Another county recorder suit against MERS seeking back recording fees has been dismissed-- this time in Arkansas.

The suit was filed by Mayme Brown, Circuit Clerk of Hot Springs County, Arkansas, as a class action on behalf of all counties in Arkansas.  The suit, which had been filed in August, 2011, was dismissed September 17th in Federal District Court in the Western District of Arkansas.

The suit claimed that MERS had a duty to truthfully record mortgages, and alleged did not do so, because MERS is a stated beneficiary on the mortgage when it cannot legally be the beneficiary.  The suit claimed that MERS used the untruthful mortgages that were recorded to later avoid recording mortgage assignments.

The court found that in Arkansas there is no duty to record a mortgage, nor is there a duty to record mortgage assignments.  Recording is merely to gain the protections provided by mortgage recording statutes, the court said.

The court found that it followed that since the banks had no duty to record the mortgages, they had no duty to record them truthfully, since they would bear the harm of any untruth contained in the mortgages.  The court cited a case where the property description was wrong on the mortgage and the bank lost the protection that would have been provided if the mortgage recording was truthful, and said that the effect of an accidental error and an untruthful recording was the same.

At any rate, the court rejected the circuit clerk's legal theory that she was a third party beneficiary to the mortgages, which meant that she could not enforce any recording duty anyway.

Unlike other suits of its kind, Brown had initially pursued a claim on behalf of herself based on a provision in the Arkansas Constitution which state that "[a]ny citizen of any county, city or town may institute suit, in behalf of himself and all others interested, to protect the inhabitants thereof against the enforcement of any illegal exactions whatever.”  The court also rejected this approach, saying that this clause protects taxpayers subject to illegal collections of taxes, not government entities concerned with an illegal avoidance of taxes.

The complaint was dismissed with prejudice, meaning that the dismissal was a final judgment by the court.