Court Opinion

ID: 3276301
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:45:05.374174+00
Date Added: 2024-06-11T13:18:43.775883
License: Public Domain

STATEMENT BY THE COURT.
Appellee brought this suit against the appellants, seeking to have his title quieted to about 1,000 acres of land in Boone County by cancellation of a mortgage thereon, given by Joe A. Bartles to the Colonial Supply Company, as a cloud on his title. Joe A. Bartles and E. B. Jennings were thereafter made parties defendant and entered their appearance in the case, as did numerous other defendants.
The appellant company appeared by way of answer and cross-complaint, and denied that Koester, appellee, had any title or interest in the lands in controversy; alleged it was the owner of a valid and subsisting mortgage covering said lands, and prayed for a foreclosure thereof, and asked also a personal judgment against defendant, Joe A. Bartles.
It appears from the testimony that Joe A. Bartles acquired title to the lands in the year 1911, and thereafter, on May 1, 1914, he and his wife executed a warranty deed conveying them to E. B. Jennings and C. B. Sitton. No cash was paid by the purchasers, the entire price being represented by a note in the sum of $19,080, executed on that date by the grantees and their wives to *Page 1081 
Bartles, which was secured by a mortgage on the lands. The mortgage became due, and Jennings and Sitton with their wives executed two additional mortgages on the lands to Bartles on March 17, 1920, the first as security in the sum of $18,000 and the second for $5,200. Sitton and wife quitclaimed all their interest in the lands to E. B. Jennings. On May 29, 1923, Bartles executed and delivered to the Colonial Supply Company, appellant, the mortgage sought to be foreclosed on its cross-complaint, which mortgage was filed for record in Boone County, Arkansas, June 26, 1923. On June 25, 1923, Bartles assigned his mortgages from Jennings and Sitton to M. R. Lively, the assignment being recorded in Boone County on January 8, 1924. Releases on these mortgages by Lively on April 10, 1924, were recorded on April 21, 1924. The title of the lands thus appeared of record in E. B. Jennings on the date of the execution and record of the mortgage from Bartles to the Colonial Supply Company, appellant, Bartles appearing to be the owner or holder of the two mortgages executed by Jennings and Sitton to him to secure the aggregate principal sum of $23,200 with interest. Bartles covenanted in his mortgage to appellant company that he was the owner in fee simple to the lands, warranted free and clear of all liens, except one mortgage, dated March 17, 1920, made by Jennings and wife to Bartles to secure the sum of $18,000, which lien had been assigned by Bartles to the Union National Bank of Bartlesville, Oklahoma. The assignment of this mortgage did not appear of record, and Bartles stated that he had attempted to use the two Jennings mortgages as collateral for his obligations, and also that his obligation to the Union National Bank of Bartlesville had been paid and the lien released. Bartles was indebted to the Security National Bank of Bartlesville in the sum of about $28,000, and, the bank examiner having complained about this item, it was taken over and assigned to H. E. Koester, a director of the bank, and appellee herein. Koester demanded additional security, and Bartles executed several assignments and *Page 1082 
conveyances to him covering certain properties which were in fact mortgages. Among these was a warranty deed dated April 12, 1924, from E. B. Jennings and wife to Koester, conveying an undivided one-half interest in the lands, and recorded in Boone County on April 21, 1924. This conveyance was intended as a mortgage, however, and was assigned by the bank to Koester, Bartles being given one year to pay the obligation. He, being unable to pay it at the end of the year, procured the delivery of a warranty deed from Jennings and wife to Koester for an undivided one-half interest in the lands in controversy, made April 27, 1925, and recorded in Boone County on April 30, 1925. The testimony shows this conveyance was an actual grant of the lands, Koester and wife having quitclaimed their interest under the former deed back to Jennings and credited Bartles' account upon the last conveyance with $7,500. On September 26, 1925, Bartles procured the execution and delivery of another warranty deed of Jennings and wife to Koester, conveying the remaining undivided interest in the lands, which was recorded on October 1, 1925, Koester, upon the execution of the deed, crediting Bartles with an additional $5,000 upon his indebtedness. Koester claims the title to the lands clear and free of the mortgage to the Colonial Supply Company, which insists that the title of Koester was subject to its mortgage, which should be foreclosed. The chancellor found in favor of Koester, and from his decree canceling the appellant's mortgage as a cloud upon his title, this appeal is prosecuted.
(after stating the facts). Appellant, the Colonial Supply Company, insists that its mortgage constitutes a first and prior lien against the lands, and that the court erred in not so holding and decreeing a foreclosure thereof. Appellant makes no real contention that the finding that Jennings was the owner of *Page 1083 
the lands in controversy after their conveyance to him by Bartles and Sitton and at the time of the execution of the deed to Koester and the decree is not contrary to the preponderance of the testimony.
It is earnestly urged, however, notwithstanding this finding of fact, that, since Bartles, on the date of the execution of the notes and mortgage to the Colonial Supply Company, on May 29, 1923, was the owner and holder of two mortgages covering the lands in controversy, executed by Jennings and wife to him .on March 17, 1920, the first securing the payment of the sum of $18,000 and the second for the sum of $5,200 with interest, Bartles' mortgage to it operated as an assignment of the mortgages by Jennings to Bartles and constituted a lien or charge against the whole interest of Bartles in and to the lands, consisting of his entire title, either legal or equitable, under the mortgages given by Jennings. This contention cannot be sustained, however.
It appears from the record that Jennings, at the time of these transactions, was the legal owner of the lands and was in possession thereof, and had been since 1914, and that Koester had obtained all the interest owned by Jennings through regular deeds of conveyance. Bartles made no attempt to include or transfer any indebtedness owed by Jennings to him, secured by the mortgage on the lands, and the mortgage from Bartles to appellant company recites that a mortgage upon the lands in favor of Bartles was owned by the Union National Bank of Bartlesville, to which the mortgage of appellant was made subject. This was notice to appellant that Bartles was not the owner of the lands and that there was an obligation outstanding secured by mortgage. Appellant insists that its mortgage from Bartles operated as an equitable assignment of the mortgages from Jennings to Bartles, and cites authorities claimed to be in support of the proposition, including our cases, Kline v. Ragland, 47 Ark. 111, 14 S.W. 474; Turman v. Sanford, 69 Ark. 95, 61 S.W. 167. *Page 1084 
In the Turman case the court construed our statute, now 1498, C.  M. Digest, providing that, if a person shall convey any real estate by deed purporting to convey the same in fee simple absolute, and shall not at the time have the legal estate, but afterwards acquires it, the after-acquired estate, legal or equitable, shall pass immediately to the grantee, and the conveyance shall be as valid as if such estate had been in the grantor at the time of the conveyance; holding that the interest of a mortgagee under his mortgage before foreclosure had no such estate as would pass by the statute to a grantee to whom he had conveyed the land prior to his mortgage, saying: "For the mortgagee, before the foreclosure, is neither at law nor in equity the real owner of the land. The legal title, it is true, passes to him by the mortgage, but he holds it for the protection of his debt, and for that purpose only. * * * The statute only purports to pass real estate, but, if only the legal title in the mortgagee passed, it would be worthless; for the legal title can be used by the mortgagee only to collect his debt, and without the debt it would avail nothing." This, in fact, is a holding that the appellant could have acquired no interest, lien on or estate in the land mortgaged to it by Bartles, the mortgagee of the lands owned by Jennings.
It is not claimed or intimated that the debts owed by Jennings to Bartles and secured by a mortgage from Jennings, the owner of the land, were transferred to appellant company or that there was any intention to make such transaction. Neither can there be any question of deception practiced upon appellant in the making of such mortgage. The mortgage itself recites the mortgage from Jennings to Bartles securing the $18,000 note and interest was an incumbrance on the lands, and that the lien had been assigned to the Union National Bank of Bartlesville. This shows, as the chancellor found, that there was no intention to convey or acquire any interest Bartles might have held in the lands by reason of Jennings' mortgage, which was recited as an incumbrance. Bartles could have transferred his lien *Page 1085 
or interest under the mortgage in the lands by a transfer or delivery of the notes secured thereby to appellant company, but there could be no equitable transfer of any such interest by his mortgage of the lands to appellant company, which especially recited that the debts secured by the mortgage from Jennings to Bartles had already been transferred to another party. In other words, the mortgage from Bartles to appellant company could not operate as an equitable assignment of his interest in the lands under the Jennings mortgage, since said mortgage was recited as an incumbrance against the lands, the lien of which had already been transferred to another bank, as stated therein. The title of appellee was superior to any claim of appellant company under its mortgage, which constituted a cloud on his title, which he was entitled to have removed by cancellation of said mortgage to appellant, and the chancellor committed no error in so holding.
The decree is accordingly affirmed.