author: English, Ch. J;:

text:
    Gerson vs. Pool.
    1. Defense of innocent purchaser.

    Should show that the vendor was seized in fee and in possession of the land.
    A Pleading.

    A material fact alleged in the complaint and admitted in the answer, is as well pleaded in the answer as if averred therein.

      :}. Bona, fide purchaser for value.

    A creditor who makes advances under the security of a deed of trust, in good faith, and without notice of a vendor’s equitable lien for the purchase money, will be protected as an innocent purchaser.

      4. Pleading.

    Under the code practice the effect of the denial of the allegations of a complaint in equity, is merely to put them in issue.
    5. Supreme Court: B,eversal of decree on the facts, etc.

    Where it clearly appears that the finding of the chancellor is erroneous, this court will not hesitate to reverse the decree.
    6. Bona fide Purchaser: Notice, etc.

    The fact that the trustee in a trust mortgage had no notice of an incumbrance, will not protect the beneficiary, purchasing with notice at a sale by ihe trustee under a power contained in the deed.

      APPEAL from Drew Circuit Court in Chancery.
    Hon. T. F. Sorrells, Circuit Judge.

      W. S. Mg Cain, for appellant.

      Jackson & Brooks, and Rose, for appellee.
   English, Ch. J;:

This was a suit in chancery to enforce a vendor’s lien, determined in the Drew Circuit Court.

The material allegations of the bill are:

That on the 13th January, 1871, John L. P. Pool, the plaintiff, sold to T. P. Edwards & Co., a firm of merchants of Montieello, composed of Thomas P. Edwards, John A. Baker and James H. Chesnut, certain tracts of land, which are described, known as the Pool place, situate in Drew County, for the consideration of $2,250, That part of the purchase money ivas paid, and a note given for the remainder, and that, on the day above named, Pool conveyed the lands to T. P. Edwards & Co., by deed in fee simple, reciting the payment of the purchase money, etc.

That there remained due and unpaid upon the note taken for balance of purchase money, $542.85, upon which Pool had obtained judgment on the law side of the Drew Circuit Court, 8th April, 1873, and caused execution to be issued against T. P. Edwards & Co.,, which was returned nulla bona.

That on the 3d of June, 1871, T. P. Edwards & Co., made a deed of trust upon the land with other property, to ¥m. T. Wells, as trustee, to secure the payment of a debt they then owed Benjamin Gerson, a merchant of New Orleans, and principal defendant to the bill, and future advances, etc.

That on the 8th day of February, 1873, Wells sold the lands under the trust deed, to pay the debts secured thereby, and that Gerson purchased the lands at the sale, and took a deed therefor from the trustee.

That at the time the deed of trust was executed, and at the time of the trust sale, Gerson and Wells had notice of plaintiff’s claim for unpaid purchase money, etc.

Gerson answered the bill, setting up the defense that he was an innocent purchaser without notice, etc.

Upon the bill, answer and depositions, the chancellor found in favor of Pool, and charged the lands with the payment of the balance of purchase money due to him from T. P. Edwards & Co., and Gerson appealed to this court.

First — the solicitor for appellee submits that the defense of innocent purchaser was not well pleaded, because the answer does not show that T. P. Edwards & Co., under whom appellant, Gerson, claims, were seized in fee and were in possession of the lands at the time they executed the deed of trust to Wells, etc.

This court has repeatedly held, that to make out the defense of innocent purchaser for value, “it is necessary that he should, in his answer or plea., state the deed of purchase, the date, parties and contents briefly, and that the vendor was seized in fee and in possession, and should state the consideration, with a distinct averment that it was bona fide and truly paid, independent of the recitals of the deed, and should deny notice previous to, and down to the time of paying the money and the delivery of the deed,” etc. Pearce v. Foreman, 29 Ark., 568 ; Tulley et al. v. Beady et al., 27 Ark., 102 ; Buck et al. v. Martin et al., ib. 6; Miller v. Fraley et al., 21 Ark., 22; Cook v. Bronaugh et al., 13 Ark., 190; Byers et al. v. Fowler et al., 12 Ark., 288.

In this case the answer does not aver that T. P. Edwards & Co., the vendors of appellant, were seized in fee of the lands. But the bill avers that the appellee, Pool, sold and conveyed the lands in fee to appellant’s vendors, and sets out and exhibits a copy of the deed, and the answer admits the execution of this deed. From this it sufficiently appears that T. P. Edwards & Co. held the legal title to the lands at the time they executed the deed of trust to "Wells for the benefit of Gerson. A fact alleged in the bill, and admitted by the answer, is as well pleaded as if averred by the answer.

But it in no way appears from the answer that appellant’s vendors were in possession of the lands when they conveyed them by the trust deed to Wells for the benefit of the appellant. In this the answer is defective, according to the established rule as above stated. In all other respects, the answer seems to confinan to the rule.

It was held in Johnson v. Graves, 27 Ark., 557, that where the creditors of the vendee take a trust deed of lands incumbered with the vendor’s lien, from the vendee, without advancing any new consideration merely as a security for the debts of the vendee contracted prior to his purchase of the lands from the vendor, they will be postponed to the rights of the vendor; but otherwise where the creditors take a conveyance in satis-' faction of the debts, or make advances upon the faith of the vendee’s title, as it appears of record.

In this case it appears, from the answer that at the time the deed of trust was executed, T. P. Edwards & Co. were indebted to Gerson in the sum of $8,525.28, and that the deed was executed to secure this sum, and any future advances that might be .made to them by Gerson, which the deed provided for; and that after the execution of the deed, and during the year 1871, Ger-son made them further advances, amounting to about $4,000. If these advances, as provided for by the trust deed, were made in good faith, and without notice of the lien of Pool upon the lands for unpaid purchase money, they placed Gerson in the attitude of an innocent purchaser for value, supposing the averment of the answer to be sufficient in all other respects. 1 Perry on Trusts, sec. 239.

Second — The bill charges that Gerson had notice at the time the deed of trust was executed, that Pool had a lien upon the lands for balance of unpaid purchase money. This the answer denies, and under the code practice the effect of the denial was merely to put the alleged fact at issue. Gantt's Digest, sec. 4591, Newman Plead, and Prac., 520.

The onus of proving the fact was upon the plaintiff below. Pearce v. Foreman, 29 Ark., 568.

John A. Baker, of the firm of T. P. Edwards & Co., deposed, in substance, that he was in New Orleans shortly before the execution of the deed of trust, and made arrangement with Gerson for the firm to secure, by deed of trust, their then indebtedness to him, and to procure from him further advancements. That he stated to Gerson, the lands, town lots, personal property, etc., which the firm proposed to embrace in the trust deed, and of which Gerson, perhaps, took a memorandum. That among the lands, etc., to be put into the deed of trust, were the Pool lands (the lands in controversy) and. he told Gerson that these lands were purchased of Pool by T. P. Edwards & Co., on which they owed him a balance of purchase money of about five hundred dollars.

Gerson in his deposition denies that Baker informed him of the incumbrance upon the Pool lands.

If appears that Gerson sent his son George, who was his general traveling agent, to Monticello, with a letter to Wells, asking him to take the deed of trust, etc., Wells reading the letter, sent George Gerson to T. P. Edwards & Co., for a memorandum of the property to be embraced in the deed of trust.

Thomas P. Edwards, of the firm of T. P. Edwards & Co., deposed that just' before the deed of trust was executed, he informed George Gerson that the firm owed Pool a balance of purchase money on the lands in controversy, and gave him the books of the firm to examine, which he thought would have shown him the balance due on the lands.

George Gerson deposed that he did not remember of anything being stated in regard to any incumbrance on the Pool lands; and it was his belief that the deed of trust was executed on property entirely unincumbered. He first heard of the Pool claim through a letter to his father from Wells or McCain.

Wells deposed that he had no knowledge of the incumbrance upon the Pool lands, when he took the deed of trust.

Upon these depositions, the court below found in favor of the appellee, and we are asked to reverse the decree.

Ordinarily, where a question of fact has been passed on by the court of first instance, and there is evidence on both sides of the question, the Court of Appeals will not interfere unless the decision of the question of fact is clearly erroneous. Where this appears in chancery cases, the court of errors will not hesitate to reverse the decree. Cornet v. Bertelsmann, 61 Mo., 126.

Baker and Edwards appear to be disinterested witnesses. This was a contest between creditors about property that had passed out of their hands. One of them proved notice to Gerson, and the other to his son and agent. They arc contradicted by Ger-son who has a direct interest in the result of the suit, and by the son, who would naturally be in sympathy with the interest of the father. All of the witnesses may have been sincere in their testimony, and the contradiction between them may have been the result of frailty of memory. What the truth may be, we do not know, but we are not disposed to disturb the finding of the chancellor upon the evidence as presented in the record.

Third — It is insisted by the solicitor of appellant, that Wells having had no notice of Pool’s claim for purchase money, when the deed of trust was executed, stood himself in the attitude of an innocent purchaser, and that Gerson having purchased the lands at the sale under the trust deed, and thereby became the vendee of Wells, took them discharged of Pool’s lien, though he may have had notice. There is nothing in this. Wells was a mere trustee in the deed executed for the benefit of Gerson. He paid no consideration for the deed, and advanced nothing upon the feith of it.

The decree must be affirmed.


source: Caselaw Access Project

author: English, Ch. J.:

license: Public Domain

text:
    Haskell, adm’r, vs. The State, et al.
    1. Benia fide purchaser, etc.

    So long as the vendor retains the legal title, a purchaser from the vendee cannot allege want of notice of the vendor’s lien for unpaid purchase money.
    2. "Foreclosure or Vendor’s Liex: Who is hound by.

    Where a vendor files a bill against the vendee to foreclose his lien for unpaid purchase money, and fails to make subsequent purchasers or incumbrancers parties, they are not bound by the decree, and their right to redeem is not barred.
    3. -: By the State,.

    "Under the provisions of the Act of July 16th, 1868, providing for the foreclosure of the State’s lien for purchase money of public lands, a purchaser from the State’s vendee, who is not made a party, or served with notice of the proceeding on the part of the State to foreclose, may, after decree and sale thereunder, and before a confirmation of the sale, apply to redeem; and the fact that the purchaser under the decree has procured a patent from the Governor, before confirmation of the sale, will not divest the chancellor of the power to set it aside, and permit the land to be redeemed.
    4. Marshalling or Securities: When purchaser not entitled to.

    Where a vendee sold a tract of land subject io the vendor’s lien for unpaid purchase money, and the subsequent purchaser mortgaged one parcel, and afterwards sold the remainder of it, without covenants against the incumbrance in either case; held, that the lien should be charged rateably upon the two parcels according to value.
    APPEAL from Pulaski Chancery Court.
    Hon. W. I. Wakwick, Chancellor.

      Clark & Williams, for appellants.

      IJ. W. Carroll, for Murphy, appellee.
   English, Ch. J.:

On the 16th October, 1848, the State sold to Bushrod W. Lee, the Northeast quarter of section eight, and the Northwest quarter of section nine, in Township eight South, Range four West, for $400, for which his note was taken, payable in five annual instalments, and a certificate of purchase delivered to him. The lands were situated in Arkansas County, and part of the internal improvement lands. It seems that Lee paid upon the note, November 5th, 1851, $253.50.

On the 10th September, 1870, the State filed a bill against Lee, in the Pulaski Chancery Court, to foreclose his lien upon the lands for balance of purchase money; and on the 6th of December, 1870, (Lee having been served with process less than thirty days before the commencement of the term) a decree was rendered against him on default, for $418.15, and costs, and the lands condemned to- be sold to satisfy the decree. Upham was appointed a commissioner to sell the lands, and on the 6th day of February, 1871, he sold them at public sale, and John P. Murphy purchased both tracts for $515.

On the 28th of February, 1871, and before the sale had been confirmed by the chancellor, Langdon C. Haskell, as administrator of Augustus M. Smith, deceased, filed the original bill in this case, making the State, John P. Murphy, Ambrose H. Sevier as administrator of John A. Jordan, deceased, and Lee, defendants.

The material allegations of this bill, after setting out the proceedings in the case of the State against Lee, and being corrected by some facts agreed upon, are as follows:

That shortly after Lee purchased the lands of the State, he sold them to John A. Jordan, and conveyed them to him by deed, with general covenants of warranty, duly recorded in the county where the lands were situated.

That Jordan took possession of the lánds, made large improvements thereon, and they constituted part of his plantation at South Bend, Arkansas County, to the time of his death, 15th September, 1861, etc.

That on the 15th March, 1860, Jordan mortgaged one of the tracts, Northeast quarter of Section eight, with other lands, to Augustus M. Smith, to secure a debt of $60,000, which mortgage was duly recorded, etc.

That Smith afterwards died, and Haskell, the plaintiff in this-bill, having been appointed his administrator, filed a bill in the Arkansas Circuit Court in 1866, against the administrator and heirs of Jordan, to foreclose the mortgage, and at the fall term,. 1868, obtained a decree for $84,000, and for a sale of the lands covered by the mortgage to satisfy the decree. That the defendants therein appealed to the Supreme Court, Avhere the cause was pending when the State instituted the above proceedings against Lee, and the decree was affirmed after the decree against Lee, but before the sale of the lands by the commissioner. (See Sevier, adm’r, et al v. Haskell, adm’r, 26 Ark., 133). That upon the affirmance of the deeree the possession of the lands embraced in the mortgage were, by consent of parties to that suit, turned over to the plaintiff, to be managed and controlled by his attorney, Sol. F. Clark, who was to receive the rents and profits until the representatives of Jordan could further litigate the matter upon appeal to the Supreme Court of the United States,, and that Clark, on the 18th February, 1871, rented the lands to Jacob B. Sumner, who was in possession thereof, etc.

That when the State instituted her suit against Lee, Haskell was the administrator of Smith, who held the mortgage from Jordan; and Sevier, the administrator of Jordan, was in possession of the lands, yet neither Haskell nor Sevier was made party to the suit, nor did either of them have notice thereof.

That said Northeast quarter of Section eight, etc., was in the midst of the plantation of Jordan, known as the West End place, part thereof in cultivation, and the land valuable; and that Lee, the only person made defendant in the suit of the State, had had no interst in the land for more than twenty years; and that the representatives of Jordan and Smith were the only persons interested therein.

Prayer that the decree in the case of the State against Lee be vacated, the sale to Murphy set aside, and that plaintiff Haskell, as administrator of Smith, be permitted to redeem the said Northeast quarter of Section eight, etc.

Murphy filed an answer to the bill 19th June, 1871, in which he sets up and relies upon the decree of the State against Lee, and his purchase of the lands thereunder, claims to be an innocent purchaser, etc., and alleges that after he purchased the land, he obtained a certificate from the commissioner who made the sale, and a certificate from the commissioner of immigration, upon which the Governor of the State executed to him a deed bearing date 6th of February, 1871, which is made an exhibit.

On the 15th November', 1871, Haskell as administrator of Smith, filed an amendment to his bill, in which he alleged in substance, that long after Jordan had mortgaged said Northeast quarter of Section eight, etc., to Smith, and after the death of Jordan and the appointment of Sevier as his administrator, and while the lien of the State for purchase money of both tracts sold by her to Lee was in full force, Sevier as administrator of Jordan, on the-day of-, 1868, obtained an order of the Probate Court of Arkansas County, to sell the said Northwest quarter of Section nine, etc., with the other lands, to pay debts of the estate; and that in pursuance of the order he advertised and sold said tract (with others), and that Wm. H. Halliburton (who is made defendant) became the purchaser thereof, and that Sevier put him in possession of the land, and that he had continuously thereafter received the rents and profits thereof.

That Jordan, in his lifetime, having conveyed by mortgage to Smitli the Northeast quarter of Section eight, which he continued to own and possess, the Northwest quarter of Section nine, was bound to discharge the lien of the State upon both tracts for purchase money, and a like duty rested upon Sevier as his administrator after his death, but that his estate was utterly insolvent.

That Halliburton, when he purchased the Northwest quarter of Section nine, had notice of the lien of the State; and if not, he purchased the land on credit, and had not paid the purchase money, or received a deed from Jordan’s administrator.

Prayer that the sale to Murphy be set aside (the same not having been confirmed by the chancellor) and that unless Sevier, as administrator of Jordan, or Halliburton would pay the money due the State on both tracts, the State be compelled in selling the lands, to sell first the Northwest quarter of Section nine, and if it should not bring enough to pay the whole of the debt due the State, that Haskell, as administrator of Smith, be permitted. to pay the balance in redemption of the Northeast quarter of Section eight.

Sevier as administrator of Jordan, filed a cross-bill, claiming the right to redeem the Northwest quarter of Section nine, but on the filing of the answer of Vm. H. Halliburton to the original bill and amendment, setting up title, and offering to redeem the same tract, Sevier entered a disclaimer of any interest in the suit.

Halliburton answered 22d February, 1872, stating in substance :

That he purchased from the estate of Jordan, at a public sale ordered by the Probate Court of Arkansas County, said Northwest quarter of Section nine, etc., and received a deed therefor from the administrator of the estate, whereby he became the owner of the right and title of said estate in said land. He professes to exhibit .the deed, but it is not in the transcript. He denies all notice of the claim, of the State upon the lands, etc., insists that the sale to Murphy under the decree in favor of the .State was illegal, and joins in the prayer of the bill to set it aside. Denies that Haskell, as administrator of Smith, or any one else, has the right to call upon or require him to contribute to pay off the claim of the State, if any she has, upon the land; but if the court should be of the opinion that the land purchased by him is liable to any portion of the claim of the State, respondent is willing and offers to pay the same when ascertained under the direction of the court. Admits that he was never in the actual possession of the land, but had been trying for some time to get possession thereof. That Jacob B. Sumner had, until his death recently, been in possession of the land, and after his death Solomon F. Clark put some one else in possession.

Murphy answered the amendment to the bill 28th March, 1872. Pie admits that in 1868, the administrator of Jordan obtained the probate order of sale as alleged, that the sale was made under the order, and that Halliburton purchased the said Northwest quarter of Section nine, etc., but submits that neither Plaskell as administrator of Smith, Sevier as administrator of Jordan, nor Halliburton, has any right to redeem said lands, eta,.

The parties agreed upon the following facts:

First — That the land in question belonged to the State, and were part of the internal improvement lands.

Second — That Lee purchased the lands of the State, and gave the note for purchase money described in the bill of the State against Lee.

Third — That the commissioner in making a sale of the lands, complied with all the requirements of the decree of the State against Lee.

Fourth — That shortly after Lee purchased the lands of the State, he sold and conveyed them to Jordan by deed with general covenants of warranty, which was duly recorded in Arkansas County, where the lands were situated; and that Jordan mortgaged to Smith one of the tracts as alleged in the pleading.

Fifth — That Halliburton holds the tract claimed by him by regular deed from Sevier, as administrator of Jordan, under a sale made by order of the Probate Court, etc., as set forth in his answer.

Solomon E. Clark deposed that in the year 1870, Jacob B. Sumner occupied both of the tracts of land in controversy as tenant of Sevier, administrator of Jordan, during which time the suit was pending for the foreclosure of the mortgage executed by Jordan to Smith. That after the institution of the suit of the State against Lee, and while the same was pending, the decree of the Supreme Court was rendered affirming the decree of the court below foreclosing the mortgage; and the possession of the property was turned over to witness as receiver by the .Supreme Court, by consent of all parties, and he took possession of the same February 18th, 1871, and rented the same out in his own name to Sumner. That the Northeast quarter of Section eight, lies in the heart of the plantation of Jordan, known as the West End, is very valuable, and could not be separated from the plantation without great damage to the whole place. That he knew nothing of the pendency of the suit of the State against Lee, until after the lands were sold, nor did Haskell, adminisistrator of Smith, nor, as he believed, did Sevier, administrator of Jordan. The mortgage to Smith was for a great deal more than the mortgaged lands were worth, and the estate of Jordan utterly insolvent; supposed to be able to pay not more than five cents on the dollar. Neither the administrator of Jordan, nor his general creditors had any interest in redeeming the lands, or protecting them from sale by the State to pay balance of purchase money due from Lee, etc.

The cause was heard by the chancellor’, the bill dismissed for want of equity, and Haskell, administrator of Smith, appealed to this court.

First — It cannot be rightfully affirmed, that Jordan, Smith, or Halliburton was an innocent purchaser, without notice of the lien of the State for purchase money, for when Lee sold the lands to J ordan, and when J ordan mortgaged one of the tracts to Smith, and when his adminstrator sold the other tract to Halliburton, the legal title to the lands Avas in the State. Lee Avas never seized in fee of the lands. Gerson v. Pool, ante.

Second — In her bill to foreclose, the State made no one defendant to the bill but Lee, who had long before parted Avith his equitable title to the lands by deed put upon the public records, and the lands had gone into the possession of Jordan, and had become part of his plantation. Sumner, the tenant of his administrator, who was an occupant of the lands, was not made party.

It is a well settled general principle of equity, that where a vendor or mortgagee, files a bill against the vendee or mortgagor to foreclose, and fails to make subsequent purchasers or incumbrancers parties, they are not bound by the decree, and their right to redeem is not barred. Story Eq. Plead, sec. 193; Haines v. Beach, 3 John Ch., 460; Moore v. Cord, 14 Wisconsin, 215; Childs v. Childs et al., 10 Ohio State, 339.

By Act of 16, July, 1868 (Pamp’t Acts 1868, p. 77)-the State was authorized to bring suits in the Pulaski Chancery Court, on notes, bonds, etc., given by purchasers of internal improvement, and other public lands, for purchase money, and to foreclose and sell the lands, etc. The suits were to be brought against the makers of the notes or bonds' given for purchase money, and service of process authorized in any coAmty in the State. The process might also be served upon the occupant of the land for which the note or bond was given — sec. 4. Upon the return of process directed to the county where the land was located, that the defendant could not be found, or upon an affidavit that he was a non-resident of the State, public notice was to be given through a newspaper, etc. — sec. 5. Section 8, provides: “That, in case of actual service upon the defendant, all persons, except an actual occupant not served, shall be bound, foreclosed and barred by the proceeding and judgment, and the person in actual possession, if served with process, shall also be bound, foreclosed and barred by such proceeding and judgment. When the service is by publication, the defendant, his heirs, his personal representatives, and all other persons, including the person in actual possession of such land, shall be forever bound, foreclosed and barred by such proceeding and judgment.”

In this case the occupant of the lands is not before the court, and is claiming nothing. Lee was served with process, and no publication was made. The subsequent purchasers, etc., had no notice, actual, by service of process, or by publication, of the bringing of the suit by the State to condemn the lands for the payment of the purchase money due to her.

Whether the legislature could provide for a decree to bind subsequent purchasers, etc., and bar their right to redeem, without making them parties, or giving them any notice, actual or constructive, or any opportunity to be heard and assert their rights, is a grave question. But be this as it may, the bill of Haskell to redeem was filed in this case before the sale of the lands to Murphy by the commissioner, had been confirmed by the court below, and the chancellor had power to set it aside, and allow the lands to be redeemed. Penn’s adm’r v. Tollison, 20 Ark., 652; Eakin & Co. v. Herbert et al., 4 Cold. (Tenn.), 117.

Nor did the fact that Murphy obtained a deed from the Governor prematurely, and before confirmation of the sale, deprive the chancellor of the power to set aside the sale, and permit the lands to be redeemed.

Third — Sevier, as administrator of Jordan, having disclaimed, Haskell as administrator of Smith, and Halliburton, have the right to redeem the lands. Moore v. Beason, 44 New Hamp., 218 ; Smith v. Austin, 9 Mich., 473; Frink v. Murphy, 21 California, 109 ; Fletcher v. Chase, 16 New Hamp., 39.

Fowrth — It remains to be decided whether Haliburton shall pay the whole of the redemption money on both tracts, or whether it shall be paid rateably by him and Haskell, administrator of Smith, according to the value of their respective tracts.

Story says: — “The general rule now acted upon by the Courts of Equity is, that where there is a lien upon different parcels of land for the payment of the same debt, and some of the lands still belong to the person, who,.in equity and justice jwes, or ought to pay, the debt, and other parcels of the land have been transferred by him to third persons, his part of the land, as between himself and them, shall be primarily chargeable with the debt. This would seeni highly reasonable as to the original incumbrancer. But it has been further held, that if he has sold or transferred different parcels of the land at different times, to different persons, as incumbrancers or purchasers, then, as between themselves, they are to be charged in the inverse order of the time of the transfers to them; that is to say, the parcels last sold are to be first charged to their full value, and so backwards, until the debt is fully paid; for, it is said, that the last purchasers are to take only as far as they may, without disturbing the rights of the prior incumbrancers or purchasers, who, being prior in point of time, have a superiority of right.” 2 Story Eq. Juris., sec. 1233 a. The cases supporting this rule are cited by Judge Story in the margin. See also, 2 Leading cases in Equity; Hare and Wallace notes, p. 241, etc.; Iglehart et al. v. Crane et al., 42 Ill., 262.

“But (continues Judge Story) there seems great reason to doubt whether this last position is maintainable upon principle; for, as between the subsequent purchasers or incumbrancers each trusting to his own security upon the separate estate mortgaged to him, it is difficult to perceive that either has, in consequence thereof, any superiority of right or equity over the other. On the contrary, there seems strong ground to contend that the original incumbrance or lien ought to be borne rateably between them, according to the relative values of the estates. And so the doctrine has been asserted in the ancient, as well as the modern, English cases on the subject” — citing them. See also, Dickey v. Thompson, 8 B. Monroe, 312; Bates v. Ruddick et al., 2 Clarke, Iowa, 423, and cases cited.

The counsel for appellant insist that the weight of authority is in favor of the rule as first above stated by Judge Story, and against the rule of equal contribution,as last stated by him. Be this as it may, we will take the rule as first stated by Judge Story, to be the law for the purposes of this case, and see what the result will be when applied to the facts of the case.

Lee purchased both of the tracts of land in question, of the State, and gave his notes for the purchase money. If he had sold one tract to Jordan, by deed with covenants of warranty, aud afterwards sold the other tract to Halliburton, the tract last sold would have been primarily liable for the debt due the State, for Halliburton would have stood in the place of Lee, who was bound to pay the debt due the State. Clowes v. Dickenson, 5 John Ch., 241.

But here Lee sold and conveyed both tracts to Jordan., The State had a lien on both tracts in his hands for purchase money due from Lee, but this was not a personal debt of Jordan’s; he was under no personal obligation to pay it. It was Lee’s debt, not his. Jordan mortgaged one of the tracts to Smith, but in the mortgage did not covenant against the incumbrance of the State. The mortgage contains the words grant, bargain and sell,” but these words do not imply a covenant against incumbrances not done or suffered by the grantor. Gantt’s Digest, sec. 829. Winston v. Vaughan, 22 Ark., 72.

Halliburton purchased the other tract of Jordan’s administrator, at a probate sale, and obtained a deed therefor, but he got no warranty against the incumbrance of the State from the administrator, and was under no more obligation to pay Lee’s debt to the State than Smith was, who took his mortgage without warranty against the incumbrance. Guion v. Knapp, 6 Paige, 39.

We can see no good reason in this case, why the lien of the State should not be charged rateably' upon the two tracts, according to their respective values.

There being nothing alleged or shown to the contrary, we shall take the tracts in this case to be of equal value.

The decree of the court below must be reversed, and the cause remanded, with instructions to the court to permit Haskell, as administrator of Smith, to redeem the Northeast quarter of Section eight, and Halliburton to redeem the Northwest quarter of Section nine, by each of them paying into court, by a reasonable day to be fixed by the court, one-half of the amount due the State, as ascertained in the decree against Lee, and upon the money being so paid into court, the court will decree the legal title to the one tract to Haskell, as administrator of Smith, to be held by him in trust, etc., and the legal title to the other tract to Halliburton.

Out of the money so paid into the court, Murphy will be re-imbursed the amount paid by him on his bid for the lands.


author: Walker, J.:

text:
    Magness vs. Arnold.
    1. Pleading; Answer in Chancery, burden of proof, etc.

    Under an answer containing denials of the allegations of the complaint, and affirmative averments, the burden of proof is on the plaintiff as to the former, and on the defendant as to the new matter.
    2. Descent:
    Where one dies without issue, seized of a new acquisition, the mother, being the sole surviving parent, takes an estate for life, with remainder, first to the line of the paternal ancestor in postponement of the maternal line, until the former becomes extinct, and then to the maternal line.
    3. Conveyance: Relinquishment of dower.

    A deed executed by the husband of a tenant for life, in which the latter joins in a relinquishment of dower merely, does not convey her estate.
    4. -- — : Acknowledgment.

    Where the certificate of acknowledgment omits the name of the grantor, but shows that the party who appeared before the officer "was the grantor, and refers to him by name in the wife’s acknowledgment, it is sufficient.
    APPEAL from Independence Circuit Court in Chancery.
    Hon. Charles Minor, Special Judge.

      U. M. Rose, for appellant.
   Walker, J.:

James W. Magness filed his bill of complaint in the Independence Circuit Court, in which he claimed to be the sole and absolute owner of the north half of the southwest quarter of section ^eighteen, township twelve north, range four west, containing eighty acres; that he had been for a time previous and then was in actual occupancy of the same.

He further alleges that defendant Arnold claims to have title to the land by a quit-claim deed from Morgan Magness, but that in fact Magness never had any title to the land; that this pretended title is a cloud upon the title of plaintiff, with a prayer that it be removed and his title quieted.

It will be seen that the plaintiff rests his claim to relief upon the ground that he is the absolute owner of the land in fee simple, and in the actual possession of the same, and that the defendant, in fact, has no valid claim to the land.

The first two propositions are flatly denied by the answer, and the validity of defendant’s title asserted. Defendant further insists that he was induced to purchase the land by the representations and assurances of the validity of the title of Morgan Magness, of whom he purchased, by William Arnold, under whom plaintiff claims title; and that but for. such rejrresentations and assurances, he would not have bought the land of Magness.

Upon this affirmative averment, the proof was upon the defendant ; upon the question of title and possession, upon the plaintiff.

The case was heard upon evidence adduced by both parties, and a decree rendered for defendant, from which the case comes before us by appeal.

The first question for our consideration is : Has the plaintiff a fee simple estate in the land in controversy ?

Deferring to the evidence, we find that one Jonathan Magness by his first marriage had several children, amongst whom was his son Morgan Magness, with whom he resided in poverty until his death in 1834. He had been married a second time, and left his wife, Bebecca, his survivor, who, in the month of December, 1834, had a child, Mary Ann, to whom, on the 16th of August, 1838, a patent was issued for the land in dispute. The patent was issued upon a certificate of pre-emption granted to occupants and cultivator's of the public lands, under an act of Congress of 1820. It is recited in the patent that the certificate of pre-emption was deposited in the land office of the United States by Mary Ann Magness, who had made full payment for the land.

If such was the case, then the land was a new acquisition. If, however, the pre-emption right was her father’s, by virtue of his occupancy and cultivation, and the purchase money paid by him, or with the money of his estate after his death, then a question would arise,' whether Mary Ann did not hold by descent, even though the patent may have been issued in her name. The fact is, that she was only about three and a half years of age when the patent was issued, and was, consequently, not the head of a family, or one who could have made the necessary residence and cultivation to entitle her to a pre-emption, nor, in fact, have paid the purchase money. But however this may be, if held as a new acquisition, upon her death her surviving parent only acquired a life estate in the land. Such is the express provision of our statute of descents, and such the decision of this court in the case of Kelley’s heirs v. McGuire and wife, 15 Ark., 555. In that case our statute of descents was considered, and it was there held: That if the estate was ancestral, and came from the father’s side, it went to the line from whence it came not in postponement, but in exclusion of the mother’s line; or if from the mother’s side, then to the line of the mother. But if not ancestral, and a new acquisition, after a life estate reserved in succession to the father and mother, if alive, it would go in remainder, first, to the line of the intestate’s paternal uncles and aunts and their descendants, in postponement of the mother’s line, until the former became extinct, and then in like manner to the mother’s line.

In the case under consideration, the father being dead, the mother took a life estate in the land in controversy, and at her death it woulcí go to the nearest relations on the father’s side (if any).

Mary Ann died intestate and without issue. Morgan Magness, under whom the defendant claims title, being a half-brother on the father’s side, had either an absolute or a joint estate in the land, dependent upon the fact as to whether there were other children and heirs by the first marriage.

In order to show title in himself to the land, plaintiff offered in evidence a deed from Crise and wife to Robertson, under whom the plaintiff claims to have derived title. The validity of this deed is contested, and if the title of plaintiff turned upon the validity of the deed, we should not hesitate to declare it invalid. But whether valid or not, as upon the death of her daughter, Mrs. Crise only acquired a life estate in the land, she could convey no greater estate to Robertson, which terminated at her death, before the suit in this case was commenced.

But, upon examination of the deed, it was found that it was the deed of Crise alone, to which the wife joined in the relinquishment of dower, in substance as follows: “ I, Phillip Crise, in consideration of $225, paid by Harrison W. Robertson, do hereby convey, remise, release and quit-claim to said Robertson the southwest fractional quai’ter of section eighteen, in township twelve north, of range four west, to have and to hold. And I, the said Phillip Crise, do covenant, etc., and that I will and my heirs shall warrant, etc, And for the consideration aforesaid I, Rebecca Crise, wife of Phillip Crise, do hereby release and quit-claim unto said Harrison W. Robertson all my right, claim or possibility of dower in or to said demised premises.”

This is no deed of the wife to the lands; she sells and conveys nothing, but merely relinquishes her right to dower. The land was hers as heir to her deceased child, and Phillip Crise, the husband, held no other interest than to the rents and profits during the life of his wife, and could sell nothing more. BrighPs Husband and Wife, Ch. 10, 116, 124.

A deed from McKinney and wife was offered in evidence by plaintiff, as forming a necessary link in his title to the land, and, on motion of the defendant, was excluded because the acknowledgment was held to be insufficient.

The certificate is as follows : Be it remembered that on this day came before me the undersigned, a justice within and for the county aforesaid, to me personally well known to be the person whose name is subscribed to the foregoing deed as a party thereto, and acknowledged that he had executed the same for the consideration and purposes therein mentioned and set forth. And on the same day voluntarily appeared before me Mary McKinney, etc.”

The omission of the justice to fill up the blank with the name of John P. McKinney is the only objection to the'certificate. We think this objection not well taken. The justice certifies that the party who appeared before him was the grantor in the deed, and the other grantor was the wife of the said John P. McKinney, the grantor. This we think amply sufficient to identify the real party who acknowedged the deed as fully as if John P. McKinney’s name had been inserted in the blank.

It is a matter of doubt who was in the actual possession of the land at the time the suit was brought.

The weight of the evidence tends to prove that the defendant resided upon and cultivated a small field upon the land, and that plaintiff had another field in possession on the same tract. Under the state of facts with regard to possession, we incline to the opinion that the case would come within an exception to the general rule which this court has established, that the party who seeks the aid of a court of chancery to remove a cloud upon his title, should be at the time in possession of the land.

Under the state of case presented to the Chancellor in the court below, a final decree in favor of the defendants might have been entered, but as the decree dismissing the case was absolute, the same end was substantially reached.

Let the decree be affirmed.


author: Walker, J. :

text:
    Rice et al. vs. Wilburn et al.
    Vendob’s Lien: Not affected by sale under execution of vendee's equity of redemption.

    Where a veuáor of real estate, by title bond, recovers judgment at law for the purchase money, under which the land is levied on and sold, only the equity of redemption passes by the sale, and the vendor’s lien may be enforced against the purchaser.
    APPEAL from Prairie Circuit Court in Chancery.
    Hon. P. C. Dooley, Circuit Judge.

      Hughes & Smith, for appellants.
   Walker, J. :

The questions of law to be considered in this case arise upon the following facts, as disclosed by the record :

Albert H. Evans died intestate, the owner in fee of the south half of section twenty, and the north half of section twenty-nine, in township one north, range four west, leaving plaintiffs Amanda, Charles, Emily and John Evans, his children and heirs at law. Amanda married plaintiff Rice, and Emily defendant Crockett.

Rice was appointed guardian for the minor children of Evans, and, as such, under the authority of an order of court, and in right of his wife,'on the 19th of November, 1859, sold the above described land to George Washington for $1,920, for the payment of which Washington executed to Rice three notes for $640 each, payable in future installments, and Rice executed to Washington his bond, by which he bound himself to Washington to convey to him the land purchased upon the payment of the notes so executed.

The first note was paid, the other two were sued upon and judgment taken for the balance of the purchase money. Executions were issued upon the judgments, made returnable to the 12th of March, 1867.

These executions were levied upon part of the land contracted to Washington, were advertised to be sold on the 11th of March,, but no sale was made until the 13th, the day after the executions were made returnable, at which time they were bid off to defendant Wilburn for the sum of $12.

It further appears that, before that time, Washington’s credit- or’s obtained judgment against him, upon which executions were issued, and were levied upon the same lands, and, on the 11th of March, two days before the sale under Rice’s execution, were sold to Fanaley, who conveyed them to defendant Wilburn.

Washington is dead; his widow and heirs and Wilburn are made defendants.

Plaintiffs by their bill seek to subject the land to the payment of their debt, and claim a specific lien upon it for that purpose.

Defendant Wilburn claimed the land purchased by him at execution sale as his absolute property, free from the encumbrance of the vendor’s lien. The court-below sustained his claim, refused to subject the land to sale, but decreed in favor of plaintiff as to all of the land contracted to Washington and not sold at execution sale.

From so much of the decree as held the plaintiff’s lien discharged on the land sold under execution, plaintiffs appealed to-this court.

The question of law presented is, did the sale of the mortgaged property, made by Rice to satisfy the debts contracted for the purchase of the land, and upon which a specific lien, equivalent to a mortgage lien, was reserved, discharge his lien upon the property sold ? Was it an absolute sale of the property itself, or only of Washington’s equity of redemption ? Upon this point there is some conflict of decisions.

In the ease of Fordick v. Risk, 15 Ohio, 84, it was held, that where the mortgagee causes the land mortgaged to be sold under execution, the purchaser takes an indefeasible title, though the price paid is not sufficient to pay the debt; and such also is the decision of the Supreme Court of Pennsylvania in Pierce v. Potter, 7 Watts, 475.

But several of the other State courts hold differently, and, as we think, upon more equitable grounds. In Deane v. Carr 2 Green’s Ch. Rep., 513, it is held, that when a mortgagee recovers judgment on the mortgage debt, upon sale of the mortgaged property the debt and the lien are only extinquished to the amount bid and paid.

Jackson v. Hull, 10 Johns., 481, is a case directly in point. The Supreme Court say: “ In this case the creditor sues on the bond and obtains judgment and execution, and the execution strictly reaches only the remaining interest of the mortgagor in the land. It reaches the equity of redemption. That is all that was sold in the present case, and was all that the defendant meant to purchase; for, at the time of the purchase, he knew of the existence of the mortgage. * * * The sale was only for the residuum, of interest remaining in the mortgagee after the execution of his mortgage. The mortgagee’s interest is no further touched by the sale than the purchase money of the equity of redemption may go to diminish the amount of the debt.” The Supreme Court of Mississippi, and of several of the other States, have given their assent to this view of the case, and it is one which we think more fully applies in the case under consideration than in ordinary mortgages. Ordinarily, the mortgagor, until foreclosure, as to third persons, remains the owner of the land. In the case before us there was strictly no sale, but a contract to sell and convey by deed upon the payment of the purchase money. The legal title all the while remained in Rice, and, never having been parted with, as well remarked by Chief Justice Watkins, in the case of Moore & Cail v. Irwin & Anders, 14 Ark., 634, “ It makes no difference whether the bond for title be recorded or not. If recorded, it becomes notice; if not on record, that circumstance would, of itself, be sufficient to put any subsequent purchaser or encumbrancer upon inquiry.”

Many of the States, as well as our own, have statutes which authorize the levy and sale of equitable estate. Such, most strictly, was the estate held by Washington; he had an equitable right under his contract to the land upon the payment of the money. If this right is raised to that of mortgagor and mortgagee the result is the same. Place Washington in the attitude of mortgagor, executing a mortgage to Eice to secure the payment of the purchase money, as was held to be the legal effect of such contracts in Smith v. Robinson, 13 Ark., 534, and still the right of the mortgagor (Washington) was liable to bé taken in execution. The levy is made, not strictly upon the lands, but upon the equity of redemption, it was this alone that Wilburn purchased. The legal presumption is, that he only purchased or intended to purchase such interest as the defendant in execution had. Such was the decision of this court in Hanger & Moody v. State, 27 Ark., 673.

But we find that, in this case, on- the 9th of April, 1861, judgment was rendered in'the Circuit Court of the United States for the Eastern District of Arkansas, against Washington, upon which execution was issued, and by the marshal of the district, levied on the lands in controversy on the 5th of January, 1867, and thereafter, on the 4th day of March, 1867, sold to Fanaley, and by him to defendant Wilburn, who, three days after this sale, bid for and bought the same land under an execution in favor of Eice for the price of twelve dollars. Conceding the sale of the lltli of March to be valid (and we are not collaterally permitted to question its validity), then whatever estate, whether legal or equitable, which Washington held, passed with it, but, of course, subject to the prior lien of Eice for the purchase money, and, consequently, at the sale made on the 13th March, under Rice’s judgment, there was nothing left to be sold belonging to Washington. Hilliard, in his work on mortgages, page. 66, says: While a mortgagor is considered as owner against all but the mortgagee, a debtor, after such levy, has not strictly any estate or interest in the land. He is not a freeholder; he has only a possibility or right to an estate on the payment of a certain sum of money. The law presumes that he has received the full value of his estate, and the right of redemption still reserved to him is a mere personal privilege to keep his own land if he does not wish to part with it at its full value.”

Looking beyond this to the sale made under Rice’s execution, after the return day of the execution, and without intending to express any opinion with regard to sales of personal property which remain in custody of the sheriff after the return day (in support of the validity of which there are some adjudicated cases), we very much question the validity of the sale of real estate after the return day of the writ, and without a writ of venditioni exponas directing the sale of the property.

Without extending our inquiry, upon the present occasion, as to thé validity of a sale of real estate made after the return day of the execution, and without a ven ex. for that purpose, we feel satisfied, upon principles of equity and upon the authority of the decisions to which we have referred, in holding that when the payment of a debt is secured by a mortgage lien on property, or by an express reservation in the contract of sale, and judgment at law is rendered upon the debt so secured, the equity of redemption, being all the interest that remains in the mortgagor, may be be levied upon and sold in satisfaction of the debt, without discharging the lien thus reserved by contract.

It is the equitable right of redemption, not the land, which is sold, for that is the only interest in the mortgagor, and, as a consequence, all that the purchaser buys.

Whether the purchaser, by the payment of the entire mortgage debt, thus discharging the lien, may be subrogated to all of the rights of the mortgagor, or whether the mortgagor may not, after sale of the property, by discharging the mortgage debt and paying to the purchaser the money bid on the land, place himself in position to assert his equitable rights, are questions not now before us for consideration.

Let the decree of the court below be reversed and set aside and the cause remanded, with instructions to render a decree in favor of plaintiffs, in accordance with the prayer of their bill.


author:
Harrison, J.:
      Harrison, J.:

text:
    W. E. & C. L. Moore vs. Trieber and Wife.
    1. Construction: Articles of partnership.

    Under articles of partnership which stipulated that tne cash receipts, after deducting one half the profits, are to be paid to one partner, and that the other partners are, at the expiration of the partnership, to take their proportion of the outstanding claims as part of the profits, th'e latter are not required to take the whole of their profits out of the claims. The last clause of the stipulation relates to such part of the profits as the claims represent.
    2. Partnership: Course of dealing in.

    Where a particular course of dealing is established between partners without objection, their assent thereto will be presumed, and they will be bound by it.
    APPEAL from Phillips Circuit Court in Chancery.
    Hon. W. H. H. Clayton, Circuit Judge.

      Tappctn, Horner and A. H. Garland, for the Moores.

      Rose, for Trieber and wife.
   Harrison, J.:

The plaintiffs, David Trieber and his wife Carrie Trieber, entered into a written contract with the defendants, W. E. & C. L. Moore, grocery merchants, in the city of Helena, for the said Carrie Trieber, who had a separate estate, to furnish the defendants, with a stock of dry goods, to sell in their store on her and their joint account, and of which they were to have the entire control — the profits from the sale, after the payment of certain expenses, to be equally divided between her and them.

The contract was originally entered into in 1869, and continued from year to year. The last written contract was for continuation of the business from 1st April, 1871, for one year, which was renewed by verbal agreement, on the same terms, from 1st April, -1872, to 1st April, 1873. The important facts of said agreement are as follows:

“ The profits. arising from the sale of said goods are to be equally divided between the said Carrie Trieber and the said W. E. & C. L. Moore, and all losses from bad debts are to be mutually borne by the parties hereto.

The cash receipts, after deducting one half of the profits, are to be paid over as she may need them to the said David Trieber as agent of the said Carrie Trieber, * * * and it is further agreed that if this agreement is not renewed at its expiration, then W. E. & C. L. Moore are to take their proportion of the outstanding claims as part of the profits.”

A special set of books was kept for the dry goods business, which was kept distinct from the grocery business, and settlements between the parties were made at the end” of each year.

It was the .habit of defendants, in the course of business, when payments were made on accounts by customers to whom they had made cash advances and sold groceries, as well as dry goods, on credit, to apply them, first to the account for cash advances, then to the account for groceries, and only such remainder as might be to the account for dry goods.

The parties- not being able to come to a satisfactory settlement, Trieber and wife brought this suit for an account.

They claim that the payments first mentioned should have been apportioned between the accounts for cash advances, groceries and dry goods, according to their respective amounts; and that, under their construction of the contract, the defendants, for their share of the profits, should take the outstanding claims.

The defendants, on their part, claim that the payments were rightly appropriated, according to the usual custom of merchants in the same kind of business, and that such had been, their habit during the whole course of the business between themselves and the plaintiffs, and such appropriations had always been assented to by them without objection.

As shown by the pleadings and evidence, the sales amounted to $47,929.14; the cash received, according to the books, to $30,886.31, and the pro rata of the payments applied exclusively to the cash advances and the grocery accounts to $4,865; the profits, if all debts should be collected, to $15,055.51, and there had been paid over to Mrs. Trieber $28,111.10.

Upon the hearing the court held that the pro rata, the said sum of $4,865 of the said payments, ought to have been applied to the dry goods account, and also that the defendants should take their profits in the outstanding claims; and, in accordance with such holding, decreed that the defendants should pay Mrs. Trieber $6,202.67, and the claims, when collected should be. equally divided between her and them.

The defendants appealed.

There are only two questions to be decided in the case. The first arises upon the construction of the contract — whether the defendants were to take their part of the profits in the outstanding claims, or, in other words, to pay over to Mrs. Trieber the cash receipts without deducting their part of the profits ?

The contract clearly admits of no such construction. It expressly says, The cash receipts, after deducting one half of the profits, are to be paid over as she (Mrs. Trieber) may need them,” etc.

The stipulation for their taking outstanding claims relates to their profits in the outstanding claims or debts at the close of the business. Its language, in connection with that we have just quoted is very plain. And it is further agreed that if this agreement is not renewed at its expiration, then W. E. & C. L. Moore are to take their proportion of the outstanding claims as part of the profits.”

The other question is, whether, on payment on general accounts, the defendants had a right to apply them, first, to the account for cash advances, then to the account for groceries, and lastly, to the account for dry goods.

The defendants attempted to prove a custom among merchants dealing, as they did, in both dry goods and groceries and making advances of cash to their customers, for such appropriation, but the evidence was conflicting and inconclusive. But they proved that such had been their practice during the whole time they and the plaintiffs had been doing business together, and without objection by them. Their assent, therefore, to such appropriation may be presumed, and they should not now be heard to complain.

For greater certainty we have referred the matter to the clerk of this court, as a special master, to take and state the accounts between the parties, in accordance with the conclusions above declared, and he has presented the following, which we find to be correct, and adopt:

Amount of cash sales..........;.............. $30,886 91

Amount of credit sales........................ 17,042 23

Whole amount of sales, $47,929 14

Profit on cash sales.............................$ 9,370 70

Profits on credit sales.......................... 5,684 81

Whole profits.......... $15,055 51

Credit sales as above $17,042 23

Profit on credit sales 5,684 81

Cost on credit sales............................. $11,357 42 W. E. & C. L. Moore,

To Carrie Trieber, Cr. Dr.

To cash collected as above..................... $30,886 91

By amount paid Mrs. Trieber...............$28,111 10

Bv half profit on cash sales.................. 4,685 35 ---$32,796 45

Overpaid Mrs. Trieber........................ $ 1,909 54

It will be seen from this statement that there remains $11,-357.42, cost of credit sales, which the defendants should account to Mrs. Trieber for, less.so much as may be lost without fault-on their part; and, if there be any loss, for one half of such loss, and, if all be collected, for one half of the 'profit thereon; and, further, that instead of being entitled to a decree for $6,207.67, Mrs. Trieber has been overpaid on account of cash receipts $1,909.54.

For the errors thus shown the decree of the court below must-be reversed, and, as the assets have been placed in the hands of a receiver, with directions to proceed in the collection of the same, which order has not been appealed from, and it is probable that a considerable portion, if not the whole of the debts, have now been collected, the cause'is remanded to it, with instructions to proceed therein, and to a final decree according to .law and as indicated in this opinion.

Decree reversed.

The appellees filed a petition for reconsideration, which was overruled. The point relied on in the motion for reconsideration will appear in the opinion overruling the same, delivered by

Harrison, J.:

We have carefully considered the motion, filed at a former day of the term, for a rehearing in this case.

The objection urged by the appelles against the opinion we have delivered is, that the appellants were allowed, in the account stated by the special master in chancery of the court, and approved by us, a credit for $3,600, the due bill' for that amount dated April 3d, 1872, and which reads thus:

“Received, Helena, April 3d, 1872, of W. E. & C. L. Moore a full settlement of all transactions for the past year, ending March 31st, 1872; and there is due W. E. & C. L. Moore the sum of thirty-six hundred dollars, being their interest in the outstanding debts; also they to have one half the profits of the amounts to be collected. David Trieber, Agt.
“ for C. Trieber.”

It is contended by the appellees that' this sum was to be paid out of uncollected debts in the hands of the appellants, but there is no allegation in the complaint, or proof that there were any such outstanding debts in their hands. The instrument, we think, does not admit of such a construction. It acknowledges that there had been a full settlement of the whole business of the previous year, and that, upon such settlement, there was found due the appellants $3,600. The construction placed upon it by the appellees would contradict this plain and direct admission of the settlement, as well as of the amount found due.

The meaning of the instrument is not entirely plain to us, but we think, in view of the peculiar business of the parties and the other facts in the case, that, upon the settlement, the appellants turned over to the appellees a portion of the credits of the concern (the appellees’ interest in them being the first cost and one half the profits), which were regarded as perfectly good, which they took as equivalent to cash, and agreed to pay appellants’ share of the profits in them.

The instrument must be supposed to have been well understood by the parties. The $3,600 were claimed by the appellees in their answer as a credit on the business of 1872,. and in the account made out by them. It was'allowed in the account made out by the receiver in the court below, and no exception to it was filed by appellees; and it was proven by the witness Moore, who was the book-keeper, in his answer to the 19th interrogatory by the appellants, which was:

“In the settlement made in April, 1872, between plaintiffs and defendants, were there any balances due from one to the other? If so, what were the balances upon the cash and credit sales, and how were they settled and from whom were they due?” He said: “ There was a balance due; there was "$3,600; this amount was due from cash sales from the plaintiffs to the defendants, and a due bill executed by the plaintiffs to the defendants and in his cross-examination no attempt was made to explain the matter, or show that the instrument had a meaning different from that he gave it, and it was in no way contradicted.

If the appellants were not entitled to this credit we are unable to conceive why no objection was made to it in the court below, when it was distinctly claimed in the appellants’ answer, and proof given by them to establish it, or why no proof was offered that there were outstanding debts in the bands of the appellants from which it was to be paid, and no exception to its allowance.

The motion for a rehearing is overruled.


author: Harrison, J.:

text:
    Little Rock and Fort Smith R. R. Co. vs. Howell.
    1. Statute: Construction of.

    In construing a statute the meaning must be gathered from the whole act; and such-a construction given to its several provisions as will render them consistent, and give effect to each.

      2. --: Mights of" settlers on railroad lands. ■

    By act of November 26th, 1856, the Legislature granted to the Little Rock and Fort Smith Railroad Company the lands donated by Congress to the State to aid in thé.construction of the Cairo and Fulton Railroad and its branches, which were adjacent to tl^e route of the former road, subject to all the provisions, restrictions, limitations and rights created by the act, so far as the same were applicable. The act also granted to the Cairo and Fulton Railroad Company1 all of the aforesaid lands adjacent thereto. The second, section provided that occupants by residence and cultivation of any of the lands comprised in the grant made by Congress might purchase of -the Cairo and Fulton Railroad Company the legal subdivision containing his residence and improvement, not exceeding one quarter section, at two dollars and a half per acre, by complying withtother provisions of the act. Both companies having failed to comply with certain conditions of the act, the Legislature, on the 1st of February, 1859, passed an act releasing them from the condition, and, in the third section, provided that actual residents and cultivators on the 1st of November, 1858, might purchase of the Cairo and Fulton Railroad Company, as provided in the former act: Held, that although the Little Rock and Fort Smith Railroad Company was not named in the second section of the first, nor the third section of the last act, it was within the provisions of said sections. * •
    3. Trust: Legislative control over land held in trust by the State-

    The fact that the land was donated to the State by Congress upon trust to aid in the construction of the roads, did not impair the Legislative control over it. It was the sole judge of the measures appropriate to effect the object of the grant, and to enable the State to discharge the trust reposed in it by Congress.
    APPEAL from Conway Circuit Coui;t in Chancery.
    Hon. W. N. May, Circuit Judge. •

      Garland, for appellant.

      Olarh & Williams, for appellee.
   Harrison, J.:

The plaintiff, George "W. Howell, resided on and cultivated, ©n the 1st day of November, 1858, and until the commencement of this suit, the north fractional part and the. south fractional part of the southwest quarter' of section six, in township five, north of range fifteen west, containing 126.54 acres in Conway county, part of that portion of the lands granted by Congress to the State of Arkansas to aid in the construction of the Cairo and Fulton Railroad and its branches, transferred and granted by the State to the Little Rock and Fort Smith Railroad Company in aid of the construction of its road, and having filed in the Auditor’s office the requisite proof of such residence and • cultivation, after the title of the company had become indefeasible, and it could sell and dispose of the lands, he applied to purchase the tract, offering the price, two dollars and fifty cents per acre, fixed by the Legislature.

The company refusing to sell to him at that price, he brought this suit against it to compel the sale.

Upon demurrer to the complaint, the sale of the tract, at the price so fixed and offered by the plaintiff, was decreed by the court, and the defendant appealed.

The lands along the Fort Smith branch of the Cairo and Fulton Railroad weré first granted by the General Assembly, by the act of January 19th, 1855, entitled, “An act fixing the line of the Little Rock and Fort Smith branch of the Cairo and Fulton Railroad, and granting the lands donated.by Congress to the State in aid thereof,” to a company of the same name as that of the- defendant, that had been formed under the general incorporation act of 1851, which failed to accept the grant and comply with its conditions. ,

The grant to the defendant was by the act of .November 26th, 1856, entitled, “An act to amend an act to aid in the construction of the Cairo and Fulton Railroad,” approved January 16th, 1855, the first section of which is as.follows:

“ Section 1. Be it enacted by the General Assembly of the State of Arkansas, That all the lands granted, or intended to be granted, to the State of Arkansas by virtue of the provisions of the act of Congress aforesaid, approved February ■ 9th, 1853, ■which lie along and adjacent to the route of the said Cairo- and Fulton Railroad, from the south boundary of Missouri to the boundary line of Texas, as surveyed, located and established by said company, and approved and confirmed by the act of the General Assembly of the State of Arkansas aforesaid, approved January 16th, 1855, and re-affirmed and established by this act, including all such lands as have been or shall be selected under and by virtue of the provisions contained in said act of Congress, in lieu of such lands as have been sold or may have been otherwise appropriated by the United States, with all the rights conferred by said act of Congress, be and the same are hereby granted, conveyed and confirmed unto the said Cairo and Fulton Railroad Company, as organized under and by virtue of the provisions of the act aforesaid of January 12th 1853, (which act is referred to in the preamble) subject to all the conditions, limitations and restrictions contained in the act of Congress aforesaid, and in the act of Congress entitled, ‘ An act for the relief of settlers on lands reserved for railroad purposes/ approved March 27th, 1854; Provided, That all costs and charges incident to the selection, listing, control and sale of said lands shall be paid by said company, and no part thereof by said State of Arkansas; Provided, further, That the lands granted or intended to be granted to the State of Arkansas by virtue of the provisions of the act of Congress' aforesaid, approved February 9th, 1853, which lie along and adjacent to the route of the Little Rock and Fort Smith branch of said Cairo and Fulton Railroad be and the sa<me are hereby granted to the Little Rock and Fort Smith Company, according to the provisions of this act, with the restrictions and limitations and rights created by this act, and no other, so far as the same are applicable to said Little Rock and Fort Smith Railroad.”

By the second section it was enacted that Every person who, on the 9th day of February, 1853, occupied, by residence and cultivation thereon, any tract of land comprised in the grant made by virtue of and under the provisions of such act of Congress of February 9th, 1853, may purchase from said Cairo and Fulton Railroad Company, at two dollars and fifty cents per acre, the legal subdivisions of such land as shall include his residence and actual improvements, not to exceed one quarter section, by complying with the following conditions ” — and sections three and four are as follows :

Section 3. Such claimant shall, within three months after said lands are selected and confirmed to said company, and a list or plat thereof filed in the recorder’s office in the county in which such lands may lie, file with the Auditor of State his own affidavit, accompanied by the affidavit of two disinterested freeholders of his county, describing the land claimed by legal subdivisions, proving the fact of such occupancy, residence and cultivation upon such legal subdivision with a view to actual cultivation and settlement,Before the day above specified, said company may, by giving reasonable notice to such claimant, appear before the Auditor and controvert the facts set forth in such affidavit, and the Auditor may swear witnesses, hear proof, and, for cause shown, set aside any such claim; Provided, That no such claim shall be set aside for misdescrijition, or error in form only, founded on mistake, but on affidavit showing such mistake, reasonable time may be given for the filing of corrected proof.
“ Sec. 4. Said claimant shall, after three months, or as soon thereafter as said company shall be in a condition to make title, pay to said company the consideration for said land, as herein-before provided, whereupon he shall be entitled to receive from said company a deed for the same, but, in case of failure to file said proof or pay said consideration money within the respective times specified, the right to make such purchase shall cease.”

And sections six and seven are as follows :

“ Section 6. Said Cairo and Fulton Railroad Company shall, within two years from the passage of this act, either grade twenty-five miles or complete ten miles of said road, at the option of said company.
“Sec. 7. This act shall be deemed a public act, and shall be favorably construed and declared for all purposes therein expressed in all courts and places whatever, and be in force whenever said company shall file with the Governor of this State' its bond, to be approved by the Governor, conditioned for the faithful performance of all the trusts and requirements in this act expressed and contained.”

Neither the Cairo and Fulton Railroad Company, nor the defendant, either graded the twenty-five miles or completed the ten miles of its road within the two years, and the General Assembly, on the 1st of February, 1859, passed the following act, entitled, “An act concerning the Cairo and Fulton Railroad and its two branches.”

“Section 1. Be it enacted by the General Assembly of the State of Arkansas, That section six of an act to amend An act to aid in the construction of the Cairo and Fulton Railroad/ approved January 16th, 1855, approved 26th November, 1856, be and the same is hereby repealed, and the Cairo and Fulton Railroad Company, and the companies of the Little Rock and Fort Smith branches of the Cairo and Fulton Railroad, be and they are hereby released from that part and condition of their respective bonds to the State, by which they were required to comply with the said section six of the said act of 26th November, 1856, and the said bonds shall be and remain good and valid in all other respects, and all the objects intended to be obtained by the execution of the said bonds by the presidents of the respective companies, shall be as fully and effectively accomplished from and after the passage of this act, as if the said section six had never constituted a part of said act of 26th November, 1856, and as fully as if each of said companies had complied with the said section of the said act.

“ Sec. 2. That the Memphis and Little Rock Railroad Company, having completed the first division of railroad, in accordance with the requirements of law, that company is hereby released from all restrictions in reference to the time of the completion thereof, except such as are imposed in the act of Congress.

' Sec. 3. That every person who, on the 1st day of November, 1858, resided on or cultivated any improvement on any of the land comprised in the grant made by virtue of the act of Congress, approved February 9th, 1853, may purchase from the said Cairo and Fulton Railroad, at two dollars and fifty cents per acre, one hundred and sixty acres, which may include the actual residence, or the farm of such person, as he or she chooses to elect, by complying with the conditións prescribed by the last General Assembly of this State, entitled, ‘ An act to amend an act to aid in the construction of the Cairo and Fulton Railroad/ approved January 16th, 1855, which was approved November 25th, 1856. And prqvided further, That until such default mentioned in said act, the owners of such improvement shall be entitled to use and occupy the same free of rent or charges.

({ Q-gQ -f* * 'I' 'I'

Although the defendant, the Little Rock and Fort Smith Railroad Company, is not named in the third section of1 the above act, nor in the second section of that of 26th November, 1856, yet, as the intent and meaning must be gathered from the whole act, and such construction given to its several parts or1 provisions as will make them consistent with each other, and SO' that all shall have an operation and effect, we find no difficulty in arriving at the conclusion that the settlers upon the lands granted to that company have the same right to purchase their improvements that those on the lands of the Cairo and Fulton Railroad Company have. The last mentioned act declares that “every person who, on the 1st day of November, 1858, resided on or cultivated any improvement on any of the land comprised in the grant made by Congress may purchase,” etc. True it says “ may purchase from the Cairo and Fulton Railroad Company,” but that company owned only that portion of the grant along the line of its road, and could not sell any part of the lands belonging to the Little Rock and Fort Smith Company. The grant to the defendant was with the same restrictions, limitations and rights as that to the Cairo and Fulton Railroad Company. It is, in other words, “ provided further, that the lands granted, or intended to be granted, to the State of Arkansas by virtue of the provisions of the act of Congress aforesaid, approved February 9th, 1853, which lie along and adjacent to the route of the Little Rock and Fort Smith brauch of said Cairo and Fulton Railroad, be and the same are hereby granted to the Little Rock and Fort Smith Company, according to the provisions of the act, with the same restrictions and limitations and rights created by this act and no other, so far as the same are applicable to said Little Rock and Fort Smith Railroad.” "

The Cairo and Fulton Railroad Company could demand from occupants, who had complied with the law, for their improvements no more than two dollars and fifty cents per acre, and the defendant’s right, in the disposal of its lands was to the same extent restricted.

The same right to occupants was reserved in the grant to the Memphis and Little Rock Railroad Company, and it was the manifest intention and policy of the Legislature to protect the settlers on every part of the grant by Congress, and enable them to secure and save their improvements by purchase at a reasonable price.

The object and effect of the third section of the act of 1st February, 1859, which confirmed the grants to the companies after their failure in the performance of the conditions upon which they were made, was to extend the privilege of purchasing their improvements to settlers who were such on the 1st day of November, 1858.

Construing the section as we have done, effect is given to every part or clause, and the whole act is consistent and harmonious, whereas a literal construction would involve the inconsistency and contradiction we have pointed out. Sedg. Stat. and Con. Law; 199.

But it is contended for the appellant that, as the grant by Congress was for the sole- purpose of aiding in the construction of the Cairo and Fulton road and its branches, the General Assembly could not require the appellant to sell any part of its lands to particular persons and at a limited or fixed price. Had the grant by Congress been made to the companies to which the lands have been transferred, this objection would be pertinent and forcible ; but as it was to the State, they necessarily became subject to the control and disposition of the Legislature, which, in the exercise of its discretion in the execution of the trust, could have created other companies and granted the lands to them, no obligation, certainly, was incurred by the State, in accepting the grant, to transfer them to the companies it did, nor, perhaps, to any other. The Legislature was the sole judge of the measures appropriate or expedient to effect the end intended by the grant, and to enable the State to discharge the trust reposed in it by Congress.

The provision conferring on occupants the right to purchase one hundred and sixty acres, including their improvements, at two dollars and fifty cents, per acre, was a just and reasonable one, the price so fixed being twice that at which the Government offered them previous to the grant to the State, and the appellant, accepting the grant upon the terms and conditions imposed, must be held to abide by and perform them.

The decree of the court below is affirmed;


text:
    Trieber vs. Commercial Bank of St. Louis.
    1. Promissory Note : Rights of endorsee before maturity, without notice, etc. A promissory note was executed on Sunday, but bore date the following
    day, and was endorsed before maturity, for value; Held, that the endorsee was not affected by the original invalidity of the instrument.
    2. Assignment: Presumption as to date, under the statute, overcome by evidence.

    The statue provision that blank assignments shall be taken as of a date most to the advantage of.the defendant, only applies in the absence of evidence as to the date of the assignment.
    APPEAL from Phillips Circuit Court.
    Hon. J. N. Cypert, Circuit Judge.

      Palmer, for appellant. •

      Plornor, for appellee.
   English, Ch. J.:

This case was determined in the Circuit Court of Phillips County, on appeal from the judgment of a justice of the peace.

The suit was brought by the Commercial Bank of St. Louis against David Trieber, as acceptor of a bill drawn by D. White upon him in favor of N. Hof hiemer & Co., and by them endorsed in blank. The bill was dated 24th November, 1873, payable three months after date, accepted by Trieber and protested at maturity for non-payment.

The defense of Trieber was that the bill was drawn and accepted on Sunday.

In the Circuit Court the cause was submitted to the court sitting as a jury, and the court found the facts to be, that the bill was executed on Sunday, though dated on Monday, 24th November; that it was, by the endorsement, of the payees, transferred and delivered to the plaintiff, before maturity, for a valuable consideration, and that it had no notice of any defect in the bill.

The court declared the law to be—

First — That the right of a holder of negotiable paper, acquired before due, for a valuable consideration, to recover against the acceptor is not affected by the acts of a prior party in the absence of actual notice, without proof of bad faith on the part of the holder.
“Second — A bona fide holder of a negotiable instrument for a valuable consideration, without notice of facts which impeach its validity between the original parties, if he takes it under an endorsement made before the same becomes due, holds the title unaffected by these facts, and may recover thereon, although, as between the antecedent parties, the transaction may be without any legal validity.”

Finding and judgment for plaintiff, motion for newr trial overruled, bill of exceptions and appeal to this court by Trieber.

First — The counsel for appellant makes no objection in his brief to the declarations of law made by the court below, and, upon the facts as found by the court, they are, no doubt substantially correct. The bill was fair on its face, bearing date on a work day, and the appellee, having taken it before maturity, without notice that it was executed on Sunday, it was valid in his hands. Edwards on Bills, p. 312, niarg.; Nelson v. Cowing, 20 Wend., 336; Gantt’s Digest, sec. 566; (Hendenin v. Sutherland, ante.

Seeond — But it is insisted for appellant that the payees of the bill, having endorsed it in blank, the endorsement must be taken to have been made on such day as will be most to the advantage of appellant, and that the court erred in finding contrary to this legal presumption, citing Gantt’s Digest, sec. 570, and Ruddell, ex’r, v. Sanders, 25 Ark., 239.

In Clendenin v. Sutherland, ante., the section of the Digest that “ All blank assignments shall be taken to have been made on such day as shall be most to the advantage of the defendant/’ was construed.

The court held that “the statute merely changed a former rule of presumption, which was, that law, in the absence of any evidence on the subject, presumes a transfer to have been made before the bill or note was due; that the meaning of the statute manifestly is, that in the absence of evidence-to prove when the blank assignment was, in fact, made, the presumption must be that it was made on such day as shall be most to the advantage of the defendant.”

In this case the court found the fact to be that the bill was endorsed and delivered to appellee before maturity, and this finding, from the evidence, overcomes the statutory presumption.

The bill was endorsed in blank by the payees, and by the cashier of the bank (appellee), endorsed to Nelson & Hanks for collection on account of the bank, who held it at maturity, and in whose ñames it was presented for payment and protested for non-payment, as shown by the notarial certificate.

The judgment of the court below must be affirmed.