93 S.W.2d 319 | Ark. | 1936
The appellant in this case sued J. W. Scott and Mary Scott, his wife, in a foreclosure suit, and under a decree in said suit sold the mortgaged property. There was a deficiency judgment or, at least, an unpaid judgment for several hundred dollars. An execution issued on November 26, 1934, and was levied upon certain lands belonging to J. W. Scott. They were advertised for sale on December 29, 1934.
The appellant had only a judgment lien upon these lands. Its mortgage lien covered other property.
The lands seized under this execution had been mortgaged or conveyed by deed of trust to E. P. J. Garrett since December 8, 1922. The mortgagor had made partial *600 payments so that the debt was not barred by limitations. No marginal notations had been made upon the mortgage record showing these payments or any extension of time of payment, and according to the record the debt was apparently barred.
The appellee filed suit to foreclose his deed of trust pleading the note showing the partial payments thereon, and alleging his lien to be prior and paramount to the claim of appellant under the execution sale on December 29, 1934, wherein the execution creditor purchased the west half of the northwest quarter of section 17, township 12 north, range 5 west in Independence County, the same tract of land conveyed to appellee in the deed of trust.
Appellant's answer specifically invoked the protection of 7382 and 7408, Crawford Moses' Digest.
There is no controversy about the respective debts or payments. The only matter for settlement by us is to determine the correct answer to the query: Is the purchaser at the execution sale, under the conditions here shown, a "third party" within the purview of above-mentioned statutes, and as such possessed of equities superior to those of the mortgagee?
In one of the earlier cases this court said: "The effect of that statute, as to strangers to the transaction, is that when the debt secured by a mortgage is apparently barred by limitation, and no payment which would stay the limitation is indorsed on the margin of the record of the mortgage, it becomes, as to such third parties, an unrecorded mortgage; and like an unrecorded mortgage it constitutes no lien upon the mortgaged property, as against such third party, notwithstanding he has actual knowledge of the execution of such mortgage. * * *
"But an unrecorded mortgage is still good and binding between the parties. It constitutes a valid lien on the property, except as to the legal rights of third parties. * * *." Morgan v. Kendrick,
Another case upon which appellant relies is that of McKinley v. Black,
Later, however, in the case of First National Bank v. Meriwether Sand Gravel Co., Inc.,
This same problem was presented again in the case of Carroll v. Evans,
In the case of Carroll v. Evans, supra, we again approved and quoted from First National Bank v. Meriwether Sand Gravel Co., supra, the above repeated extract from that case. In addition thereto we said, quoting from McGuigan v. Rix,
We also cited and quoted with approval upon the same matter from Howes v. King,
It now seems patent from a reconsideration of these cases cited and argued by the respective parties in this suit there is conflict in our announcements. We believe it proper upon this re-examination to use whatever means may be necessary to clarify our views rather than to attempt to reconcile them.
When the Legislature passed 7382 and 7408. Crawford Moses' Digest, the purpose was not creative of new rights, but the intention was to protect third parties as prospective purchasers. Purchasers of real property, in the absence of actual knowledge, look to the records of titles. These are outgrowths of the laws of registration.
Proper marginal notations of extensions of time of payment or of partial payments furnish constructive notice to the world of the continued existence of the debt, and of the security held for its payment.
Since the giving of notice to these "third parties," prospective purchasers, was the prime motive, if not the only one, for the passage of these statutes, it would be inconsistent to hold that by reason of them those who were, prior to the passage of these acts, required to take notice of other's rights need not do so now.
Perhaps there is no better known principle than the application of the rule of caveat emptor and particularly to a creditor purchasing at his own execution sale. Unless we hold that the two sections of the statutes under discussion destroy the rule of caveat emptor, as applied to execution sales, we must say that the opinion in McKinley v. Black,
Ordinarily, notice whether constructive or actual, or purely legal, as under the rule of caveat emptor, will protect prospective purchasers, and the statutes may not be regarded as the exclusive method whereby notice may he had Wasson v. Beekman,
In the last-cited case there were no marginal notations showing credits or extension of time of payment, although the lien of the mortgage was apparently barred. Notice of lis pendens filed with the foreclosure suit and passion by the plaintiff through a tenant was held to be sufficient.
So in the case under consideration the appellant as an execution creditor purchaser had notice, or at least bought under the rule of caveat emptor, and was not, therefore, a protected third party. Moreover, two days before the purchase the appellant had written notice, or actual notice, of appellee's rights, and no doubt in bidding for the property took full cognizance thereof.
The decree of the chancery court was correct.
Affirmed.