Beal Burrow Dry Goods Co. v. Baker

• Decision Date: 16 April 1929
• Docket Number: 18646.
• Citation: 277 P. 585,136 Okla. 278,1929 OK 165
• Parties: BEAL BURROW DRY GOODS CO. v. BAKER.
• Court: Oklahoma Supreme Court

277 P. 585

136 Okla. 278, 1929 OK 165

BEAL BURROW DRY GOODS CO. v. BAKER.

No. 18646.

Supreme Court of Oklahoma

April 16, 1929

Rehearing Denied May 21, 1929.

Syllabus by the Court.

A debtor, in making an assignment of his property for the benefit of creditors, where the transactions involved are governed by the laws of the state of Arkansas, and when the assignment is executed at the solicitation of the creditors who at a meeting agree to take charge of all the debtor's assets and themselves select the assignee, and the debtor does not seek to coerce any of his creditors, such debtor may stipulate for and exact a release from his creditors who assent, where he dedicates all his property, not exempt by law, to the payment of his debts, to be distributed to all his creditors, and does not reserve to himself, to the exclusion of nonassenting creditors, any interest therein. King v. Hargadine-McKittrick Dry Goods Co., 60 Ark 1, 28 S.W. 514; McReynolds v. Dedman, 47 Ark. 347, 1 S.W. 552; Brown Shoe Co. v. Stone, 172 Ark. 1156 292 S.W. 117.

Commissioners' Opinion, Division No. 2.

Appeal from District Court, Pittsburg County; Harve L. Melton Judge.

Action by Beal Burrow Dry Goods Company against J. H. Baker. Judgment for defendant, and plaintiff appeals. Affirmed.

W. J. Horton and Jackman A. Gill, both of McAlester, for plaintiff in error.

Counts & Counts, of McAlester, for defendant in error.

DIFFENDAFFER C.

This is an action brought by Beal Burrow Dry Goods Company, plaintiff in error, herein referred to as plaintiff, against J. H. Baker, defendant in error, herein referred to as defendant, for the recovery of $1,097.08, claimed as a balance due upon a promissory note. The note was for the sum of $2,000. It was executed by Williams & Stone, a copartnership composed of R. E. Williams and J. H. Stone, who were engaged in business in Ft. Smith, Ark., and indorsed by J. H. Baker. The petition was in the usual form as to execution and indorsement of the note. Defendant answered admitting the execution and delivery of the note by Williams & Stone, and further alleged:

"Third: Defendant admits that he endorsed said promissory note by writing his name across the back thereof, and that such endorsement was without consideration, but as a mere matter of accommodation.

Fourth: For further answer, defendant alleges that on or about the date said note shows a credit of $986.03, the plaintiff and Williams & Stone, the original makers of said note, made and entered into an agreement by which the said Williams & Stone delivered to plaintiff and other creditors, certain goods, property and money, the exact description and amount thereof being unknown to this defendant, with the agreement and understanding that the plaintiff would accept said property, money and goods in full and complete settlement and satisfaction of said promissory note, and that the said Williams and Stone were to be released from further liability by reason of the execution and delivery of said promissory note, and that the said plaintiff received and accepted said property, goods and money in full settlement of said obligations, and fully released the said Williams and Stone from further liability on said note.

Fifth: This defendant alleges that the said Williams and Stone were released from said liability on said note without his knowledge or consent, and that by reason thereof, and in consideration of said agreement, defendant is fully released and discharged from all liability as endorser on said promissory note."

Plaintiff moved to strike certain parts of the answer as follows:

"1. All of paragraph three for the reason that same is redundant and immaterial and constitutes no defense whatsoever.

2. All of the fourth paragraph for the reason that the same is redundant and immaterial and constitutes no defense whatsoever.

3. All of the fifth paragraph for the reason that the same is redundant and immaterial and constitutes no defense whatsoever."

The motion was overruled, and plaintiff replied by general denial, and further alleged:

"Plaintiff says that the assignment made to creditors by Williams and Stone was executed in Ft. Smith, Arkansas, and that at that time both members of said firm were domiciled and the said business was located in Ft. Smith, Arkansas.

Plaintiff further says that the said assignment to creditors and all transactions connected therewith were governed by the laws and decisions of Arkansas, which laws plaintiff expressly pleads as hereinafter.

Plaintiff further says that under the laws and decisions of Arkansas an assignment, either in writing or otherwise, such as pleaded by defendant is void and contrary to public policy and plaintiff therefore says that said agreement claimed by defendant is void and constitutes no defense."

The issues, as thus joined, were tried to a jury, resulting in a verdict for defendant, upon which verdict, after unsuccessful motion for new trial, judgment was entered. From this judgment, plaintiff appeals. There are ten assignments of error, but the principal question involved is raised in the seventh assignment, viz.: That the court erred in refusing to direct a verdict for plaintiff.

Williams & Stone were in business at Ft. Smith, Ark., and, from the record, it appears that on or about the 8th day of March, 1924, they were indebted to various creditors, including plaintiff, in the aggregate sum of nearly $9,000. Their assets were about $7,379.23. On said date a meeting of the principal creditors, except Brown Shoe Company, was held at the Arkansas Valley Bank in Ft. Smith. It is not clear how the meeting was brought about, but the representative of plaintiff notified defendant. At this meeting the condition of the firm was discussed. One of the members was there, and it was agreed that the firm would be unable to continue in business at that place, for the reason that the volume of business was so small that the overhead expenses could not be paid. One of the members desired to move the stock to another town, but objection was raised to this. There was evidence to the effect that at this meeting a tentative agreement, subject to the approval of the other creditors, was made, whereby Williams and Stone were to make an assignment for the benefit of creditors, and if possible prevent bankruptcy; and that it was agreed by those present that, if the assignment was made, they would accept the proceeds in full settlement of their accounts.

H. C. Bass, a representative of one of the principal creditors, was agreed upon by the creditors, as assignee, and thereafter Williams & Stone made a deed of assignment to H. C. Bass, reciting that the parties of the first part were indebted in divers sums of money, which they were unable to pay in full to their different creditors, a list of which was attached; the deed further stated that they desired to make a fair distribution of their property and assets among all their creditors in proportion to their respective claims.

The deed recited that it was in trust for the benefit of creditors of the estate of parties of the first part. Nothing whatever was said in the deed about creditors accepting dividend in full settlement of their claims or accounts or releasing Williams & Stone. Bass took charge of the property, and March 13 wrote all creditors, including plaintiff, in part:

"To the Creditors of Williams and Stone, Fort Smith, Arkansas.

Gentlemen: Subsequent to a meeting of the creditors, held in this city last Friday, March 7th, Williams and Stone, located at 420 Towson Avenue, Fort Smith, Arkansas, have made an assignment to the writer for the benefit of all creditors, share and share alike, subject, of course, to the approval of said creditors.

The following firms were represented at the Creditor's Meeting:

Beal Burrow Dry Goods Company,

Berry Dry Goods Company,

J. Foster & Company,

Arkansas Valley Bank.

It developed that the liabilities of Williams & Stone were considerably in excess of the cash value of their assets and that their volume of business was not sufficient to cover overhead expenses, therefore, it was the unanimous opinion of all creditors present that it would be to the best interest of all parties concerned to liquidate this business and the writer was asked to act as trustee to avoid bankruptcy proceedings."

The assignee advertised and sold the property and distributed the proceeds among all the creditors, at the rate of 48 per cent. of their claims.

Williams & Stone were indebted to plaintiff in addition to the $2,000 note in the sum of $733.34. They were paid 48 per cent. of the total amount, and they...