Lytle v. Citizens Bank of Batesville

Tom Glaze, Judge.

In August of 1979, the appellant sold a tractor and trailer to Bobby Reeves and his wife for $20,000. The Citizens Bank of Batesville, hereinafter referred to as Bank, loaned the Reeveses $20,000 to finance the purchase, with the proceeds from the loan going to appellant to satisfy other indebtedness to the Bank. The Reeveses granted a lien to the Bank on the tractor, trailer and on certain lots in Calico Rock, Arkansas. Appellant individually guaranteed the loan.

The Reeveses defaulted after making two payments, and the Bank foreclosed on the security, naming appellant, the Reeveses and an individual who claimed a repairman’s lien on the truck. The repairman is no longer a party to the suit. The Reeveses were totally in default and, after a hearing, the court entered a decree on October 21, 1980, granting judgment in favor of the Bank against the Reeveses and appellant jointly and severally for the balance due on the $20,000 loan.1

The personal property was sold to appellant on November 7, 1980, and the real estate was set for sale on December 16,1980. The Bank entered a bid for $13,000 on the property, which was approximately the amount needed to satisfy appellant’s debt. On December 18, 1980, the Bank filed a motion to withdraw its bid and deny confirmation of the sale. A hearing was held on January 23, 1981, and the chancellor entered an order on February 12, 1981, denying confirmation of the December 16 sale and reforming the mortgages between the Reeveses and the Bank so as to delete the two lots. A second sale of the remaining five lots was ordered. That sale was held on March 18, 1981, at which time appellant bid $ 100 for the lots. The lots were sold and deeded to him and this sale was confirmed. A deficiency judgment was entered, which appellant satisfied on May 7, 1981.

Appellant argues that the trial court erred in not confirming the first sale, and it also erred in reforming the mortgage to delete two lots. He contends the first sale should have been confirmed because the attorney for the Bank testified at the trial. He argues further that even though the Bank’s attorney withdrew during the trial, he still later participated in the case by preparing and approving the proposed decree. On the other side, the Bank urges that this appeal should be dismissed as moot since appellant paid the judgment, and it has been satisfied.

MOOTNESS OF THE APPEAL

No motion for dismissal of the appeal on the grounds of mootness was filed by the Bank, but the point was raised in the Bank’s brief. We chose to treat this issue as though it was raised by a motion to dismiss, and time was granted both parties to submit affidavits in support of and in contravention of such a motion. Ark. Stat. Ann. § 27-2139 (Repl. 1979).

Appellant has filed an affidavit which states that a supersedeas bond was not available to be posted because of appellant’s financial condition. The affidavit further states that since the judgment had not been stayed by a supersedeas bond, the Bank’s attorney indicated that he intended to execute on appellant’s office equipment and bank account. Appellant then claims he borrowed the money to pay the judgment as a result of the threat of execution. That sworn allegation has not been contradicted.

Some jurisdictions hold that the payment of a judgment under any circumstances bars the payer’s right to appeal. However, in the majority of jurisdictions, the effect of the payment of a judgment upon the right of appeal by the payer is determined by whether the payment was voluntary or involuntary. In other words, if the payment was voluntary, then the case is moot, but if the payment was involuntary, the appeal is not precluded. The question which often arises under this rule is what constitutes an involuntary payment of a judgment. For instance, in some jurisdictions the courts have held that a payment is involuntary if it is made under threat of execution or garnishment. There are other jurisdictions, however, which adhere to the rule that a payment is involuntary only if it is made after the issuance of an execution or garnishment. Another variation of this majority rule is a requirement that if, as a matter of right, the payer could have posted a supersedeas bond, he must show that he was unable to post such a bond, or his payment of the judgment is deemed voluntary. For a discussion of the various rules, along with citations to the various jurisdictions, see: Defeated Party’s Payment or Satisfaction of, or Other Compliance With, Civil Judgment as Barring His Right to Appeal, Annot. 39 A.L.R. 2d 153 (1955); 4 Am. Jur. 2d Appeal and Error, § 260 at 755 (1962); Metropolitan Development and Housing Agency v. Hill, 518 S.W. 2d 754 (Tenn. App. 1974).

We adopt the majority rule as the better reasoned rule. Thus, if appellant’s payment was voluntary, then the case is moot, but if the payment was involuntary, this appeal is not precluded. In applying this rule to the facts at bar, we must determine whether the payment made by appellant was voluntary or involuntary. In doing so, we believe that one of the most important factors to be considered is whether appellant was able to post a supersedeas bond at the time he satisfied the judgment.2 The record supports the conclusion that he could have done so.

There is nothing in the record which shows appellant even requested the court to set the amount of a supersedeas bond, much less to show his financial inability to pay such cost. Obviously, appellant had the financial ability and resources to borrow $13,364 so he could satisfy the judgment in full. There is no evidence to indicate the posting of a supersedeas bond would have been a greater or lesser financial burden on appellant than his full payment of the obligation imposed under the judgment. For whatever reasons, appellant simply chose to forego his right to request a bond in an effort to stay the trial court’s judgment and any subsequent proceedings to enforce it.

In view of the state of the record before us, we find appellant’s payment was voluntary. Therefore, we hold this appeal should be dismissed because appellant’s satisfaction of the trial court’s judgment rendered the issues on appeal moot.

Dismissed.

Mayfield, C.J., concurs. Cooper, J., dissents.

After the $20,000 loan was made, the Reeveses obtained an additional $10,000, which was secured by his second lien on the same collateral, plus a lien on another vehicle. That transaction is not a part of this lawsuit since the chancellor ruled that appellant had not given a continuing guarantee and, therefore, had not guaranteed the subsequent $10,000 advance.

Arkansas Rules of Appellate Procedure, Rule 8, Ark. Stat. Ann. Vol. 3A (Repl. 1979), provides that a supersedeas bond is necessary to stay appellee’s proceeding on the j udgment. Rule 8 provides that whenever the appellant “desires a stay on appeal” he must post a supersedeas bond, but it does not require the posting of a bond in order to appeal.