Court Opinion

ID: 7817646
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:41:40.47282+00
Date Added: 2024-06-11T16:30:38.731160
License: Public Domain

John A. Fogleman, Justice, dissenting. I dissent from this decision for the reasons stated in The First National Bank of Conway v. Conway Sheet Metal Company, Inc., No. 5-4504, 244 Ark. 963, 428 S. W. 2d 293, insofar as the $1,050.00 for the purchase price of the lot is concerned. The statement that the mortgagee is bound, when disbursing the money, to expend it for construction purposes only, clearly overrules Sebastian Building & Loan Ass’n v. Minten, 181 Ark. 700, 27 S. W. 2d 1011, without reservation. The suggestion that following the procedure used in Ashdown Hardware Co. v. Hughes, 223 Ark. 541, 267 S. W. 2d 294, makes a difference, puts a construction on that case which the court did not refer to or suggest when the case was decided. The distinction between a lump sum loan and installment or future advance loan for these purposes is a strained one, to say the least. The fact that sums are to be advanced seems to me to make little difference insofar as the application of the “purpose” doctrine is concerned. The net result is that we have at least partially abandoned the “purpose” doctrine. It seems inconsistent to me to say that the mechanics and materialmen are not third party beneficiaries of the construction money mortgage, after having said that they are entitled to look at the records to ascertain that the builder will have periodic advances, contracted to be used solely for construction purposes. I do not believe that it is the purpose of the recording statutes to do more than give notice of the lien claimed by the mortgagee and the means of ascertaining the amount secured. Reliance on them for the purpose suggested by the majority is inappropriate. As to the $1,700.00 paid to retire the existing mortgage, I cannot see how the position of the appellees was damaged. If the disbursement had not been made, Modern American would still have a prior lien on the lot for $1,700.00. This lien was of record and I find no representation by Modern American that the debt secured thereby was paid prior to the time of the construction money loan, as was the case in Planters Lumber Company v. Wilson, 241 Ark. 1005, 1100, 413 S. W. 2d 55. I agree that there was no basis for requiring appellant to pay the undisbursed portion of the loan into the registry of the court or to require appellant to disburse it. I would reverse on appeal and affirm on cross-appeal.