Sirman v. Sloss Realty Company, Inc.

• Decision Date: 12 June 1939
• Docket Number: 4-5530
• Citation: 129 S.W.2d 602,198 Ark. 534
• Parties: SIRMAN v. SLOSS REALTY COMPANY, INC
• Court: Arkansas Supreme Court

129 S.W.2d 602

198 Ark. 534

SIRMAN v. SLOSS REALTY COMPANY, INC

4-5530

Supreme Court of Arkansas

June 12, 1939

Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor affirmed.

Decree affirmed.

Chas W. Garner, for appellant.

Barber & Henry, for appellee.

OPINION

BAYER, J.

A suit was filed in the chancery court on September 15, 1938, to recover judgment and to foreclose a lien of a second mortgage on lot 9, block 4, Chesterfield Square Addition to the city of Little Rock. The appellants offered several defenses to prevent a recovery and foreclosure of this second mortgage. They insist that the receipt of a bond for the sum of $ 100 and a small cash payment delivered to the Sloss Realty Company by the HOLC and the execution by the Sloss Realty Company of a warranty deed to enable the Sirmans to give a first lien to the HOLC was a complete settlement of the original debt and that the second mortgage and the note it secured were without consideration. They argue that the second mortgage and note were unenforceable for the reason they were against public policy as fixed and determined by the HOLC act of 1933 and the rules and regulations of the HOLC board. They also allege that the mortgage and note were obtained by fraud, and that the note and mortgage are void because the mortgage was not acknowledged according to statutory requirements. They argue also there was error of the trial court in not requiring the appellee to give an itemized statement, or bill of particulars as to what items entered into the $ 900 note. The court decided all these issues against the appellants and the appeal from the decree of the chancery court is to reverse that decree.

The view that we have of this situation as presented by this record is such that the three contentions made by the appellants are so inter-related and connected one with the other that they cannot well be stated as different subject-matters, nor may they be discussed as independent of the other and it may save time and space to state and present these several matters according to their connected relations with each other and in that way determine the merits of each and all of them as the facts may not be separated and all the matters be discussed separately without unnecessary repetition.

An effort will be made to present all these matters as above indicated and we shall attempt to make a statement of the facts without abstracting the evidence in detail. Sloss and his wife sold to the Sirmans the foregoing real property in 1925. Small payments were made from time to time upon the property until in 1931. The date of the original contract appears to be February 15, 1925, and on October 15, 1931 more than six years later, a new contract was entered into between the parties. By the agreement on that date, Sloss, the seller of the real estate, reserved the right to maintain on the real property a first mortgage not to exceed $ 1,500 and there were to be made certain payments by M. M. Sirman upon the property amounting to $ 27 per month and at the same time Sirman and his wife executed to Sloss a note in the sum of $ 2,944.19 as a balance then to be paid upon the $ 3,700 indebtedness upon the property. There was noted upon this note a credit of $ 400 as of date February 20, 1933, reducing the indebtedness by that sum to $ 2,431 as of that date. The note bears credits, the details of which are unnecessary to set forth. Thereafter, in February, 1934, Sirman made application to the HOLC to borrow money from this corporation to refinance this property he had bought from Sloss. He testifies that he did not know at that time the exact amount that he owed and that he made a statement in his application of the facts as he knew them and submitted this statement to Sloss who inserted in it figures or amounts with which he was not familiar. The application, however, shows that there was upon this property a first mortgage securing a debt owing to Dora A. Bainbridge of $ 800, and to the Fidelity Company amounting to $ 450, and that there was due upon the second mortgage $ 1,144.51, including interest. It also showed there were taxes past due. A loan was finally granted in the sum of $ 1,500, after an appraisement showing the property was worth $ 2,066. The parties who held debts against this property, Dora A. Bainbridge and Fidelity Company, filed with the HOLC consent or agreements to accept HOLC bonds in settlement of the respective indebtednesses in the following sums: Dora A. Bainbridge, $ 800; Fidelity Company, $ 450, and the Sloss Realty Company, $ 323.99. These agreements, or "consents," as they were called, were filed, as we understand, prior to the date of the grant of the loan for $ 1,500. When the loan was finally fixed in that sum, it became necessary then to secure new "consents" or agreements from the creditors so that the amount of bonds that might be issued would be within the loan. Sloss, who represented the Sloss Realty Company, the owner of the Sirman paper, says that he knew that Bainbridge and the Fidelity Company would not scale down or reduce indebtedness that was owing to each of them, so it became necessary, if the loan went through, for him to reduce the amount that he was willing to accept in HOLC bonds. There was also a statement that taxes, special assessments, insurance, loan expense, etc., would have to be paid, which, upon final settlement, reduced the amount that would be paid to Sloss from $ 323 to $ 113.34, so in satisfaction of the lien that Sloss held against this property at this time, he accepted a bond for $ 100 and $ 13.34 in cash.

It is now insisted by the appellants that this was in satisfaction of the debt that was then due Sloss in the sum of $ 1,144.51 balance, which we think the record discloses was the obligation owing at that time by Sirman to Sloss in addition to the $ 1,500 represented by the mortgage to the HOLC. In the foregoing statements when we have referred to the appellee as Sloss we do so without distinguishing between Sloss and the Sloss Realty Company, which took over the Sloss notes and papers after the settlement made October 15, 1931. This is a matter that is immaterial inasmuch as there is no controversy involving the period of time of ownership of this paper by Sloss as the individual or the corporation he represented. Many of the disputed questions of fact will be passed over without consideration, for the reason that they have been determined by the chancellor, and we think in that regard the chancellor's findings of fact were correct or at least not obviously contrary to a preponderance of the evidence.

Of these disputed questions of fact, one in regard to the amount that Sirman now claims to have paid upon this indebtedness should have been noticed. It is argued in his brief that though he does not know exactly what he paid, it was approximately $ 3,100 or $ 3,200. We find, however, from the excerpts of his own testimony that in 1931 when he executed the new note and accepted the new contract, he had not paid exceeding $ 1,000. There was an admitted indebtedness of $ 2,700. The proof is that for the next two years or up until the time of the execution of the HOLC mortgage his payments had not exceeded $ 75 or $ 80 per year. He admits in several instances that he does not know what he had paid. We, therefore, think that violence is not done to any of his rights in determining that the actual balance that he owed is clearly not in excess of what he is now willing to admit was at that time owing by him. In fact he was owing much more than the $ 900 note and mortgage that he then executed after he had executed the mortgage for $ 1,500 to the HOLC and after he had received credit for the $ 400 found in memorandum upon the margin of the $ 2,700 note.

It is argued that Sloss' agreement or consent to accept from the HOLC $ 323.99 should be conclusive and again when he did agree and accept the $ 113.34 that this was conclusive, and Sloss may not now be heard to say otherwise. We do not think so. When Sloss agreed to accept one bond and the small amount of cash, he noted by writing upon this consent or agreement the fact that he expected to take from Sirman a second mortgage. The language used by him in this respect is harshly criticised, for he said, "except for a small second mortgage." In addition, it is urged that this reservation or notation that he expected to receive a second mortgage and the second mortgage are in violation of the public policy of the government as indicated by the Act of Congress under which the HOLC was organized, and that, inasmuch as the amount was not stated, it was an intentional deception of the HOLC, for the reason that the second mortgage, instead of being a small one, was a relatively large one. Whether that theory be true or false it was notice to the HOLC that Sirman and his wife would execute this second mortgage that would be received and taken by Sloss upon the same property that Sirman had mortgaged to the HOLC. Sirman and his wife denied they had executed this note and mortgage for $ 900. Upon inspection, however, of their signatures they admitted these to be genuine, but denied they acknowledged the mortgage and testified that when these instruments were signed they executed them or signed them without reading because Mr. Sloss represented to them that they were papers in connection with the HOLC loan for which they had applied. Sloss said all these matters were explained and understood and that numerous letters were written to Sirman immediately after the execution of this second mortgage demanding payment in accordance with its terms and that Sirman ignored these letters until suit was threatened and denied liability at all times, after his attention was called to the...