Robertson v. American Investment Co.

Smith, J., (after stating the facts). The fact that the notes sued on by Robertson were indorsed, “without recourse on me”, by Plunkett is unimportant here. A syllabus in the case of Neely v. Black, 80 Ark. 212, reads as follows: “Indorsement of a promissory note without recourse does not indicate that the indorsee takes with notice of any defects, or that he does not take on the credit of the other party or parties to the note, but only that he takes without recourse on the indorser.” Robertson therefore, by purchasing the purchase-money notes from Plunkett, acquired the equitable vendor ’s lien which Plunkett had. The fact that an express vendor’s lien was not reserved in the deed is unimportant, because the deed showed on its face that these notes were given in part payment of the land, and any inquiry would have revealed the fact that they were not paid. Union & Planters’ Bank & Trust Co. v. Simmons, 166 Ark. 285. It is true the mortgages to the mortgage company were placed on record before the.deed from Plunkett to Casey was filed for record, but this is unimportant, because the deed from Plunkett to Casey was in the chain of title under which the mortgage company claims. The title mortgaged was acquired through the deed from Plunkett to Casey. In the case of Gaines v. Summers, 50 Ark. 322, Mr. Justice Battle said: “A person purchasing an interest in lands ‘takes with constructive notice of whatever appears in the conveyances constituting his chain of title. ’ If anything -appears in such conveyances ‘ sufficient'to put a prudent man on inquiry, which, if prosecuted with ordinary diligence, would lead to actual notice of some right or title in conflict with that he is about to purchase, it is his -duty to make the inquiry, and if he does not make it he is guilty of bad faith or negligence,’ and the law will charg-e him with the actual notice he would have received if he had made it.” (Citing cases). The doctrine of that case has been many times reaffirmed by this court and is settled law. We think the court was also in error in holding that by subrogation the lien of the mortgage company was superior to the vendor’s lien acquired by plaintiff Robertson. In the first place, the mortgage indebtedness to Winner amounted to only $750, and upon no theory could there be sulbrogation beyond the sum paid to satisfy the mortgage. But it further appears that the mortgage from Plunkett to Winner was canceled when Winner agreed to take a mortgage from Casey in satisfaction o,f the one which he had from Plunkett. The deed from Plunkett to -Casey was dated September 12,1921, and the mortgage from Casey to Winner was also dated September 12, 1921, but necessarily the deed is prior and superior to the mortgage, for the deed conveyed to Casey the title which 'Casey mortgaged to Winner, therefore the vendor’s lien in Plunkett’s favor is superior to the mortgage lien in Winner’s favor. It is true Winner testified that it was understood this mortgage from Casey was to be a first lien, and that fact was recited in the mortgage from Casey to Winner, but there is no showing whatever that Robertson was aware of or was a party to this understanding. On the contrary, the undisputed testimony is that Robertson had no actual knowledge of this understanding. Such knowledge as Robertson bad was constructive, arising* from the fact that there was a mortgage of record from Casey to Winner, but it is also an undisputed fact that Casey had no title to mortgage except that which he derived through the d'eed to him from Plunkett. Robertson testified, and is corroborated by Plunkett, that he had sold Plunkett other lands upon which he, Robertson, held a vendor’s lien, and that Robertson satisfied this lien in consideration of the transfer to him of the notes herein sued upon. Robertson was an innocent purchaser of the notes sued on. He had only constructive notice of the existence of the mortgage from Casey to Winner, and the court was therefore in error in not adjudging that the vendor’s lien which Robertson acquired by the purchase of the notes was superior to the mortgages executed to the mortgage company, one of which, as has been said, was assigned to the bank and trust company of Vermont. The decree of the court below will therefore be reversed, and the cause remanded with directions to enter a decree in conformity to this opinion.