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Olds Bros. Lumber Co. v. Marley

Supreme Court of Arizona

October 16, 1951

OLDS BROS. LUMBER CO. et al.
v.
MARLEY et ux

Judgment modified and affirmed.

P. H. Brooks and C. D. McCauley, of Winslow, for appellants.

W. E. Ferguson, of Holbrook, for appellees.

De Concini, Justice. Udall, C. J., and Stanford, Phelps and La Prade, JJ., concur.

OPINION

De Concini, Justice.

[72 Ariz. 394] This action was filed in the trial court by plaintiff-appellant, Olds Brothers Lumber Co., to foreclose a mortgage upon realty owned by defendants below, Melvin Patch and wife, mortgagors. There were three other liens upon the same realty, the holders of which, The Valley National Bank, Babbitt Brothers Trading Co., and R. S. Marley and wife, were made defendants in the action. All of said liens were executed

Page 465

by defendant Patch in whom is vested the legal title to the realty involved.

The facts out of which this action arose are as follows: In 1942 Mrs. Marley and her son-in-law Melvin Patch were engaged in the grocery and produce business. Mr. Marley joined in the work of the business some time in 1942. In 1946 articles of copartnership were executed and recorded showing a one-half interest in the Marleys and the other half in Patch. The partnership was known by the firm name of "Patch and Marley". On January 21, 1947, the three partners entered into an option agreement whereby the Marleys granted Patch a 30-day option to purchase their one-half interest in the partnership for $ 12,000, to be paid: $ 4,000 cash upon exercising the option; $ 2,000 within fifty days; $ 3,000 September 30th of that year; and $ 3,000 September 30, 1948; Patch to assume all partnership debts, etc. Patch exercised the option on February 19, 1947, paid the Marleys $ 4,000, and the Marleys delivered their deed to the partnership realty -- the realty in question here -- as provided by the option agreement. The final $ 3,000 payment has not been made to the Marleys, and it is for that payment that they claim a lien against the realty.

At the time the option agreement was executed the partnership firm was in financial distress and owed "numerous" creditors. Appellant was one such creditor. On October 20, 1947, Patch executed a promissory note in favor of appellant for some $ 3,000, the amount of the indebtedness the firm owed appellant, which had accrued from 1945 to 1947. The note was secured by a mortgage on the realty in question. It is that mortgage which appellant sought to foreclose in the trial court.

The contracts and mortgages involved were executed and recorded in the following order:

Instrument

Dated

Recorded

1. Marley-Patch option agreement

Jan. 21, 1947

Feb. 19, 1947

2. Mortgage to Valley Bank

Aug. 7, 1947

Aug. 12, 1947

3. Mortgage to Olds Brothers

October, 1947

Nov. 7, 1947

4. Mortgage to Babbitt Brothers

Nov. 19, 1947

Nov. 22, 1947

[72 Ariz. 395] The parties all stipulated the Valley National Bank mortgage was superior to all others. Babbitt Brothers stipulated that their mortgage was subsequent and inferior to Marleys' rights under the option agreement, except as to Marley's claim for a lien on the real estate for the value of the truck. The main question in ...


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