Selig v. Powell

¶1Supplemental Opinion on Denial of Rehearing delivered January 29, 1973

¶21. Equity — laches—defenses.—The ignorance of one’s rights does not prevent application of the doctrine of laches in a suit brought after unreasonable delay unless such ignorance was due to fraudulent concealment or misrepresentation by the party invoking the doctrine.

¶32. Equity — laches—prejudice from delay. — Equity will not relieve a party where laches operates as an estoppel and the delay becomes inequitable and works a disadvantage to another.

¶43. Equity — laches—application of doctrine. — Where appellee failed to establish fraud or mental incompetence, she was guilty of laches and not entitled to enforce an equitable vendor’s lien under the evidence.

¶5On petition for rehearing, appellee states that the court, though filing an expansive opinion, makes no mention of what she deems to be the central issue, viz., that she was entitled to a vendor’s equitable lien under our cases, it being undisputed that Mrs. Moonan was never paid for the property at issue, and also undisputed that the corporation, which obtained title by deed from Madey, knew that she had not been paid. Several cases are cited in support of this statement, including Shall v. Siscoe, 18 Ark. 142 (1856), where this court stated:

“It is very well settled in England, and in most of the States of this Union, that, in equity, the vendor of land has a lien for the purchase money, not only against the vendee himself, and his heirs and other privies in estate, but also against all subsequent purchasers having notice that the purchase money remains unpaid. The lien exists, although there be no special agreement for that purpose, and notwithstanding the vendor conveys the land by deed, and takes the note or bond of the vendee for the purchase money. To the extent of the lien the vendee becomes a trustee for the vendor and his heirs, etc., and all other persons claiming under him, with such notice, are treated as in the same predicament. … *And third persons, having full knowledge that the estate has been so obtained, ought not to be permitted to keep it, without making such payment, for it attaches to them, also, as a matter of conscience and duty.”

¶6On this basis, appellee contends that she is entitled to prevail in this litigation unless one of the defenses asserted by appellant, laches, estoppel, waiver, and limitations, bar her from relief.

¶7While we did not discuss this particular argument by appellee, since it was overshadowed by the argument of fraud on the part of appellant, and mental incompetence on the part of Mrs. Moonan, we find no merit in same, and actually, it cannot be considered without reference to, or discussion of, the other arguments.

¶8We think the record reflects that Mrs. Moonan was guilty of laches. There is no contention but that Mrs. Moo-nan executed the deed, and signed the letter authorizing the conveyance of the property to Brookmire. In her brief, appellee states that Madey did not discuss terms and conditions with Mrs. Moonan, nor was the latter informed of the omission of the lien retaining clause or the existence of the notes. As to the first, the letter from Mrs. Moonan to Madey set forth the conditions, and Madey testified that this was simply a matter of Moonan going through with the marriage. As to the second, to say that she was never informed of the omission of the lien retaining clause or the existence of the notes is simply speculation. While Madey testified that he did not so inform her, there is no evidence that Moonan, or others, did not so advise. But at any rate, having unquestionably executed the deed, it was then up to appellee to present evidence that she did not know what she was doing, was overreached, or that fraud was committed to obtain the conveyance. In Belew v. Griffis, 249 Ark. 589, 460 S.W. 2d 80, this court said:

“Although a person is ordinarily bound to know the contents of a contract which he signs, we have often recognized an exception to that principle when fraud or inequitable conduct is charged. As we said in Massachusetts Mut. Life Ins. Co. v. Brun, 187 Ark. 790, 62 S. W. 2d 961 (1933): 'There is a well-recognized exception to the rule that a party is bound to know the contents of a paper which he signs; and that is where one party procures another to sign a writing by fraudulently representing that it contains the stipulation agreed upon when, in fact, it does not, and where the party signing relies on the faith of these representations, and is thereby induced to omit the reading of the writing which he signs. It is well settled that a written contract which one party induced another to execute by false representation as to its contents is not enforceable and the party so defrauded is not precluded from contesting the validity of the contract by the fact that he failed to read it before attaching his signature’.”

¶9In the last case cited, this court also stated:.

“In a recent case we said: 'Learned counsel for appellants invoke the doctrine which has always been, and still is, adhered to by this court, that one who signs a contract, after opportunity to examine it, cannot be heard to say that he did not know what it contained’.”

¶10In Bradley Lumber Company of Arkansas v. Burbridge, 213 Ark. 165, 210 S.W. 2d 284, this court pointed out that ignorance of one’s rights does not prevent the application of the doctrine of laches in a suit brought after unreasonable delay, unless such ignorance was due to fraudulent concealment or misrepresentation by the party invoking the doctrine of laches.

¶11We stated in the original opinion that fraud was not established, i.e., that Mrs. Moonan was not induced to execute the deed by false representations as to its contents, and there is absolutely no evidence that Mrs. Moonan did not have the opportunity to examine the deed. In Sanders v. Flenniken, 180 Ark. 303, 21 S.W. 2d 847, this court, in referring to laches, and mentioning that it operates as a species of estoppel where delay becomes inequitable, stated:

“The disadvantage may come from loss of evidence, change of title, intervention of equities, and other causes, but, when the court sees negligence on one side and injury therefrom on the other, it is a ground for denial of relief.”

¶12The answer by appellee to the defenses raised by appellant to the claim for lien by Mrs. Moonan is that the latter, because of fraud and mental deficiency, did not know the status of the corporation, and was not in a position to assert any rights. The original opinion points out that the evidence on mental incompetence was not sufficient to sustain that allegation.1 In other words, in the seven year period from the time of the execution of the deed until the institution of the suit by the Securities Commissioner, Mrs. Moo-nan should have recognized that something was wrong when she received only one payment from the corporation, and if she was looking to Brookmire for her money, was negligent in not taking steps to ascertain the reasons therefor.2 During the seven year period mentioned, an action could have been instituted which would have reflected the financial instability of the corporation, and both on that phase, and Mrs. Moonan’s claim to the property, revealing evidence could have been offered. Unquestionably the principal witness in such a proceeding would have been James Moonan but never, during Moonan’s life time, was there any suggestion by Louise Powell Moonan that she had not been paid for her property, and it was only after his death and after Brookmire had gone into receivership that she asserted her claim of lien against the building.

¶13In Williams v. Grayson, 224 Ark. 207, 273 S.W. 2d 844, the plea of laches was sustained. There, it was contended inter alia that the evidence did not support this finding against Williams and wife (the testimony even included an opinion by a psychiatrist that the mentality of both was that of a seven to twelve-year-old, though this was disputed by other evidence). On rehearing, this court sustained its original finding, stating:

“. . . It is urged, however that facts are not sufficient to sustain laches as to Williams and his wife.

The record discloses that in December, 1938, Williams and his wife executed the deed to Grayson. What occurred at the time the deed was delivered and in connection with its procurement are matters in respect of which appellants introduced considerable evidence; yet Whaley, the notary public who took the acknowledgement, is dead, and R. L. Elliott, who witnessed the transaction, has also passed away. The date of Elliott’s death is not shown, but Whaley died in 1946. Thus years intervened between the death of this witness and facts regarding which he was informed when the suit was filed in 1948, and to which he could have testified if timely action had been taken.”

¶14There, the period of time covered was about ten years but length of time is not controlling where action could have been taken prior to the demise of an important witness, one who might well possess peculiar knowledge of the facts. For instance, in Page v. Woodson, 211 Ark. 289, 200 S.W. 2d 768, the opinion reflects the following facts:

¶15Earl Page instituted suit in October, 1946 against his wife for divorce. A complete written property settlement between the parties was made a part of the complaint and the decree, and the divorce and confirmation of property settlement was granted and approved by the court on October 9 of that year. On January 10, 1946, Mr. Page died testate without surviving issue, leaving his property to a sister, Maude Woodson, and others. Less than one week after his death, Mrs. Page instituted suit against the appellees endeavoring to set aside the property settlement on the grounds that she entered into the settlement under duress, her husband threatening to take her life if she contested the divorce or refused to execute the property settlement; that the duress continued to exist until shortly before his death. Subsequently, in February, Mrs. Page instituted another suit, alleging the same grounds, and in addition asserting that she had a meritorious defense to the divorce action which she was prevented from exercising by threats of her husband. The trial court found for appellees, and on appeal, the chancellor’s decree was affirmed by this court. After pointing out that Mrs. Page had consulted able counsel as to property rights and was apparently fully advised, the court added:

“. . . There is still another reason why the appellant cannot prevail in this action, and that is, that she has been estopped by conduct amounting to laches.

It appears certain from the evidence that the duress claimed by appellant grew out of alleged threats of Earl Page to take her life prior to and leading up to the divorce decree and property settlement.

Immediately following the divorce decree, Mr. Page went to Yell County where he remained until December 13 th, when he suffered a heart attack. He was in a Little Rock hospital from December 14th to December 24th, and soon after Christmas, he went to Carlsbad, New Mexico, where he remained until his sudden death January 10, 1946.

We find no evidence of any duress or threats subsequent to the property settlement and divorce decree. In these circumstahces, Mrs. Page waited more than three months after the decree of divorce, and for approximately a week following Mr. Page’s death, and when he could no longer speak for himself, before bringing the present suit.”

¶16We mentioned that the law required prompt action on her part and such action had not been taken.

¶17William Sherman, Securities Commissioner at the time of the institution of the suit for receivership, testified that a registration statement was filed with the Commissioner in July, 1963, the purpose of such statement (which reflected the value of the lands and building at $60,000) being to provide information to the Securities Division Office with regard to a pending sale of stock. He stated that if a registration statement complies with the law, and full disclosure is made, the registration is approved. He testified that this was a secondary registration, “which means they were re-registering the outstanding shares of Brookmire common stock, i.e., a registration by the shareholders to qualify their shares for distribution.” He said there were approximately 60 shareholders, and after the filing of this statement, the Securities Division gave its approval to offer these shares of stock to the public. This same information was contained in the prospectus which was offered to the public as a matter of information in connection with the stock sale. It would appear from the testimony of the commissioner that it is doubtful that the sale would have been approved had the registration statement reported the true facts. In addition, let it also be remembered that the investors, attracted by the BIS Newsletter and other advertising by BMC, permitted King as a broker to purchase various securities, and it is axiomatic that these people would not have invested their money with a resulting loss in excess of one million dollars without relying upon the purported financial condition of the companies.

¶18Equity, of course, will not enforce a stale demand under the circumstances here mentioned, and accordingly, we are réally back to the basic questions, viz., did appellee establish that fraud or deceit was practiced upon Mrs. Moonan in obtaining a deed to the real estate? Was Mrs. Moonan mentally incompetent and thus unable to look after her interests? We have answered both questions in the negative, and under those findings, we hold that Louise Powell Moonan was guilty of laches, and not entitled to enforce any equitable vendor’s lien.

¶19Petition for rehearing denied.