granted their prayer to have the deed, made pursuant to the sale in 1913, reformed. On the latter proposition the decisions of this court are against them. 60 Ark. 487; 75 Id. 8; 86 Id. 443. On the question of limitation, neither the three-year, nor the five-year, nor the seven-year statute applies. The child, Minnie, did not reach majority until 1916 or 1917, and at that time a new right of entry accrued to all the heirs. 142 Ark. 230; 92 Id. 143. Moreover, Polk and Powers, as mortgagees in possession, were entitled to hold the lands until the rents and profits satisfied the debt, and that occurred in 1918.

There was no judicial sale in 1913 and the 5-year statute does not apply. 61 Ark. 80; 69 Id. 539. See also, as to the 3-year statute, 87 Ark. 502.

Oliver & Oliver and C. L. Daniel, for appellees.

1. Polk's entry was not as a mortgagee, but under the deed executed to him by M. J. Denton. If, as claimed by appellant, he took nothing by the deed, that does not alter the fact that he entered into possession under it, and that by virtue of the possession so obtained he later put Powers in possession. 110 Ark. 172-174; 3 Pomeroy, Eq. Jur. 1215; 70 Ala. 260; 39 Minn. 39. The liability of a mortgagee for rents and profits depends upon whether or not he took possession of and held the property as mortgagee. 111 Ark. 509.

2. Powers is entitled to have the first deed made in March, 1914, refunded. The mortgage which is the basis of the foreclosure suit correctly describes the land, and was made an exhibit to the complaint. In equity, where there is a variance between the complaint and exhibit, the latter will control. 31 Cyc. 563-b and authorities cited; 33 Ark. 722. Though it misdescribed the land, the decree was not void, and the order correcting it on October 8, 1915, related back and took effect from the date of the original decree. 23 Cyc. 883. See also, on the question of reformation, 28 Ark. 372; 31 Id. 252; 33 Id. 72.

3. Appellants are barred of any right to recover the surplus arising from the 1913 sale. Polk received the money and applied it on debts of Denton early in 1914, more than six years before this action was commenced. Kitchens v. Jones, 87 Ark. 502, cited by appellant, has no application whatever. See Kirby's Dig. § 5064. The burden was on appellants to show that the claim is not barred. 69 Ark. 311.

4. The decree and orders made in the case of Polk v Denton et al. in which the Wheatley mortgage was foreclosed are res judicatae of all contentions made by appellants in this case. It is true that the order of October 8, 1918, does not recite that appellants were served with notice, but, in the absence of proof to the contrary, it is conclusively presumed that proper notice was served. 49 Ark. 413; 92 Id. 141; 72 Id. 101; 74 Id. 81; 123 Id. 389. They are estopped...