{ "id": 1614198, "name": "Fears v. Futrell", "name_abbreviation": "Fears v. Futrell", "decision_date": "1949-11-21", "docket_number": "4-8998", "first_page": "122", "last_page": "127", "citations": [ { "type": "official", "cite": "216 Ark. 122" }, { "type": "parallel", "cite": "224 S.W.2d 362" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "215 S. W. 611", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "140 Ark. 418", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1594383 ], "opinion_index": 0, "case_paths": [ "/ark/140/0418-01" ] }, { "cite": "212 Ark. 163", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1470160 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/212/0163-01" ] }, { "cite": "93 S. W. 2d 319", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "192 Ark. 599", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1414887 ], "opinion_index": 0, "case_paths": [ "/ark/192/0599-01" ] }, { "cite": "79 S. W. 2d 425", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "190 Ark. 511", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1421856 ], "opinion_index": 0, "case_paths": [ "/ark/190/0511-01" ] }, { "cite": "134 S. W. 1195", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "97 Ark. 534", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1318868 ], "opinion_index": 0, "case_paths": [ "/ark/97/0534-01" ] }, { "cite": "14 Am. St. Rep. 57", "category": "reporters:state", "reporter": "Am. St. Rep.", "opinion_index": 0 }, { "cite": "4 L. R. A. 247", "category": "reporters:federal", "reporter": "L.R.A.", "opinion_index": 0 }, { "cite": "11 S. W. 684", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "51 Ark. 433", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8723786 ], "opinion_index": 0, "case_paths": [ "/ark/51/0433-01" ] }, { "cite": "192 S. W. 883", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "127 Ark. 511", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1550288 ], "opinion_index": 0, "case_paths": [ "/ark/127/0511-01" ] }, { "cite": "21 S. W. 2d 162", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "180 Ark. 238", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1393534 ], "opinion_index": 0, "case_paths": [ "/ark/180/0238-01" ] }, { "cite": "33 Ark. 328", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8723880 ], "opinion_index": 0, "case_paths": [ "/ark/33/0328-01" ] }, { "cite": "167 S. W. 706", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "113 Ark. 100", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1537553 ], "opinion_index": 0, "case_paths": [ "/ark/113/0100-01" ] } ], "analysis": { "cardinality": 508, "char_count": 9642, "ocr_confidence": 0.514, "pagerank": { "raw": 5.80887621159229e-08, "percentile": 0.3617087328257362 }, "sha256": "3b730649f49346639cf00962627b95f8e2a312f0c80ad7508e269f0723a7fe69", "simhash": "1:2b47667fb71840ce", "word_count": 1667 }, "last_updated": "2023-07-14T19:41:58.287119+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Fears v. Futrell." ], "opinions": [ { "text": "Ed. F. McFaddin, Justice.\nThe question for decision \u2022is whether the chancery court was correct in holding that appellee\u2019s rights as a mortgage creditor are superior to appellant\u2019s rights as a judgment creditor.\nOn August 15, 1946, appellant, Fears, obtained judgment against E. E. Coleman in the Chancery Court of Greene county for an amount in excess of $10,000. The lands here involved are in Lawrence county; and a certified copy of the Greene county judgment was not filed in Lawrence county (under \u00a7 29-130 Ark. Stats. 1947) until October 1, 1948. Prior to the last-mentioned date the rights of appellee, Futrell, arose, as follows:\n1. On November 13, 1947, Futrell loaned Coleman $3,200, and as security received, and immediately recorded, a deed of trust from Coleman and wife, covering certain described real estate in Lawrence county, Arkansas. This deed of trust, which did not purport to he security for any subsequent indebtedness, will be hereinafter referred to as the \u201c1947 instrument.\u201d\n2. On January 15, 1948, Futrell loaned Coleman and wife an additional $3,000, and received from them a promissory note bearing this notation:\n\u201cIt is agreed and understood that this note is secured by mortgage, already given one the house and 58 lots in West Walnut Eidge, known as the Billingley Estate.\u201d\nWe will hereinafter refer to this note as the \u201c1948 instrument.\u201d\nAs previously stated, Fears had a certified copy of the Greene county judgment filed in Lawrence county on October 1, 1948. Then on January 20, 1949, Futrell filed the present suit to foreclose both the 1947 instrument and the 1948 instrument, and to have both decreed superior to Fears\u2019 judgment. As regards the 1948 instrument, Futrell alleged:\n\u201c. . . that said note, and the agreement thereon endorsed, constituted an equitable mortgage upon the lands as first hereinabove described, . . .\u201d (being those described in the 1947 instrument).\nBy answer Fears alleged that, prior to November 13, 1947, Futrell \u201chad actual personal knowledge\u201d of Fears\u2019 judgment; and that such knowledge rendered Futrell\u2019s rights inferior to Fears\u2019 judgment. When the chancery court sustained Futrell\u2019s demurrer to the said answer, Fears refused to plead further; and a decree was entered adjudging Futrell\u2019s rights to be superior in all respects to Fears\u2019 judgment. This appeal challenges that decree.\nI. As to the 1947 Instrument, but Little Need be Said. Fears\u2019 judgment against Coleman in Greene county was not a lien on Coleman\u2019s lands in Lawrence county until a certified transcript of the judgment was filed in Lawrence county; and that date was October 1, 1948. So Futrell\u2019s mortgage on the Lawrence county lands antedated the filing of Fears\u2019 judgment in that county. In his answer Fears did not allege that the dealings between Futrell and Coleman were in bad faith or in pursuance of any scheme to defraud creditors. In the absence of such a claim, the holding in M. & F. Bank v. Harris, 113 Ark. 100, 167 S. W. 706 is not applicable. Futrell\u2019s actual knowledge of the Greene county judgment against Coleman did not prevent Futrell from dealing with Coleman in good faith. Those dealings, as consummated by the 1947 instrument, are superior to the subsequently filed judgment. The chancery court was correct in so holding.\nII. As to the 1948 instrument, Claimed by Futrell to be an Equitable Mortgage, a More Extended Discussion is Necessary. The notation on the note read:\n\u201cIt is agreed and understood that this note is secured by mortgage, already given one the house and 58 lots in West Walnut Ridge, known as the Billingley Estate. \u2019 \u2019\nThe verified complaint alleged \u2014 and Fears\u2019 answer did not deny \u2014 that the 58 lots were the same property as that described in the 1947 instrument; so the identity and sufficiency of the description of the property, covered by the notation, cease to be questions in this case.\nIn Apperson v. Burgett, 33 Ark. 328 Mr. Justice Eakin, speaking for this court in 1878, said:\n\u201cAccording to the principles established in this court nearly a quarter of a century ago, and since maintained without question, the lien of the judgment was subject to all valid liens upon the lands at the time of the rendition, whether recorded or not. It bound only what the debtor then had, and was effective only to prevent future alienations or incumbrances. \u2019 \u2019\nMr. Justice Eakin said \u201cat the time of rendition,\u201d because in that case the lands were in the same county in which the judgment was rendered; and because the statutes of Arkansas then in force (\u00a7 3603-4, Gantt\u2019s Digest of 1874) did not provide for a circuit court judgment to be filed in another county. It was not until March 17, 1891, that there was enacted what is now \u00a7 29-130, Ark. Stats. (1947), whereby a circuit or chancery court judgment may be filed in another county and accomplish lien results. So Mr. Justice Eakin\u2019s language \u201cat the time of rendition\u201d, when applied to the case at bar, really means \u201cat the time of filing in the county in which the lands are located.\u201d Read in such light, the language indicates that a prior valid lien, though unrecorded, is superior to a subsequently filed judgment.\nIn Snow Bros. Hdw. Co. v. Ellis, 180 Ark. 238, 21 S. W. 2d 162, we again considered the nature of a judgment lien; and Mr. Justice Kirby said:\n\u201cA judgment lien, however, does not attach to the land, but is a lien on the real estate owned by the defendant \u2014 the judgment debtor\u2019s interest in it \u2014 and, if that interest be subject to any infirmity or condition by reason of which it is eliminated or ceases to exist, the lien attached thereto ceased with it. Howes v. King, 127 Ark. 511, 192 S. W. 883; \u00a7 6299, C. & M. Digest; 15 R. C. L., \u00a7 255, p. 798.\u201d\nIn the above quotation we cited with approval 15 R. C. L. 798, which reads:\n\u201cThe lien of a judgment is subject to prior liens, and will' not prevail over prior equitable claims on the same property. It is subject to every equity which existed against the land in the hands of the judgment debtor at the time of the rendition of the judgment, and courts of equity will protect the equitable rights of third persons against the legal lien, and will limit such lien to the actual interest which the judgment debtor has in the estate.\u201d\nThe effect of our holdings, as applied to the case at bar, is: if the 1948 instrument is sufficient to constitute an equitable mortgage, then Futrell\u2019s claim is superior to the judgment rights of Fears.\nWhat language is necessary to create an equitable mortgage. In Bell v. Pelt, 51 Ark. 433, 11 S. W. 684, 4 L. R. A. 247, 14 Am. St. Rep. 57, we held that an equitable mortgage was created by language on a promissory note which, after a description of the land, said:\n\u201c. . . vendor\u2019s lien is hereby reserved on said land for the purchase money.\u201d Mr. Justice Hemingway, speaking for the court in that case, said:\n\u201cMr. Pomeroy says that, where an instrument manifests an intent to charge or pledge property, real or personal, as security for a debt, and the property is so described that the thing intended to be charged or pledged can be sufficiently identified, it is held that a lien follows. 3 Pom. Eq., \u00a7 1237. An attempt to create a security in legal form having failed, equity will give effect to the intention of the parties and enforce the lien as an equitable mortgage. Any agreement that shows an intention to create a lien is in equity a mortgage.\u201d\nIn Arkansas Cypress Shingle Co. v. Meto Valley Railway Co., 97 Ark. 534, 134 S. W. 1195, we again held that an equitable mortgage was created Toy language on a promissory note. Mr. Justice Wood, speaking for this court, quoted with approval this language:\n\u201c 1. . . a lien created by contract, and not sufficient as a legal mortgage, will generally be regarded as in the nature of an equitable mortgage. The form of the contract is immaterial. Though a lien may not be expressed in terms, equity will imply a security from the nature of the transaction, and give it effect as such, in furtherance of the agreement of the parties, if there appears an intention to create a security.\u2019 \u201d\nApplying the rationale of our holdings to the case at bar, it is clear that the notation on the 1948 instrument was sufficient to constitute an equitable mortgage, because the notation said: \u201cIt is agreed . . . that this note is secured by mortgage ... on the house and 58 lots . . .\u201d This was an agreement to create a lien, and as such was a valid equitable mortgage. Therefore: since (a) it is not denied that the description of the property, referred to in the notation, is sufficient; and since (b) prior equitable mortgages are superior to subsequently recorded judgments; and since (c) the notation on the 1948 instrument was sufficient to constitute an equitable mortgage, it follows that the chancery court was correct in sustaining the demurrer to the appellant\u2019s answer. Affirmed.\nMaurice Cathey was named as trustee in the 1947 instrument, and therefore was joined as a party plaintiff with Futrell. But we will continue to refer to Futrell as the \u201cplaintiff\u201d or the \u201cappellee.\u201d\nLanguage to the same general effect may be found in 31 Am. Juris. 39.\nFor some other cases, see Carroll v. Evans, 190 Ark. 511, 79 S. W. 2d 425; Citizens Bank & Trust Co. v. Garrott, 192 Ark. 599, 93 S. W. 2d 319; and Tolley v. Wilson, 212 Ark. 163, 205 S. W. 2d 177, and eases there cited.\nSee, also, McGuigan v. Rix, 140 Ark. 418, 215 S. W. 611, and Hughes on Arkansas Mortgages, \u00a7\u00a7 13 and 14.", "type": "majority", "author": "Ed. F. McFaddin, Justice." } ], "attorneys": [ "E. H. Tharp and Lee Ward, for appellant.", "Phil Herget and Kirsch & Cathey, for appellee." ], "corrections": "", "head_matter": "Fears v. Futrell.\n4-8998\n224 S. W. 2d 362\nOpinion delivered November 21, 1949.\nE. H. Tharp and Lee Ward, for appellant.\nPhil Herget and Kirsch & Cathey, for appellee." }, "file_name": "0122-01", "first_page_order": 146, "last_page_order": 151 }