GIBSON .V. DOUGHTY. 1037 • GipsoN . V. DOUGHTY.. 44613 .0pinion, delivered April 19, 1937.. 1. MORTGAGES — LIMITATIONS — EXTENSION' AGREEMENT.—An agree-• ment to extend the , time for payment of debt secured by deed of trust on certain land and indorsed on the margin of the record • of such deed of 'trust which reads : "For extension 'of indebtedness • secured in this T-D see extension duly recorded in Record Book 57, page 374. W y W. Holipeter, Clerk, by T. .W. -Potter, Deputy Clerk," field sufficient to prevent a subsequent mortgage from becoming prior and paramount. Crawford & Moses' Dig., § 7382. . . MOirrGAGE. S—PRIoit INcymBRANcus:—Where a deed of trust on MT-• tain lands was executed and recorded to secure an indebtedness -. of $5,000, a subsequent mortgage of the 'same and other land made "subject to a prior mortgage indebtedness .of.apprOximately $5,000 was sufficiently definite to identify the mortgage referred to and to evidence an intention on the part of the mortgagee to • recognize the prior incumbrance. 3.. MORTGAGETHIRD PARTIES.—One taking a mortgage to secure the payment of a -judgment against the mortgagor is a judgment .creditor, and is not a .third party within the meaning of § 7382, Crawford & Moses' Digest, 'requiring, as to third parties, indorse-- ment on the margin of the record `of a mortgage a 'memorandum . of -an extension agreement for time of payment., • Appeal from Mississippi Chancery Court, Osceola. District ; J. F. Gantney, Chancellor ; affirmed., Engene SlOan and Aane Fendler, for appellants. Herman Horton and Roy Penix, for appellees. BUTLER, ,J. , Appellees brought' this suit on Feb-ruary 5, 1936, seeking :recovery. on a .debt secured by a deed of trust and for foreclosure of , that instruinent. The debt secured by the mortgage was the sum of $5,000, due December 1, 1930.... The deed of- trust was properly executed and ;acknowledged and placed of record. On -Sep-tember 15, 1930, ;am extension agreement was eXecuted and delivered to the trustee by which the due date of. the debt secured by the original .deed of trust was extended to December 1, 1935. This extension agreement was duly recorded, and there• was endorsed upon the margin . of the original deed of trust the : following: "For extension of indebtedness secured ,in this •-D •see extension
1038 GIBSON V.'DOUGHTY. ; [193 duly recorded in record book•57, page-374. W. W. Holi-peter, clerk, by T. W. Potter, deputy clerk." The original mortgagors were made defendants, and, also, a number of other persons who appeared to have some interest in the lands secured by appellees' deed of .trust. The defense tendered by the defendants, Clay Sloan, Wilson Ward . Company and J II Crane, as 'trustee for Lee WilsOn` & Company, Was that while their ,mortgages were •executed and recorded subsequent to the deed of trust sued on, their interest was prior and paramount to that hf appellees' because of a failure to indor g e a proper memorandum of the extension agreement on the margin Of the record of the original deed of trust as , ko-vided by § 7382,.Crawford & Moses' Digest, and•that they were third parties within the m , . eaning of that statute. If it be conceded that the.meinorandum , did not comply with the terms of the statute, and did not ,arrest the running of the_statute of limitations as to third parties (a point we do . not decide); we-are of the opinion the decree of ' the trial court holding :-. .apflellees' 'deed of trust superior to .that of appellants is correct for the ,reason that they are not third parties within, the meaning of-the statute. On June 1, 1934, the mortgage under which appellant, Clay Sloan, claims was executed by . the mortgagors of appellees' deed of truSt. - Sloan's 'Mortgage covered several tracts of land designated'as tracts-,:Nos. 1, 2, etc.- Traet 'No. 2 conveyed- the identical lands described in appellees' , deed of trust, and was Made . "subject to a prior* mortgage indebtedness of approximately $5,000." It is the -contention 'of the appellants that the' reference was not sufficiently definite to identify •the mortgage referred to in Sloan's mortgage as that of the apijellees, and to evidence an intention on his part to recognize the prior incumbrance under the —rule announced in . McF addin v. Bell, 168 Ark 826, 272 S. W . 62, that a general recital in a mortgage or conveyance to the affect that the instrument is made aubjeCt•to the inctim-branées :against the property does not esthp a mortgagee' or -grantee from 'attacking the- Validity of -such"incuin-brance, and that hothing short of a certain and definite
ARK..] OIBSON V. ! DOUGHTY. 1039 reference in some way .to particular incumbrances thereon will evidence the intention on the part of the subseT quent mortgagee to recognize such incumbrance. We think; under the' authority of-the McFaddin case, supra, that the * reference in Sloan's mortgage te prior incurabrances is sufficiently definite to estop him from-attacking the validity Of the prier Mortgage On the 'ground that it is barred by limitation: If it is snfficiently definite; the: proposition that Sloan merely takes the, place of:the original mortgagor ,is not open to dispute. ' The recital in the McFaddin case held sufficient is as follows : "Said E. F.'McFaddin,; * trustee, buying the teal estate, 'subject to all mortgages against .it on record:" The third head-note of that caseis as follows : "Recitals in a'rnortgage that it is taken subject to all mortgages against it on record amount to a recognition by . the Mortgagee that such mortgages as, were on 'record' were . prior valid liens on the. land, and preclude the mortgagee from pleading the statute of limitation. ?! . , „ - In Haney v. Holt,' 179 Ark,' 403,-16 S. W. (24) 463; reference to a prior mortgage held sufficiently certain states : " This, mortgage: is Second 'to a '.previeusly recorded mortgage." 'A recital in a deed of trust that it was a "second mortgage :on" the landsde'scribed prior deed of trust was 'sufficiently definite- reference fo the first deed of trust.- Gunnels- v. Farmers' Bank- of Emerson, 184 Ark. 149, 40 S. W. (2d) 989. - 'It appear§ that the'simi seCured hY deed of trust was the' identical sum! named in SlCian' tiiOrt! gage and' coVered the identical . 'property.'' Sloan's inOrt-: gage Was ' ex6cuted at a tiine When appdllees' dedd'df fiugt was a valid subsisting lien With'Out regard to exteril
sion of indebtedness, land. at • ; a time when ''the randum indorsement'was'on the margin Of the idcOrd 'of appellees' deed of trnst and was sufficiently' definitelin-der the authority- of the cases, supra, to refer to, and recognize the priority of, appellees' deed of trust. The deeds of trust in favor of Wilson Ward Company and J. H. Crane as trustee for Lee Wilson & Company, as shown by their recitals, were made to secure cer-
1040 GIBSON V. DOUGHTY: L1-93 tain judgments obtained.by them against appellees' mortgagors—in other words, they were the judgment creditors of the mortgagors, and, as such, are not strangers and third. parties to the mortgage within the meaning of the statute. Sufficient anthotity for this declaration is found in the- recent case of Citizens Bank & Trust Co. v. Garrott, 192 Ark. 599, 93 S. W. (2d) 319, where it is said: " (1) An unrecorded mortgage is still good and binding •etween the parties even though there has been a failure to comply with the : provisions of . § 7382 of Crawford & Moses' Digest. It constitutes a valid 'lien on the property except as to the legal 'rights of third partieS.". (2). "Third partieS within the meaning of § 7382 • of Craw, ford &Moses' Digest, means strangers to the mortgage:" (3) "Judgment 'creditors are .not innocent purchasers and by their judginents cOuld only subjeet to the pay-, ment of their indebtedness the mortgagor's interest re-maining-, in the property, • their liens being subjeet to existing equities of third partieS. in the land." (4) •" The purpose of §§. 7382 .and 7408. of Crawford & t . Mbses' Digest, was- riot to create -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." (5) "Since the giving of . notice to these, third parties prospective purchasers was the prime motive, if -riot the only one, for the passage of these statutes it wOuld be inconsistent to hold that by the reason of themlhose who were prior to the passage of 'these acts, required: to take ,notice of. others' -rights need not do so now." (6) "The opinion in McKinley. v. Black, 157 Ark. 280, 247 S. W. 1046, was held erroneous." (7) "Ordinarily, :notice, either. constructive or actual, or purely legal .* * will protect prospective purchasers and the statutes may not .be • regarded as the exclusive method whereby : notice may. be had.' " . -.. • -
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.