The opinion of the court was delivered by: ROY
ELSIJANE T. ROY, UNITED STATES DISTRICT JUDGE
Trial was held in this matter and post-trial briefs and findings have been received. The Court makes the following findings of facts and conclusions of law, and directs the Clerk to file the post-trial briefs and findings so that they may be made a part of the official record.
This is a foreclosure action by the Federal Land Bank of St. Louis (FLB). On March 30, 1982, the McGinnises executed a promissory note (the Note) to FLB in the principal amount of $275,000.00, bearing interest at the initial rate of 12 3/4% per annum. Contemporaneously with the execution of the note and for the purpose of securing payment of the note, the McGinnises executed, acknowledged and delivered to FLB a mortgage which conveyed certain property lying in Independence County, Arkansas.
On July 2, 1982 the McGinnises conveyed the subject property to Rex A. and Mary G. Davis. A mortgage on the subject property was filed by The Citizens Bank of Batesville on July 2, 1982. Citizens Bank agrees that its lien is inferior.
The plaintiff contends that the McGinnises are in default, and seeks judgment against them and foreclosure of the mortgage. In their answer, the McGinnises, by way of affirmative defense, state that plaintiff entered into a forbearance agreement with defendants for the transfer to plaintiff of defendants' interest in Federal Land Bank stock and a vendor's lien on plaintiff's security in consideration of forbearance from any action against defendants including suit, foreclosure or other collection efforts. Defendants also state that plaintiff is estopped to attempt to collect the indebtedness from defendants as plaintiff accepted payments from defendants Davis, extended the payment schedule with defendants Davis over the defendant McGinnises' objection and generally treated defendants Davis as borrowers on plaintiff's indebtedness.
The McGinnises cross-complained against Rex A. and Mary G. Davis and Citizens Bank of Batesville, seeking foreclosure of a vendor's lien and judgment against Rex A. and Mary G. Davis for any amounts awarded plaintiff against the McGinnises. The McGinnises contend that they conveyed the property to the Davises and retained a vendor's lien, and that the failure of the Davises to pay the amount owed FLB constitutes a breach of the agreement. Therefore, they contend they are entitled to foreclosure of the vendor's lien and indemnification and judgment against the Davises. In their answer, the Davises basically deny the allegations of the complaint.
There is no issue in this case as to the execution of the note and mortgage in favor of FLB. Nor is it disputed that the amount owed on the note as of January 9, 1989 was $370,896.55 with interest thereon at the rate of $117.55 per diem. It is not disputed that the note and mortgage to FLB are in default and that FLB has a first lien against the real property at issue in this action. The only issues before the Court are these affirmative defenses raised by the defendants:
1. Whether FLB is estopped from foreclosing against the McGinnises by virtue of an alleged forbearance agreement entered into between FLB and the McGinnises;
2. Whether FLB is estopped from collecting the indebtedness owed by the McGinnises because it allegedly accepted payments from the separate defendants, Rex A. and Mary Davis, extended the payment schedule with the Davises over the objection of the McGinnises, and because it generally treated the Davises as borrowers on the indebtedness owed to FLB;
3. Whether FLB is estopped from foreclosing against the McGinnises because it received a forbearance application from the McGinnises in 1987 and allegedly failed to respond to the application;
5. Whether FLB is estopped from foreclosing against the Davises because the Davises and the McGinnises submitted a joint application for restructuring on January 6, 1989, three days prior to the trial of this case.
Plaintiff first asks the Court to strike the last three affirmative defenses as being untimely and because they were never properly before the Court. Plaintiff contends that the first two defenses were the only ones ever raised by the McGinnises in any pleading, that the last three were raised for the first time in the Davises pre-trial conference information sheet, and that no one moved to allow their pleadings to conform to the evidence. The plaintiffs do state, however, that they were aware of these defenses, and all of the issues were fully tried to the Court, with the Court reserving ruling on plaintiff's objections. Technically, the plaintiff's legal assertions are correct. However, the plaintiff was able to fully and completely address each affirmative defense, and the Court finds that it is more judicially expedient to reach the merits of the affirmative defenses raised. Had the plaintiff been prejudiced, the Court would hold otherwise. Since no prejudice has been shown, the Court will reach the merits of the defenses raised.
In their post-trial memorandum brief, the McGinnises argue for the first time that FLB is legally barred from pursuing the McGinnises pursuant to Ark.Code Ann. § 4-3-606(1)(a). This defense is obviously very untimely and should not even be considered. However, even if the argument were considered, it would nevertheless fail, since several cases have found that this defense is not available to makers of a note such as the McGinnises. See United States v. Vahlco Corp., 720 F.2d 885 (5th Cir. 1983), later appeal, 800 F.2d 462 (1986); United States v. Unum, Inc., 658 F.2d 300 (5th Cir. 1981); Utah Farm Production Credit Assn. v. Watts, 737 P.2d 154 (Utah 1987).
I. WHETHER FLB IS ESTOPPED FROM FORECLOSING AGAINST THE McGINNISES BY VIRTUE OF AN ALLEGED FORBEARANCE AGREEMENT ENTERED INTO BETWEEN FLB AND THE McGINNISES.
The forbearance application dated April 21, 1987 was entered as an exhibit. The only signature on the application was that of Robert W. McGinnis. In the application, Mr. McGinnis states that he is willing to convey voluntarily to FLB any right, title, or interest he may have in the property, ...