Arkansas Nat. Bank v. Boles

• Decision Date: 12 December 1910
• Citation: Arkansas Nat. Bank v. Boles, 133 S.W. 195, 97 Ark. 43 (Ark. 1910)
• Parties: ARKANSAS NAT. BANK v. BOLES et al.
• Court: Arkansas Supreme Court

133 S.W. 195

ARKANSAS NAT. BANK v.BOLES et al.

Supreme Court of Arkansas.

December 12, 1910.

Appeal from Washington Chancery Court; T. H. Humphreys, Chancellor.

Action by the Arkansas National Bank against C. P. Boles, in which John R. Harris and others were made partiesdefendant.From a decree of the Chancery Court, plaintiff appeals.Reversed and remanded, with directions.

On the 28th day of April, 1908, C. P. Boles and his wife executed to appellant a mortgage on lot 1, block 1, in the town of Fayetteville, to secure the following indebtedness, to wit: One note of even date for $1,250, one note dated April 24, 1908, for $1,250, and other notes indorsed by C. P. Boles, which latter amounted to $9,162.82.The lot described was the "residence" or home place of Boles and wife, the mortgagors.On February 2, 1909, C. P. Boles and wife executed to Jno.R. Harris, as trustee for the First National Bank of Fayetteville, a mortgage on the lot above mentioned to secure the First National Bank for a loan of $1,000, evidenced by note of that date.

Harris testified that C. P. Boles and Ashley Boles, his son, wanted to borrow $1,000 from the bank he represented, and wanted to secure it by a mortgage on the home place.He asked them what was against the home place.They mentioned, among others, a note to the appellant for $1,250.Witness then asked Boles to get a statement from the Arkansas National Bank (appellant) of his indebtedness and how much was secured.Boles went at once to appellant and returned with the following statement written on the stationery of the Arkansas National Bank:

Note Apr. 28th, 1908....... $1250.00    Sec.    Residence
                 "    "   22      " .......  1250.00             40 acres
                 "   Bal.           ..................1350.00   Endorsed
                                           E. Pitkin and Ellis Duncan
                

He relied upon the above statement as to the extent of the incumbrance on the "home place" and loaned Boles the $1,000; would not have loaned the $1,000 but for the statement.If he had known that appellant had a lien on lot 1 for $1,250 and the further sum of $9,162.82 or any other sum in addition to the $1,250, which he understood was represented by note of April 28, 1908, he would not have loaned Boles the $1,000.Ashley Boles testified: "I was at the First National Bank of Fayetteville, about the 2d of February, 1909, when an application was made by my father for a loan of $1,000.Mr. Harris asked us to go to the Arkansas National Bank and find out how much we owed it; just a general statement of what we owed on the home and mountain places.That, in compliance with the request, my father and I went immediately to the Arkansas National Bank and let Mr. Morton know that we were on a deal with Mr. Harris.We told him that we were on a deal with Mr. Harris, or figuring with him, and asked him this: `Just give us a statement, Mr. Morton, of what we owe and what it is secured by.'He turned around to the books — he was back in the vice president's office — and wrote us out a statement.After we got the statement, we took it back to Mr. Harris and gave it to him, and after that the note and mortgage were given."

C. P. Boles testified: "I think I told Mr. Morton that Mr. Harris was not satisfied with my statement, and wanted him to make a statement of the notes we owed, the date, and how secured; and he gave us in return that little statement there which was then three notes, which were secured as this has them there.I took the statement and went and showed it to Mr. Harris.This statement was for the purpose of showing Mr. Harris how much our property was incumbered.The $1,000 was put to my credit in the bank.No part of the same has been paid except the amount credited."

The statement referred to by these witnesses is that set out above.

W. H. Morton testified: "I am cashier of the Arkansas National Bank, and was vice president in April, 1908.Boles was in arrears to both our bank and the First National Bank.I did not know to what extent, or what amount, but I knew of the fact.The statement alluded to by Harris and the Boles was made by me, and was made at the bank and upon bank stationery.I have no recollection as to when the statement was prepared.My recollection is Mr. Boles asked for a statement.Mr. Boles said he was on another deal.During the period from July, 1907, the organization of the Arkansas National Bank, up to February, 1909, I knew that the First National Bank of Fayetteville was also advancing money to Boles and to the wagon company for the same reason that our bank was doing so.Boles was in arrears both at our bank and at the First National Bank."He further testified that he had no recollection of the figuring in the statement; that Mr. Boles had not called upon him for a statement to be furnished to any one else; that he did not make those figures to enable him to obtain the loan; that he had no knowledge of his negotiating for a loan; that he often called for statements on his own account; and that these notes were designated in this way.The president of the bank also testified that Boles often called for these statements, that these notes were designated in this way, and that he had no knowledge whatever of the procurement of any loan from the First National Bank.

The appellant sued Boles and wife and made Harris, trustee for the First National Bank, and others, parties.The complaint set up the various notes mentioned in mortgage of April 28, 1908, alleged...