St. Louis Union Trust Co. v. Chicot County Cotton-Alfalfa Farm Co.

• Citation: 193 S.W. 69,127 Ark. 577
• Decision Date: 05 March 1917
• Docket Number: 206
• Parties: ST. LOUIS UNION TRUST COMPANY v. CHICOT COUNTY COTTON-ALFALFA FARM COMPANY
• Court: Arkansas Supreme Court

193 S.W. 69

127 Ark. 577

ST. LOUIS UNION TRUST COMPANY v. CHICOT COUNTY COTTON-ALFALFA FARM COMPANY

No. 206

Supreme Court of Arkansas

March 5, 1917

Appeal from Chicot Chancery Court; Zachariah T. Wood, Chancellor affirmed.

Decree affirmed.

Stewart Bryan & Williams and Hope & Seibert, of St. Louis, Mo., for appellants.

1. The chancellor erred in releasing from the lien the 800 acres claimed in the appellee's, Hollywood Farms Co. cross-complaint, because (1) The release provision is so vague and uncertain as to be void and uninforceable. 195 Mo 91, 101; 32 Id. 79; 67 Cal. 43; 95 Ind. 326. (2) It should be interpreted in connection with the entire instrument, and any right to have the land released by paying $ 9.00 an acre was forfeited and extinguished when appellees failed to comply with the agreements on their part; they were in default and after the maturity of the debt the right to release did not exist. 133 Mass. 120, 121; 9 Cyc. 579; 6 Rul. Case Law, § 227, p. 837; 43 F. 535; etc. (3) No demand was made at the time the $ 5,000.00 was paid, nor when a subsequent payment of $ 2,000.00 was made. Jones on Mortg., § 981, p. 1051 (6 ed.). (4) There was no tender of the $ 200.00 made. Only $ 7,000.00 was paid when $ 7,200.00 was the proper amount. 21 Ark. 563; 30 Id. 505; 90 Id. 206; Hunt on Tender (ed. 1903), §§ 222, 86, 234; 34 Ala. 126, etc., etc.

2. On the cross-appeal.

The payment of the $ 4,000.00 was paid to the American Forest Co., after the notes were assigned to plaintiffs, and hence no part of it ever reached plaintiffs, and no credit was allowed. 16 Wall (U.S.), 271; 5 Otto (U.S.), 16; 93 Iowa 572; 25 Kans. 625; 131 Wisc. 152; 80 N.W. 801; 113 Ark. 588; 104 Id. 388, 395; 113 Id. 120, 123-4, 28, 34. Plaintiffs were innocent purchasers before maturity--they were pledges. 102 Ark. 472, 451, 459-60; 37 Id. 556; 41 Id. 418; 18 A. & E. Enc. Law, 608.

3. The Missouri statutes as to foreign corporations do not apply. The property was wholly in Arkansas, and the transaction was interstate. 229 Mo. 397; 217 U.S. 91; 160 Mo. 435; 184 S.W. 999; 153 Mo.App. 139; 25 Mo. 3; 132 U.S. 282. The company was not doing business in Missouri, within the scope of its charter. 184 S.W. 119. The mere taking a mortgage and note to secure a debt is not doing business contrary to law. 54 Ark. 566; 62 Id. 53; 60 Id. 120; 113 Id. 72; 105 Id. 281. The American Forest Co. did comply with the statute, and was afterwards duly licensed. This subsequent taking out of license cured the transaction. 77 Ark. 203; 184 S.W. 999, 1024.

4. The decree is erroneous in that part releasing the 800 acres, but correct in all other respects.

J. C. Gillison, for appellees.

1. The contract was purely a Missouri contract, and must be construed and enforced under the Missouri laws. Rev. St. Mo. 1909, §§ 3037-8-9-40; 245 Mo. 168; 216 F. 878. Where the contract or debt is void the security is void. 111 Mo. 620; 1 Jones on Mortg. (3 ed.), § 110, p. 84, § 610, p. 481; 66 Ark. 77; 73 Id. 518.

The Forest Company was a New York corporation doing business in Missouri, in violation of law, with Missouri corporations and was not interstate business.

2. The $ 4,000.00 paid should have been credited on the notes for the purchase money. The notes had not been endorsed to the plaintiffs when this payment was made.

3. The release clause was certain and definite. The description of the land to be released is made so by the selection. The right may be exercised after as well as before default in the payment of the mortgage debt, and even after foreclosure suit is begun, if before final decree. 27 Cyc. 1415, 1416 and note.

4. A tender was made and kept good. $ 7,000.00 was paid and accepted and the $ 200.00 was deposited with the clerk of the court.

OPINION

MCCULLOCH, C. J.

This is an action to foreclose a deed of trust executed by the Chicot County Cotton-Alfalfa Farm Company (a Missouri corporation) to B. H. McFarland, as trustee, conveying two large tracts of land in Chicot county, Arkansas, one of the tracts containing 10,200 acres and the other 5,600 acres, to secure a debt in the sum of $ 60,000.00, evidenced by four promissory notes executed by said defendants to the American Forest Company, a New York corporation. Said notes were transferred by the payee to the St. Louis Union Trust Co. and Broadway Bank of St. Louis, as collateral security for indebtedness of the payee to said assignees, who are plaintiffs in the present action. The Hollywood Farms Company was joined as defendant in the action on account of having subsequently purchased from the mortgagor 800 acres of the land described in said deed. Said notes and deed of trust were executed on December 1, 1910, falling due, 3, 4, 5 and 6 years, respectively, from date, and were assigned, as aforesaid, to the plaintiffs before maturity, the first maturing note being assigned to Broadway Bank of St. Louis, and the other three to the St. Louis Union Trust Co. Defendant Hollywood Farms Company in its answer and cross-complaint pleads the purchase of 800 acres of the land from the mortgagor, and the right to have the same released under a clause to that purport and effect in the deed of trust. The other defendant, Chicot County Cotton-Alfalfa Farms Co., pleads a payment of $ 4,000.00 which has not been credited on the notes, and also as defense against recovery of any part of the debt pleads that the original beneficiary in the trust deed, the American Forest Co., was a New York corporation, doing business in the State of Missouri without having complied with the laws of the latter State, that said transaction between the parties took place in the State of Missouri, and under the laws thereof the contract was void. The chancellor sustained the defense of defendant, Hollywood Farms Co., and decreed a release of said lands purchased by that defendant, but decided against the contentions of defendant, Chicot County Cotton-Alfalfa Farm Co., on all of its pleas and rendered a decree foreclosing the mortgage for the full amount of the debt. The decree provides, however, that "should there be any surplus going to the American Forest Company out of the proceeds of said sale after first paying all costs of this action and the amounts due from the American Forest Company to the plaintiffs respectively, $ 4,000.00 of such surplus, with interest thereon at the rate of 5% per annum from August 1, 1914, until paid, shall be paid out of such surplus to the defendant Chicot. County Cotton-Alfalfa Farm Company."

Both sides have appealed to this court.

The clause in the deed of trust under which the release is claimed, reads as follows:

"Now if the said four notes for fifteen thousand ($ 15,000.00) dollars each, and interest thereon, be well and truly paid as the same shall become due and payable, according to the tenor and effect of said notes, and if the said covenants and agreements in regard to taxes, mechanics' liens or interest on said prior mortgage notes be faithfully kept and performed and all money paid by the said party of the third part, its endorsees or assigns, on account of said taxes, liens and interest as above provided, be fully paid,

"Then this deed shall be null and void, and the property hereinbefore conveyed shall be released at the cost of said party of first part, its successors and assigns, shall have the right at any time to procure the release of any portion of said tract of 5,600 acres of land from the lien hereof by payment to the party of the third part, its endorsees or assigns, of $ 9.00 per acre, for the land so to be released and shall also have the right at any time to procure the release of any portion of said tract of 10,200 acres above referred to from the lien hereof by the payment to the party of the third part, its endorsees or assignees, of $ 3.00 per acre for the land so to be released; and all payments so made for the release of land from either of said tracts shall be applied upon the earliest maturing of said four notes at the time outstanding; and to procure such release of record of any portion of said land hereunder, it shall not be necessary to procure said notes or any of them. And in case of payment of all of the said four notes and interest thereon, and the observance of the covenants and agreements herein set out by party of the first part, its successors or assigns, so as to entitle it or them to a release of all the property above described, or in case of the payment to the party of the third part, its endorsees or assigns, of $ 9.00 per acre for any portion of the 5,600 acres of land above described, or $ 3.00 per acre for any portion of the 10,200 acres above described, so as to entitle party of the first part, its successors...