Merchants' & Farmers' Bank v. Cleland

• Decision Date: 18 December 1903
• Citation: 77 S.W. 719
• Parties: MERCHANTS' & FARMERS' BANK v. CLELAND et al.
• Court: Kentucky Court of Appeals

77 S.W. 719

MERCHANTS' & FARMERS' BANK v. CLELAND et al.

Court of Appeals of Kentucky.

December 18, 1903

"Not to be officially reported."

Dissenting opinion. For majority opinion, see 77 S.W. 176.

H. W Rives, for appellant.

H. P Cooper, Edward W. Hines, A. M. J. Cochran, and W. S. Pryor for appellees.

PAYNTER J. (dissenting).

I delivered the opinion of the court which was withdrawn, and it so fully states the facts and my conclusions that I adopt it as my dissenting opinion, with some additional observations. It reads as follows:

"On April 4, 1896, T. Horace Cleland, husband of the appellee Ella M. Cleland, entered into a contract with the Inter-State Cattle Company of Macon, Miss., to the effect that it was to increase its capital stock to $25,000. Cleland was to take the stock, and pay for the same at par value; the amount so invested to be used to purchase blooded mares and other improved stock, suitable for stocking its property. The value of the live stock to be agreed upon by the parties in interest, if possible, but if not, to be determined by disinterested parties in the usual way. Cleland was to give his undivided attention to the business of the company as manager, and for his services was to be paid $480 per year. He was to have the right to keep some of his own horses and mares upon the property, and for which he was to pay pasturage. The property belonging to the company consisted of 1,600 acres of land in Noxube county, Miss., and a cash asset of about $2,000. The value of the assets was estimated at $18,000. Cleland was to take $7,000 of the stock, thus increasing the capital stock to $25,000. He lived at Lebanon, Ky. and owned 75 or 100 head of pedigreed horses, and it appears to have been understood that he was to ship them to Noxube county, Miss. It was in contemplation of the parties that his subscription to the capital stock was to be paid in the horses, although the written contract did not so state. Under the arrangement he was to take the horses to Mississippi about the 1st of January, 1897, at which time he shipped part of them; but it is claimed by the appellee Mrs. Cleland, as there was no feed provided for them by the company, the balance were not then shipped. In March another consignment of the horses was made. Some of them were not shipped until after July 19, 1897. The contract between the parties as to the increase of the capital stock, etc., and acceptance of the horses was never consummated. The Cleland horses were placed upon the company's land. He took possession of it as manager, and proceeded to improve the place. Those representing the corporation claim that Cleland refused to have his horses valued, because he said they were not in proper condition, and that if they were valued he would not get for them what he was entitled to receive. Mrs. Cleland claims that the failure to value the horses was the fault of the cattle company; that when it was suggested that they be valued its officers would postpone it for one reason or another. The cattle company claims that the horses were in such condition when they reached Mississippi that they were hardly able to travel from the railroad to the land. Many of the horses died. Mrs. Cleland claims that she owned the horses under a contract with her husband. Some of his Kentucky creditors placed their claims in the hands of a Mississippi lawyer for collection. Thus the matter stood July 19, 1897, when the contract made between the cattle company and Mr. Cleland was abandoned by mutual consent. The cattle company then sold Mrs. Cleland 640 acres of the land. The contract price was stated in the deed at $8,500, but a part of that amount consisted in advancements which the cattle company had made between January 1st and that date for the improvement of the property and the expenses of farming operations. As evidence of the indebtedness of the $8,500, Mrs. Cleland executed her notes, and her husband also signed his name to the notes below hers. To secure her notes she executed a deed of trust on the land which she purchased and the horses that were then living. The Kentucky creditors instituted a proceeding in a chancery court of Mississippi to subject the horses to the payment of their debts, upon the ground that they belonged to the husband, and that the transaction between him and her was fraudulent. The chancery court decided that the transaction between the husband and wife as to the horses was fraudulent, and that they should be subjected to the payment of the husband's debts in suit. The Supreme Court of that state affirmed the judgment. The horses were subsequently sold to pay the debts, thus leaving the land alone pledged to pay the purchase money debt. The Mississippi courts held the transaction was valid as to the deed of trust on the land. The land was sold under the deed of trust, and only brought $2,100. Shortly after the notes were executed they were assigned to the appellant. This action is based upon the notes upon which credit is given for the $2,100, the proceeds of the sale of the land.

"Mrs. Cleland resisted the payment of the notes upon the grounds: (1) That she was assured by Mr. Jones, secretary of the cattle company, that she did not incur personal liability in the execution of the notes and the deed of trust. (2) That, if she cannot thus be relieved, the notes should be credited with the sum of six hundred and odd dollars, expenses paid by her for keeping the horses in Kentucky from January until they were shipped to Mississippi, and for the value of the horses that died in Mississippi before and after July 19, 1897; for the amount due for pasturage of other persons' stock upon the company's land during the season of 1897; for the value of her husband's services as manager from January 1 to July 19, 1897; and some other amounts not necessary to mention. (3) That there should be a rescission of the contract, because the land which she bought was infested with ticks. (4) That the title to the land was defective, inasmuch as about five acres of it was in use for cemetery purposes.

"Under the Mississippi laws a married woman is personally bound upon her contracts. On the day the land was sold to Mrs. Cleland the president of the cattle company and some of the directors and Mr. Jones, its secretary, met the Clelands at a lawyer's office to consummate the sale. Mrs. Cleland testifies that while the papers were being prepared she had a conversation with Mr. Jones, secretary of the cattle company in the room where they had all assembled, and details it as follows: 'Mr. Jones came over and sat down by me, and I told him the horses were mine, that I had put my money in them, and that was the reason I wanted the land deeded to me, and that I was willing to give a mortgage on the land and the horses, but I was not willing to be bound in any other way, and he assured me that I would not be.' Mr. Jones denies that he gave her such assurance. The lawyer testifies that he never heard such a conversation, and that it was never suggested to him in the preparation of the papers by any person that Mrs. Cleland was not to be bound by the notes. The other persons interested in the cattle company who testified deny any knowledge of such an arrangement as claimed by Mrs. Cleland. The notes import a personal liability. The notes were an acknowledgment of a personal liability and promise to discharge it. Her testimony is insufficient to overcome the evidence of...