Stoops v. Bank of Brinkley

• Decision Date: 15 November 1920
• Docket Number: 246
• Parties: STOOPS v. BANK OF BRINKLEY
• Court: Arkansas Supreme Court

225 S.W. 593

146 Ark. 127

STOOPS v. BANK OF BRINKLEY

No. 246

Supreme Court of Arkansas

November 15, 1920

Appeal from Monroe Chancery Court; John M. Elliott, Chancellor reversed.

STATEMENT OF FACTS.

On the 5th day of June, 1915, appellees brought this suit in equity against appellants to foreclose a deed of trust on real estate and also to attach other real estate on the ground that appellants were nonresidents. Appellants admitted the execution of the deed of trust sued on, and the foreclosure of the same, but defended the suit on the ground that the land attached had been released from the debt sued on.

Appellants George B. Stoops and Gesina A. Stoops, his wife, live in Chicago, Illinois, and have lived there since before they purchased the land involved in this suit in September, 1912. George B. Stoops was a witness for himself. According to his testimony he was looking around to buy a good section of cut-over land in Arkansas, and Handford F. Donnelly came to see him with reference to selling him some land. Donnelly told Stoops that he would show him over 1,760 acres of land and that if any of it suited Stoops he could have any portion of it at the same price. Stoops came to Arkansas and looked at the land in Monroe County, which is involved in this suit and told Donnelly that section 12 was satisfactory to him. Donnelly finally told Stoops that he could not get section 12 without taking the whole tract. Stoops told Donnelly that he would not be able to do that because he did not have the money to handle a deal of that size. Donnelly replied that suitable terms would be made; and that he could sell all the land that he did not want for more than he was paying for it. Stoops finally told Donnelly that he would take it provided they would make a clause releasing him entirely from all encumbrances on any portion that he should pay off, in order that he might sell or do as he wished with it. Donnelly said that it would be all right.

We here copy from the record from the testimony of George B. Stoops the following:

"Q. State whether or not it was agreed that the plaintiff should hold the balance of the land which you had not paid off in full as full security for the balance of the debt.

"A. They were to hold the balance of the land after releasing whatever portions were released. They were to hold the balance for the remaining debt.

"Q. Was anything said about whether or not you would be required personally or otherwise to pay any of the balance of the debt except that the same would be secured on the real estate not released?

"A. There was nothing said about that. I was not to be held for anything except the balance of the mortgage on the remaining land, that is the mortgage against the land. I was not to be held for anything personally against it.

"Q. Then the land was to be held as full security for the debt?

"A. The land that was still not released was to be held for security, not what was released was to be held.

"Q. You understood from the deed of trust that you would have a perfect right to sell the land that was released?

"A. I did understand that, and that was the intention of having it done that it could be sold and there could be no claim come on it whatever."

Stoops at first thought the land he was purchasing belonged to Donnelly, but afterward ascertained that it belonged to the Bank of Brinkley. On the 14th day of September, 1912, the parties entered into a written agreement whereby Stoops was to purchase the whole 1,760 acres of land for $ 10 an acre making an aggregate of $ 17,600. Part of this amount was to be paid in cash and the balance on deferred payments. A deed of trust was to be given to secure the balance of the unpaid purchase money. On the 28th day of October, 1912, George B Stoops and Gesina A. Stoops, his wife, executed a deed of trust to G. Otis Bogle, trustee, for the Bank of Brinkley on the whole 1,760 acres to secure the unpaid purchase money which amounted to $ 12,000 as evidenced by nine promissory notes. After describing the notes for the deferred payments, the deed of trust contains the following: "All notes bearing interest from date until paid at the rate of eight per cent. per annum, interest payable annually on the 28th day of October of each year, and if default be made in the payment of said notes or either of them, or interest thereon when due, then all of said notes are to become due and payable upon such default, it being expressly understood, however, that said grantors, their heirs or assigns, shall have the right to sell all or any part of said land upon the payment to the holder of said notes the sum of ten ($ 10) dollars per acre on the land so sold, and, upon the payment of said sum, said notes are to be credited with the amount paid thereon and a release made on the margin of the record of this instrument releasing the part of land sold by the grantors herein; it being further understood, that any such payment so made shall be made on the notes first falling due."

On cross-examination by Mr. Bogle, Mr. Stoops testified as follows in regard to the release clause which we have just copied:

"Q. I said no more to you or made you no other promises than is set forth in the deed of trust, did I?

"A. Well, nothing further than you said that I should have the right after this was released to do what I pleased with the land; it was mine and there would be no more claim against it, that I could do as I pleased sell it to any one. You said that.

"Q. Do you mean to say that after this land was released that you were not personally responsible for the payment of the notes that had not been paid?

"A. I mean to say that it was my understanding that the remaining land was to be security for the notes.

"Q. But you did not understand that you would be released from the payment of these notes, did you, Mr. Stoops, that had not been paid?

"A. Well, I did understand that I would be released except that they would hold the land for it, but not what had been released.

"Q. You understood then that you were responsible for the payment of the notes, did you not?

"A. Not anything further than the security of the remaining land. It was my understanding that, after I had paid as much as the full purchase price for the release of the land after what was paid in the beginning, that the land was to be entirely free."

On August 1, 1913, Stoops found out that he could not obtain the money to pay for the entire tract of land and elected to purchase 320 acres and pay $ 10 an acre therefor in accordance with the provisions of the deed of trust. He paid $ 3,413.23 for the 320 acres and a release deed was executed to him by Bogle as trustee. The deed recites that it was executed in conformity with the provisions in the deed of trust, and that it was not intended to release any other land mentioned and described in the deed of trust. Altogether, Stoops paid about $ 9,000 on the purchase price of the whole 1,760 acres. This includes the amount paid for the 320 acres described in the release deed.

The trustee, G. Otis Bogle, who also was a director in the bank and an attorney therefor, testified in regard to the release clause in the deed of trust. We copy from the record as part of his testimony as follows:

"Q. Explain the following clause in the deed of trust executed by Geo. B. Stoops to the Bank of Brinkley, to secure the deferred payments, as follows:

"It being expressly understood, however, that said grantors, their heirs or assigns, shall have the right to sell all or any part of said land, upon payment to the holder of said notes the sum of $ 10 per acre on the land so sold, and upon the payment of said sum said notes are to be credited with the amount paid thereon and release made on the margin of the record in this instrument, releasing the part of the land sold by the grantors herein."

"A. At the time this matter was up, Stoops wanted this clause in the deed of trust, so that, in the event he wanted to dispose of certain portions of this land, he could do so, by paying $ 10 per acre, but there was no understanding with the Bank of Brinkley that it would not hold him personally responsible for whatever might remain due, after the foreclosure on the land that had not been released."

He further testified that it was not the understanding that the bank should hold as absolute security the land not released. He and other officers of the bank also testified that Donnelly was not connected with the bank and was not the agent of the bank in making the sale of the lands. Bogle said that Donnelly made a contract to purchase the land himself at $ 7 per acre and resold it to Stoops at $ 10 per acre. The bank then contracted directly with Stoops. Stoops failed to pay the note for the purchase money which fell due in October, 1914. By the terms of the mortgage, if default was made in the payment of any note, all the notes became due. The bank then brought this suit to foreclose the mortgage and also attached the 320 acres of land embraced in the release deed on the statutory ground that appellants were nonresidents of the State.

The chancellor found that the balance due on the mortgage principal and interest, amounted to $ 9,989.22, with interest at the rate of 8 per cent. per annum from March 20, 1916. The land embraced in the deed of trust was ordered sold in payment of this amount, and it was further decreed that if it did not sell for enough to pay the whole indebtedness the land attached should be sold to pay the deficiency. There was a deficiency of $ 2,359.52, after the land was sold under the foreclosure decree, and it was further decreed that the 320 acres of land embraced in the release deed should be sold under the attachment proceedings to pay this deficiency. Appellant...