Union Central Life Ins. Co. v. Shelman

• Decision Date: 16 November 1937
• Citation: 110 S.W.2d 430,270 Ky. 650
• Parties: UNION CENTRAL LIFE INS. CO. v. SHELMAN et al.
• Court: Kentucky Court of Appeals

110 S.W.2d 430

270 Ky. 650

UNION CENTRAL LIFE INS. CO. v. SHELMAN et al.

Court of Appeals of Kentucky

November 16, 1937

Appeal from Circuit Court, Breckinridge County.

Suit between the Union Central Life Insurance Company and E. H Shelman, trustee for William McGlothlan, E. R. McGlothlan and Louis Sauer, and others. From the decree, the Union Central Life Insurance Company appeals.

Affirmed.

William E. Berry, of Louisville, for appellant.

Walls &amp Kincheloe and Allen R. Kincheloe, all of Hardinsburg, and Ashcraft & Morgan, of Bradenburg, for appellees.

CLAY Justice.

The Union Central Life Insurance Company appeals from a decree adjudging E. H. Shelman, trustee for William McGlothlan, E R. McGlothlan, and Louis Sauer, and J. D. Lyddan, committee for William D. Miller, and W. E. Brown, statutory guardian of James H. Gray, a prior lien on a 106-acre tract of land located in Breckinridge county.

The facts may be summarized as follows: On March 8, 1917, the Bank of Hardinsburg & Trust Company conveyed to A. T. Beard, H. M. Beard, and T. B. Beard the 106-acre tract of land. The consideration was 35 notes for $100 each, payable over a series of years. The notes were secured by a lien on the land. Five of these notes were paid. After they were due the remaining 30 notes were transferred to numerous trust estates without the knowledge of the beneficiaries, and without any assignment of record. Thirteen of the notes are held by appellees, and the other 17 have been acquired by the special deputy director of banks after the bank went into liquidation. On January 30, 1922, H. M. Beard, T. B. Beard and wife, and A. T. Beard and wife, mortgaged several tracts of land, including the 106-acre tract, to the Bank of Hardinsburg & Trust Company to secure a large loan. Thereafter T. B. Beard acquired from his brothers their interest in the 106-acre tract of land. On July 23, 1926, he and his wife executed to the Union Central Life Insurance Company a mortgage on various tracts of land in Breckinridge county, including the 106-acre tract, to secure a loan of $35,000. On the same day the Bank of Hardinsburg & Trust Company and Green Brothers executed a deed of release, reading in part as follows:

"Witnesseth: That whereas on January 30, 1922, by mortgage dated on that date, recorded in Book 35, page 524, of the County Court Clerk's Office of Breckinridge County, Kentucky, the second parties hereunto mortgaged certain property to the Bank of Hardinsburg & Trust Company, to secure the payment of certain notes, among others, a note for $10,000.00 and another for $10,000.00 and another for $3000.00 and a fourth for $4,411.00.

"And whereas, the last mentioned note for $4,411.00 has heretofore been paid to the said Bank of Hardinsburg & Trust Company, the true and lawful owner and holder therein the lien of the land described in the mortgage above referred to, or any other mortgage, recorded or unrecorded, in favor of said bank is hereby released, as to that note, and

"Whereas, the first three notes mentioned and described in the mortgage above referred to, or two notes of $10,000.00 each, and the note for $3,000.00 were by the said Bank of Hardinsburg & Trust Company, for a valuable consideration sold and assigned to the firm of Green Brothers, of Falls of Rough, Kentucky, and

"Whereas, the first note of $10,000.00 mentioned in the mortgage above referred to has this day been paid in full, the lien on all the property described in the said mortgage is hereby released, so far as that particular note is concerned, but no further, and also in consideration of the payment of said $10,000.00 on the above mentioned indebtedness, the said first parties of this instrument hereby jointly and severally release all claim and lien of every character, on the following described portions of the land and property described in the mortgage above referred to."

Following the above are numerous references to numerous tracts of land, each of which gives the date of the deed, name of the grantors and grantees, and the page and number of the deed book in which the deed is recorded. The reference to the 106-acre tract is in the following language: "The eleventh tract described in said mortgage being 106 acres conveyed by the Bank of Hardinsburg & Trust Company to Beard Brothers dated March 8, 1917, recorded in said office in Book 65, page 506."

The deed of release concludes with the following: "All of the land herein intended to be released are fully described by metes and bounds, in a mortgage from Thomas B. Beard and wife to the Union Central Life Insurance Company, dated June 29th, 1926, and this day filed for record in the said County Court Clerk's Office."

The Union Central loan was closed by A. A. Van Winkle, an abstractor, of Owensboro, Ky. On his direct examination his testimony is as follows: The substance of his understanding with the bank was that the bank was accepting a certain amount of money from the Union Central out of the loan the Union Central was making on a certain part of the Beard land and the bank was to release that part of the land in full, and to hold as security the balance of the debt by a mortgage from Thomas Beard and wife. He paid over to the bank the money agreed...