Billingsley v. Pruitt

G-eoege Rose Smith, J.

This suit was brought by the appellant, Ida Billingsley, to foreclose a mortgage upon certain lots in Batesville. The cause of action is admittedly barred by limitations, but the original mortgagors did not interpose that defense. The statute was pleaded, however, by the principal appellee, W. F. Armstrong, and the only question in the case is whether Armstrong is entitled to rely upon the defense of limitations. The chancellor upheld Armstrong’s plea, dismissed the complaint as far as the land is concerned, and limited the plaintiff to a personal judgment against the mortgagors.

These are the facts: On May 2, 1947, the mortgage in question was executed by H. A. Pruitt and his wife to secure a $1,500 note to John Edwards. The last installment on the note was due February 2, 1949. The Pruitts paid only $100 to Edwards, and in 1950 the note was purchased by Mrs. Pruitt’s parents, Dr. and Mrs. Billingsley, who took an assignment of the note and mortgage. After Dr. Billingsley’s death this suit was filed on October 12, 1954 — more than five years after the maturity of the debt. It is conceded that the Pruitts made no payments after the dne date of the note, and of course no such payments were indorsed on the margin of the record. The Pruitts preferred not to plead the defense of limitations against Mrs. Pruitt’s mother.

Armstrong’s interest in the land derives from a second mortgage which the Pruitts executed in 1949 to secure a debt owed to M. F. Highsmith. This mortgage recited the priority of the Edwards mortgage and authorized the second mortgagee to pay off the first mortgage and be subrogated to its lien. Highsmith foreclosed the junior mortgage in 1952, without mating the senior mortgagee a party to the suit, and bought the property at the foreclosure sale. In June of 1954 High-smith deeded the land to a corporation in which he is a stockholder, and on the day before this suit was filed the corporation conveyed the land to Armstrong by warranty deed. Armstrong made a down payment of $500, gave a mortgage for the unpaid balance of $5,500, and testifies that he knew nothing of the first mortgage when he bought the property.

The appellant argues that inasmuch as Highsmith’s mortgage was expressly subordinate to Edwards’ first lien Highsmith was not a third party within the meaning of the statute that requires payments to be indorsed of record in order to keep the lien alive as against third parties. Ark. Stats. 1947, § 51-1103. It is then contended that Armstrong stands in no better position than Highsmith and cannot interpose a plea that is personal to the original mortgagors.

A manifest flaw in this argument lies in its disregard of the fact that Mrs. Billingsley’s mortgage is barred not merely of record but also in actuality. In the cases cited by the appellant, such as McFaddin v. Bell, 168 Ark. 826, 272 S. W. 62, the mortgagor had tolled the statute by payments made less than five years before suit was filed, but the mortgagee had not made the required indorsement on the margin of the record. In that situation the defense of limitations is not available to the original debtor or to anyone else who is not a stranger to the transaction. In the case at bar, however, the debt was not kept alive by payments, and, unless the defense of limitations bas been waived, the right to foreclose is barred “as to all parties and for all purposes.” Bank of Mulberry v. Sprague, 185 Ark. 410, 47 8. W. 2d 201.

We think it plain that Armstrong is not bound by the Pruitts’ election not to defend the case. It must be remembered that the Pruitts have no interest whatever in the land, for the Highsmith foreclosure divested their equity of redemption. Clark v. Lesser, 106 Ark. 207, 153 S. W. 112. If, as the appellant urges, the plea of limitations is personal to the Pruitts, the statement means no more than that they are free to admit their liability on the note. With respect to the land the plea is similarly personal to Armstrong, who is the real party in interest. His choice cannot be dictated by the Pruitts, who have no pecuniary interest in his dispute with the appellant. It is apparent that if the appellant’s argument were accepted it would follow that a mortgage, barred both of record and in fact for fifty years or more, could still be foreclosed, with the mortgagor’s consent, as against subsequent purchasers for value. Needless to say, that is not the law in this state.

Affirmed.

Ward, J., dissents in part.