Balch v. Leader Federal Bank for Savings
Supreme Court of Arkansas
868 S.W.2d 47 (1993)
In 1970, the owner of four parcels of land in Arkansas signed a ground lease with a lessee who planned to build a hotel on those parcels. The lessee planned to use four neighboring parcels that the lessee owned as hotel parking. The lessee borrowed money from Liberty National Life Insurance Company (Liberty National) to help finance the hotel’s construction. Both the lessee and the owner signed a mortgage on the hotel to secure repayment of the loan to Liberty National. The owner then conveyed the parcels to Memory B. Balch and Beverly Balch Price (plaintiffs), and the lessee conveyed its interest in the ground lease and its ownership of the neighboring parcels to the Crestwood Company (Crestwood). The Balches and Crestwood agreed that the ground lease remained binding and that the Liberty National mortgage continued to encumber the hotel property. In 1987, Crestwood defaulted on the Liberty National loan and obtained a new loan from Leader Federal Bank for Savings (Leader Federal) (defendant) in the amount of approximately $1.924 million to pay off Liberty National and satisfy the mortgage. Crestwood signed the note and mortgage with Leader Federal, and the Balches were asked to sign only a certificate acknowledging facts and consenting to the Leader Federal loan covering the hotel parcels. Crestwood defaulted on its mortgage with Leader Federal. Leader Federal sued to foreclose on the hotel and adjacent parcels, arguing that the certificate created a lien on the Balches’ fee-simple absolute interest in the hotel parcels. The Balches claimed the certificate only subordinated the Balches’ interest in the ground lease to Leader Federal’s mortgage and that because the Balches did not sign the mortgage with Leader Federal, the Balches’ fee-simple absolute interest in the hotel parcels was not subordinated to Leader Federal’s mortgage with Crestwood. The trial court agreed with Leader Federal, ruling that Leader Federal could foreclose the Balches’ fee-simple interest under the mortgage. The Balches appealed.
Rule of Law
Holding and Reasoning (Hout, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 178,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.