Hankins v. Merchants' & Planters' Bank

Hart, J., (after stating the facts). The decree of the chancery court was correct. The Legislature of 1873 passed an act providing that the lien held by the vendor of real estate, when the same appears on the face of the deed, inures to the benefit of the assignee of the note for the purchase money, and may be' enforced by such assignee. Crawford & Moses’ Digest, §476. Since the passage of that act this court has uniformly held that a vendor’s lien reserved in a deed as security for the purchase notes of land is analogous to a. mortgage, and passes with the transfer of the notes to a bona fide purchaser freed from any defenses which the grantor had against the grantee. Stephens v. Anthony, 37 Ark. 571; Pullen v. Ward, 60 Ark. 90; Smith v. Butler, 72 Ark. 350; Beard v. Bank of Osceola, 126 Ark. 420, and Graves v. First National Bank of Bentonville, 126 Ark. 177. It is true that J. A. Hankins testified that the note for $1,500 held by the Merchants’ & Planters’ Bank was paid by that bank at the instance of the maker, A. Wakin. This, however, is denied by A. "Winham, who acted for the Merchants’ & Planters’ Bank in the purchase of the note, and by C. M. Blocker, who acted for the plaintiffs in the premises. According to the testimony of Winham and Blocker, the note was purchased' by Winham for value in the usual course of business, and the qualified indorsement was placed on the back of the note in order that Hankins and wife might not (be held personally liable on their indorsement. The indorsement was made by the plaintiffs “without recourse” merely to release themselves from liability as indorsers, and not for the purpose of releasing the lien of the vendor, which passed by the assignment of the note. . ! i -7s! The chancellor found the issue in this respect in favor of the defendants, and his finding is in accord with the weight of the evidence. An indorsement without recourse merely releases the indorser liability, and is not out of the usual course 'of trade. In the case of Neely v. Black, 80 Ark. 212, it was held that the fact that the payee of a note indorsed it without recourse did not impair the negotiable character of the instrument, nor put the indorsee upon notice of any infirmity therein between the original parties. Judge Battle, speaking for the court, quoted with approval from a Virginia case the following: “An indorsement without recourse is not out of the due course of trade. The security continues negotiable, notwithstanding such an indorsement. Nor does such an indorsement indicate, in any case, that the parties to it are conscious of any defect in the security, or that the indorsee does not take it on the credit of the other party or parties to the note. On the contrary, he takes it solely on their credit, and the indorser only shows thereby that he is unwilling to make himself responsible for the payment.” Moreover, the matter is set at rest by our negotiable instrument law, wherein it is provided that such an indorsement does not impair the negotiable character of the instrument. Crawford & Moses’ Digest, § 7804. It follows that the decree must be affirmed.