Court Opinion

ID: 7825525
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:06:02.859538+00
Date Added: 2024-06-11T16:30:51.407469
License: Public Domain

Jack Holt, Chief Justice, dissenting. I dissent. The majority points out the pertinent language from the “Warranty Deed With Assumption of Debt” which stated that in consideration of ten dollars and other good consideration the grantors conveyed the 5M Ranch, with the following declaration: SAID Grantee hereby assumes the payment of certain notes totalling $240,000.00 in conjunction with this transfer of the above described 1,500 acres, more or less, in Carroll County, Arkansas. Morgan Maxfield, the grantee, signed the warranty deed and executed a promissory note dated the same day as the warranty deed, in favor of J. R. Maxfield, Jr. in the amount of $95,000.00. The thrust of Agri Bank’s argument is that since the $95,000.00 note was not specifically set out in the warranty deed, then a vendor’s lien was not created. After a hearing, the chancellor determined that the warranty deed was unambiguous and evidenced on its face a vendor’s lien in favor of the trust, and further declared its priority over Agri Bank’s mortgage, to which I agree. I take issue with the majority’s holding that the warranty deed with assumption of debt as written did not put Agri Bank on notice of the outstanding indebtedness. It is well settled that a vendor of land has an equitable lien on the land for the unpaid purchase price. Wilson v. Shocklee, 94 Ark. 301, 126 S.W. 832 (1910). Furthermore, a mortgagee who accepts a mortgage which recites a prior mortgage is estopped to deny the superiority of the prior mortgage. Id. Although our cases in this area are limited in number and are of some vintage, the law on vendor’s liens has been addressed. Vendor’s liens are discussed in Talieferro v. Barnett, 37 Ark. 511 (1881), wherein we held that a deed reciting that the land conveyed was held bound for the payment of the notes given was a valid expression of a lien. In addition this court has held that a subsequent purchaser is affected with notice of all recitals in the title deeds of his vendor, whether recorded or not. Graysonia-Nashville Lumber Co. v. Saline Dev. Co., 118 Ark. 192, 176 S.W. 129 (1915). In Graysonia we noted an even older case, Gaines v. Summers, 50 Ark. 322, 7 S.W. 301 (1887) where we stated: A person purchasing an interest in lands, “takes with constructive notice of whatever appears in the conveyances constituting his chain of title.” If anything appears in such conveyances “sufficient to put a prudent man on inquiry, which, if prosecuted with ordinary diligence, would lead to actual notice of some right or title in conflict with that he is about to purchase, it is his duty to make the inquiry, and if he does not make it, he is guilty of bad faith or negligence,” and the law will charge him with the actual notice he would have received if he had made it. Gaines, 50 Ark. 322, 327, 7 S.W. 301, 302. We have long held that if a purchaser is informed by recitals in his chain of title that property has been sold on credit, he is bound to inform himself as to whether this debt has been paid. Stroud v. Pace & Allison, 35 Ark. 100 (1879); and where purchase money notes were described in deed, those notes constituted notice that the vendor had a lien for the unpaid purchase money. Ponder v. Gibson-Homans Co., 166 Ark. 591, 266 S.W. 682 (1924). One cannot rely on an abstract in the face of recitals in a deed since a mistake in the abstract of title would not relieve one from making inquiries suggested by the deed itself. Union & Planters’ Bank & Trust Co. v. Simmons, 166 Ark. 285, 265 S.W. 953 (1924). Union & Planters’ Bank & Trust was not relieved from inquiry since the deeds had recitals even though the mortgagor made a statement in his loan application that there were no liens on the land to be mortgaged. Id. The same principles ring true in this case. The recital in the Warranty Deed with Assumption of Debt put Agri Bank on notice that there was some outstanding indebtedness which placed on it the responsibility of making inquiry as to whether this prior indebtedness had been paid. They, like the bank in Union & Planters’ Bank & Trust, could not rely on an abstract or statements of Morgan Maxfield, mortgagor, when the deed reflected a prior indebtedness. Having failed to make responsible inquiry, Agri Bank cannot now complain. The other argument raised by Agri Bank is not addressed by the majority, but I will address it here for it too is without merit. Agri Bank alternatively argues that if there was a valid vendor’s lien, then J. R. Maxfield, Jr. waived this vendor’s lien by accepting a deed of trust. Agri Bank points out that at the hearing Jordan Maxfield testified that concurrently with the execution of the warranty deed, Morgan Maxfield gave J. R. Maxfield, Jr. a deed of trust and that J. R. Maxfield, Jr. accepted this deed of trust as security. This deed of trust was never recorded nor was the document ever produced. It was allegedly in the possession of Morgan Maxfield after its execution, and Morgan died before this action came before the chancellor. Considering Jordan Maxfield’s testimony, Agri Bank asserts that any vendor’s lien was waived and that the trust must rely on the deed of trust to establish the existence and priority of the lien. The deed of trust being unrecorded, Agri Bank asserts priority. A deed of trust is in legal effect a mortgage, Tate v. Dinsmore, 117 Ark. 412, 175 S.W. 528 (1915), and if a mortgage is given, then an equitable vendor’s lien is indeed extinguished as the vendor must then rely upon the mortgage. See Jack Collier East Co. v. Barton, 228 Ark. 300, 307 S.W.2d 863 (1957). However, as this court said in Chapman v. Chapman, 55 Ark. 542, 544, 18 S.W. 1037, 1037 (1892): In the absence of an express waiver of a vendor’s equitable lien for unpaid purchase money of land, or circumstances which show that it was his intention to waive it, the lien exists. “If under all the circumstances it remains in doubt, then the lien attaches.” Generally, the acceptance of security other than the obligation of the vendee is evidence of intention to waive the vendor’s lien and rely upon the other security. But this is only prima facie evidence of waiver. Each case must be determined upon its particular circumstances. It was evident in Chapman that where there was a mortgage taken in exchange of the vendor’s lien but it was invalidly acknowledged, no intent to waive the vendor’s lien could exist until a valid recorded mortgage was received. The trust cites Chapman and asserts that, though it may be presumed that some document was executed, there is no proof that this document was a valid deed of trust, that it covered the lands in question, or that there was any intent on the part of J. R. Max-field, Jr. to rely on this deed to waive his vendor’s lien. I agree. It is well settled that those who claim under a lost deed must prove its contents by clear, satisfactory, and convincing proof. Witt v. Graves, 302 Ark. 160, 787 S.W.2d 681 (1990). In light of the limited information regarding the deed of trust and the fact that the vendor’s intent was not brought out in his testimony, neither the contents of the deed of trust nor waiver of the vendor’s lien was established. Upon review of a chancellor’s findings, we will not reverse unless the findings are clearly erroneous or clearly against the preponderance of the evidence. Riddick v. Street, 313 Ark. 706, 858 S.W.2d 62 (1993). Under these circumstances, I cannot say the chancellor’s decision was clearly erroneous. Thus, I dissent. Newbern, J., joins in this dissent.