608 VOGAN v. LAFAYETTE SOUTH SIDE :BANK [193 & TRUST COMPANY. VOGAN v. LAFAYETTE SOUTH SIDE BANK & TRUST"COMPANY. 4-4516
Opinion . delivered FebruarS , 8,•1937. • MoRT -GAdEs=-In 'an action by a bank which had, by subrcigatien, -succeeded to. the -rights of the- original mortgagees in lands covered by the mortgage, held that it could not be said as a matter of law that . the allowance of a watchman's salary by a special .. master appointed . .by the court to take proof and state an account was erroneous, since ihe watchman might have been necessary . to the preserVation of the property. 2. .• j UDGMENTS.' =-A decree in a mortgage foreclosure from which there was no appeal is binding .on the parties, and where the right to . have certain of the mortgaged lands released from the lien was litigated in that proceeding, the claimant is without remedy, in a sUbsequent proCeeding to hive them released. 3. EQurrv.—The equitable maxim that "equity treats that as done which ought to have been done" cannot serve to correct,•change or modify a decree from which there was . no appeal which decided that certain of the lands covered by a mortgage should not be released from the mortgage lien. 4. MORTGAGES.—The finding of the Chancellor against the contention that the sale Of mortgaged lands under the foreclosure decree should not be confirmed because mortgagors were not given
ARK.] VOGAN V. LAFAYETTE SOUTH SIDE BANK • 609 & TRUST COMPANY. sufficient opportunity, ..to find• purchasers. was hot agaifist the preponderance of the evidence.. • ' Appeal - froM :Clay . ChancerY •atir • t,'IV • e stern " triet; 'J.-F.'Gantnep, Chaneelley; 'Affirtned. • Bloodwerth, • for appellant. Shane ce. Fendler, for appelleeS. '• BAKED;J: Henry Quellmalz'Was the owner of : a conSiderable amount of real estate in the Western . district of Clay Connty, Arkansas.' 'In addition; he • wtfg pi:e§idoit and manager of the -Henry Quellthalz Lumber' & Manufacturing , COmpahy:'_ This Company Was the 'oWner 'of a' considerable amonnt of 'real rtoperty.. • After • Henry Quellmali's death the 'Children; Who With hiM W.ere'the owners of all the capital stock of the corporation, tran's'- ferred their: reSpective 'shares . to: their Mather, : Anna QuellMalZ, : : - who 'becathe preSident 'Of -the CarPeratiOn.. Henry A.'Quellnialz,.a Married"son; AY. hO iSnOw deceased; became 'secretary 'of the' carporatiOn"and manager Of its affairs. Sonie time during' the Year 'of '1923 ` Henry: A: Quellmalz entered • inte' négatiatiens 'With the' Lafayette South Side Bank- & Tiust . Conipany ' to. refinande this cav pOratiOn, and ArrarigeMents were Maiie 'to . barre* $100, 000. 'This mehey -wa8'te be : used 'firt to Pay Off all indebtedneSS, inclnding a 'large 'amount aliendY awing to the. bank. and Other shrris'of Money borrawed upon lands. Some' of • the lands • ha•been Mortgaged' by thes'elaer Henry Quellmalz 'and same,..as "We understand,' . -by 'the corporatien. • The : financing 7'§cheme waS . .'comPleted' and money Was placed to 'the aCCOunt of the Henry.'QUellthalz Lumber • & ManufAetnringi COmPany with aii Agreement that ehebits br drafts : -Were to be' cOunterSigned some 'member 'af 'the' banking Organization 'for 'the -payment . of debts.-: Numeraus Mortgages'were paid . Off, some to inSnrAnce 'companies and 'loan campanies;:fintil all .of the original debts-were then represented .by the one debt owing ta the appellee' bank. .A.8 time Went 'on there was' finally paid upen this' indebtedness 'approxiMately 000. The lumber' •Company, , hoWever,. had become 'delinquent in its paymentsiand also in'paymentaf taxes and special assessments upOn the lands. • After a failure' to refinance • the obligations of the . corporation, : suit was
610 VOGAN V. LAFAYETTE SOUTH SIDE BANK [193
& TRUST COMPANY. filed in the United Sta.tes court to foreclose the mortgage or deed of trust. We are not favored with a complete record of that proceeding, but there is an indication there was an effort.on the part of some members of the family to assert individual interests in the lands, but this proceeding was abandoned, And not until iater, the exact time is not material, a suit was filed by the heirs of Henry . Quellmalz against the appellee, asserting that they are the . owners by inheritance .of all the lands of which Henry Quellmalz died seized. They made no. claim to any of. the lands.pr any interest therein that had been owned by the Henry Quellmalz Lumber & Mannfacturing . Company.. A decree was rendered in this suit in 1934. . The ,effect of this decree was to declare that appellant, Marie Quellmalz Vogan, and her sister, Thecla Quellmalz Mitchell, are the only ones having any interest in the lands which their father had owned as an individual, the ' finding .being to the effect that the .widow_ of Henry Quellmalz and the other two children as officers. of the jienry . Quellmalz Lumber .& Manufacturing Company, joined in the mortgage or deed of trust, as parties or officers of the corporation, conveying the land by the mortgage or deed of trust to the appellee, as the property of the corporation, and that these parties were therefore estopped to set up • any claim or interest in said property thereafter. .No question is raised here by either of the parties as to the propriety or correctness of the ..decree, and no appeal was taken therefrom, and .it was , not thereafter changed or . modified in any particular. There was a provision in that decree, however, to the effect that the two daughters *ho received au interest.in the real property took the said lands, subject to certain rights of the appellee bank. The bank had furnished money, the $100,000, a great part of which was borrowed and used to pay off indebtedness upon these lands secured by . mortgages and the .effect, as we understand, of these proceedings, was to subrogate the bank, the appellee herein, to the rights of -the original mortgagees, and at the time of tbe rendition of this decree the court appointed Mr. T. W. Ratcliffe, as special master to state an
ARK.] VOGAN V. LAFAYETTE SOUTH 'SIDE BANK 611
& TRUST COMPANY. account, determining how much indebtedness should be charged to the one-half interest in thesd landS*reCovered by the Appellants, and also to deterthine what other indebtedness aS taxes; special assesSments or otherwise were properly Chargeable against the property, and also to determine the rents and Profits that had-been derived or gained by the appel.lee from the Use and occupancy of this property from and after tbe time-it had acquired and taken possession thereof after the foreclosure in the United States distriét court. • Mr. Ratcliffe, as master, was given access to the proof already taken, • and was * directed to take other proof as it might become necessary th determine the facts and state the account. He took some proof, filed his report, showing An* indebtedness fOund and charged by him against this property- after all credits and rents and profits had been given, amounting to approximately $38;000. Exceptions were filed by the appellants to certain parts • of the master's report and upon a hearing on these exceptions the court overruled all of them*, confirmed the master's report and ordered thiS property sold in satisfaction Of the indebtedness. It is from this order and• decree, confirming the Mastei's report, 'and also from a confirmation of the sale 'of the lands that. this appeal is taken. • The _exceptions filed . cOver the following items-: That the MOster erred in . finding and charging , any of the expenses incurred by the 'defendant for A watchman, and, second, that the master erred in charging . ' any alleged * losses of the defendant againSt the lands, and third, that the master • erred in charging the amounts paid on a mortgage to the International HarVester Company (meaning, as we suppose, International Insurance Company), and to the Deming Investment Company, and that he did not take , intO consideration or Credit these amounts with payments that had been paid by the Henry Quellmalz Manufacturing CompanY on the 'original 'mortgage, asserting that* the 'defendants Were Paid • in cash such amounts of money before they paid 'debts to-the -International Harvester Company and Deming Invesfment Company. The fourth alleged error is in effect the same
612 VOGAN V . 'LAFAYETTE SO U TH SIDE BANK [193 & TRUST 'COMPANY. 6 as the a third m relating e to th . e m payments of th r e s t- o-a b o.es . The 'fifth i to the effect the master erred in charging a 'part Of the money 'alleged to have , been advanced by the defendants in July, 1930, and to pay taxes, etc., upon the property, the allegation being that the ad-'vancement as made was made to pay taxes, and the.taxes 'paid upon plaintiffs' lands were duly charged in*other items, and that these advancethents 'were made to secure a 4iew mortgage .and security, and not for 'any consideration of value in regard to the land§ of these plaintiffs ; that the-master erred in charging any part of the. $170.67 for alleged repairs against appellants' lands.. • • • Let it be said in the beginning that since the appellants have not seen fit to abstract evidence as to, these several items, but have contented themSelves with state ments, so whatever discussion • we offer will , be based upon such statements, together with such, other facts as we. have been able to find from the report mid other information as set forth in the briefs of, appellants and appellees. • • . No objeCtiOn is made as to the proportional part of the many items. which it . iS admitted were properly chargeable against . the lands. - The master states:• "(That during 'the -time , of operation of this estate by the defendant from January 1, 19.32, to: Janhary 27, .1936, 'the defendants incurred the following expenses on both Tract No.. J and Tra . a: No..II, and, which. were .of benefit to the plaintiffs, as follows : :, . • . " `Salary for. watchman, fOr49 mouths , . at $60 per month $2,940.00 'Repairs on farm property . , 177.67 " ' Taxes paid on lands in both . Tract I , . . .and,Tract II .4,752.52 " 'Making in ,the aggregate $7,870.19'. "Other claims for *surveying, timber and farm costs, etc.„were not regarded as proper charges ; but one watchman was:allowed for the entire time of 49 months-at $60 permonth." ' ,• . .We cannot say as a matter of law that these several items were not ptoperly chargeable against the -lands. A
ARK.] VOGAN v. LAFAYF/ITE SOUTH * SIDE BANK 613 .& TRUST 'COMPANY. proper decision must • rest upon prevailing . facts. , A watchnian conceivably could be very useful or necessary for the preservation of property, and in the absence of an effective shOwing by appellants that this charge .was improper, we are impelled to •hold *that the court was correct in suStaining the master in that regard. As to the second Rein about Charging alleged, losses, we have very little more inforthatign.thari We have in regard to the foregoing matter. , As we understand appellants' Contention, taxes, special assessments and other items.of expense were charged against these lands; The total charge was credited with the amount of rents received therefrom: : The, rents were : somewhat Jess tharr the expenses and therefore there was a loss. This loss wa.s occasioned by reason of the..payment: of necessary items or charges, some of -which were liens against the property. If there were losses incurred by bad management, faulty operation, -those facts do not appear, and, as'•said in the foregoing : statement, appellants have not shown that the items were improperly charged, and it may be said in this connection that although the appellants have argued that some of the matters charged were for surveying and other items of expense of that kind the supporting facts are not abstracted. The master . expressly disclaims that . any of thoseitems have.been taken into account as proper charges, .and no proof. . is abstracted tending to show otherwise. ... - As to the third item , or -Charges in regard- •to: the mortgage te the .International Harvester Company and the Deming investMent- Comt•any, we may also treat other mortgages, or liens for taxes, etc.,. which were against the lands at the time of the execution 'of the mortgage by :the Henry Quellmalz . Lumber & Manufacturing Company, participated : in by. all the Quellmalz family except the two*appellants here, as one Or a 'single item. As we understand appellants' 'contention, they are asserting that these lands, though under-mortgage at the time this money was borrowed; and although men6r.was borrowed for the purpose of paying off indebtedness ' then existing against the property; the appellee should not be entitled to be subrogated tO the rights . of those original
614 VOGAN V. LAFAYETTE SOUTH SIDE BANK [193
83* TRUST COMPANY. mortgagees, although they 'furnished the funds with which the Mortgages were settled or 'satisfied. It is not argued, however, that this is true as a 'matter of law, bUt particularly becauSe of tbe fact that the mortgage or deed of trust provided that, as payments were made from time to time, lands should be released, and it is the contention that these lands' belonging to Henry Quellmalz, as an individual, 'should have . been the first to be released, although the payments reached or aggregated $40,000; that none of the property . was ever released. Appellants argue that, 'after thiS money was borrowed, $24,000 waS used tO pay off a mortgage upon this 'property, together, as we presume, with' some of the corporate property. The serieS of notes aggregating the same amount for $24,000 was' mentioned in this mort7 gage or deed of triiSt, and it is argued here that that $24,000 represents the 04;000 "secured by a mortgage and paid off in the 'refunding obligations, and it . is further argued that 'this $24000 shOuld have . been the fi.rst money to be "regarded • as having been repaid Out of the $40,000, paid over by the Henry Quellmalz 'Lumber & .Manufacturing Company upon its indebtedness ; that had -this been done a great deal; if not nearly all, of the property out of which these aPpellants now • claim their rights, would have been free of tbe mortgage indebtedness. For the sake of argument only, although we do not believe it is a correct . statement, let us assume that appellants '-contention.in this regard was' correct; . and upon this assumption we may proceed to determine what the result would be as growing out of appellant' contention in that respect. If tbe Quellmalz Lumber & Manufacturing Company ever made any demand at tbe time .of the payment of any of these funds to the appellees for the release of any of this property from the mortgage that fact does not appear. It is also apParent from the record that the entire traCt of land belonging to Henry Quellmalz, together with that belonging to tbe Henry Quellmalz Lumber. & Manufacturing Company was foreclosed upon and sold by the proceeding in the United States court, and only bY that procedure did. the. appel-lee obtain title: for Which it is now sued. The right to
MIK.] VOGAN v. LAFAYETTE SOUTH SIDE BANK 615 .TRUST 'COMPANY. have this property .released was also litigated; and the question. settled by the decree:rendered on the 6th day of December, .1934....The court, at that time, did not decree -that any-of theAands should be free from the• lien, but: expressly declared, .otherwise,. that .all of the lands in controverSy here were subject,-to the: liens of these former mortgages, -and all-taxes and Special assessments paid-out of the borrowed money fund or, adVanced by the appellee. TherefOre, we shOuld agree that the. appellants are right in their contention they •are wholly without remedy as all of these rights are predetermined by the decree from which there was no appeal. •Thatdecree was final and is conclusive:.• . It is also argued that, Under . the law, such payments as were -made should -have been' -credited or applied to. liquidate the first debt. We-agree to that proposition where the matter' wasnot otherwise-predetermined, but the contract Or mortgage provided that if payments•were• made before maturity that the application should be made in the inverse order-of maturities. That-is to say, that all payments not made-upon obligations at maturities, but made in-advance of maturity in sums of $1,000 or Multiples thereof should be credited upoh the last maturing • obligations ) and - the'- $24,000 we -have heretofore mentioned was an obligation that matured' in regular order in 1934. • • There'is • no 8ho*hig 'that the $40,000 which had been paid over was such as . may have 'been so applied or could be credited upon unmatured instruments ; but notwithstanding that fact,• whether the land; or any part . the'reof, should have been -released 'is- disposed of by decrees of the•United States court and of the chancery court from no one of which an appeal was ever had. Appellants cite Many authorities Supporting the maxim in equity to the effect ;that . equity treats that as done which ought to have 'been done. That maxim cannot serve to correet, change or:modify either one of the decrees' which decided a -proposition different from •the contention now made by appellants. • In effect, the foregoing are the contentions made in .regard to •the master's report and the correctness of all these findings of the master and • of the . court's decree confirming the same.
616 VOGAN V. LAFAYETTE SOUTH SIDE BANK [193 & MUST COMPANY. must rest. upon the testimony adduced in support thereof. We are not favored with any abstract of testimony showing the incorrectness of .the court's .action. We must therefdre ,determine that • the exceptions were properly overruled. The : court, upon confirmation . of the master's report,. decreed that appellant's land -should be sold in satisfaction of *the indebtedness, lien of which was properly declared upon the land, and the decree was 'pre-. pared. and duly approved by 'counsel for appellants, although counsel now asserts that he did . not observe or take notice at the time that the decree . provided for an immediate sale. He has now filed exeeptions to the sale of the lands, insisting that the court should not have confirmed this sale for the reason that the appellants weie not able within the short time to procure purchasers, or , to find a means• by which they could protect their interests in the property. They did, however, procure, one or two prospective purchasers. it is asserted in the ,exceptions to the. sale that the appellee company and. its agents refused to disclose to prospective buyers facts within their knowledge, and they discouraged prospective buyers from appearing at the proper time to bid for the property, one of these being a gentleman from Poplar Bluff, Missouri, concerning whom' it is alleged that he had been advised the.sale would beat 1 :00 o 'clock in the afternoon and appeared at Corning at that time to bid upon the property. The sale, however, was had at 10;00 a. m., three hours prior to the hour of the appearance of , the prospective bidder. . ° All these matters were controverted, and we do not find the decision to be against a . preponderance of the evidence. . At* the , sale the . appellee bid the debt against the property. A few days after the sale, counsel for the appellee wrote a letter, copy of which was sent to counsel for. appellants, .and a copy or the original sent to the prospective purchaser . at Poplar Bluff, Missouri. The. effect of the letter was that the appellee did not desire to retain the property, if appellants could make a sale thereof advantageous to themselves, or that the prospective bidder from Poplar Bluff, if he desired to do so,
ARK.] 617 could take over the bid they had offered for the property, and . by- executing proper bond to secure the purchaSe price he. would be assigned . a -certificate of purchase. There was no . offer . to raise . fhe bid made, not even an offer to secure or pay costs . of readvertising the property, nor the execution of any bond or- any form of. indemnity to protect -this judgment-lien creditor in the event a new sale 'was ordered. , . • This . suit in one, form or other has been pending now for several years. Appellees have talcen -considerable amount of loss in the sale of property at the- first foreclosure in •the United States court. Thercis a deficiency judgment we are told of approximately $20,000. There is no income from . the property. sufficient . to ,meet taxes and special assessment requirements, and other. expenses, and the caseis not ., brought vrititin .the.'rules we have recently announced hi caSes wherein sales Were improvident and new sales ordered. There is no real inadequacy of price: Pope . v. Shdnnon Bros., 190 Ark. 441, 79 S.. W. (2d) 278. .. . No real . questions of law have been involved herein; except possibly the most .elementary principles. We . think the facts have been determined correctly:: The decree- and: order appealed from are, therefore,. affirmed. •
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.