Brown v. Wright

• Citation: 22 S.W. 1022,58 Ark. 20
• Parties: BROWN v. WRIGHT
• Decision Date: 10 June 1893
• Court: Supreme Court of Arkansas

22 S.W. 1022

58 Ark. 20

BROWN v. WRIGHT

Supreme Court of Arkansas

June 10, 1893

Appeal from Arkansas Chancery Court, JAMES F. ROBINSON, Chancellor.

J. H and J. A. Brown brought suit against Win. Wright and Annie his wife. The complaint alleges that on April 30, 1887 William Wright owned certain property in Tyler, Texas, known as Wright's hotel; that he fraudulently represented to plaintiffs that his title was unincumbered, and thereby induced plaintiffs to buy it from him at its full value, $ 2500, paid in cash; that he and his wife, Annie, thereafter removed from Texas to Pine Bluff, Arkansas, and invested the money received of plaintiffs in a hotel at Pine Bluff, and took the title in the name of defendant, Annie; that the Pine Bluff property was afterwards sold, and the money reinvested in a hotel at Stuttgart and other real estate in Arkansas county, and the title of the last mentioned real estate was also taken in her name and is now held and claimed by her as her own; that, about a year after plaintiffs had purchased and paid for the hotel in Tyler, they discovered for the first time that this hotel property, as defendants well knew when they sold to plaintiffs, was incumbered by a mortgage which defendants had joined in making to one Mrs. Loftin on April 19, 1886, to secure a debt of $ 1000 payable two years after date and bearing twelve per cent. interest from maturity, the existence of which mortgage defendants intentionally concealed from plaintiffs; that, the mortgagee having advertised the property for sale under the mortgage the plaintiffs, to save their title, were compelled to pay, and did pay, the full amount of the incumbrance; that both defendants are insolvent, and have no property except that sought to be reached in this action; and that the object of defendants in procuring the title to this property to be taken in the name of defendant, Annie, was to defeat plaintiffs' claim. Prayer was for judgment for the amount expended by plaintiffs to remove the incumbrance, that the lands mentioned be subjected to plaintiffs' claim, and for general relief.

The answer of both the husband and wife sets up that when the hotel at Tyler was bought, $ 1200 of the price was paid with her money, and that the remainder was afterwards paid by her with money which she made by keeping boarders, and that the husband, though holding the legal title, was really a trustee for her. They deny that either of them made any false representations about the lien, but say that plaintiffs bought subject to this, as it was on the public records. The answer also sets up a homestead right in the property sought to be subjected to plaintiffs' claim.

Assuming the answer to contain a counter-claim, the plaintiffs filed a reply denying the averments of the answer. This reply also contained an affirmative allegation that defendants made plaintiffs a warranty deed to the hotel at Tyler. This reply seems to have treated as an amendment to the complaint, and defendants filed an answer to it, denying that defendant, Annie, made a warranty deed.

J. H. Brown, one of the plaintiffs, testified: "I am sixty-three years old, am a cotton broker at Tyler, was formerly a merchant and knew defendants at Tyler many years. They kept a hotel there, and I sold them railroad and family supplies. John A. Brown and I bought their hotel at Tyler, called the Wright hotel, and paid them $ 2500 in cash therefor, its full value. Before buying I questioned William Wright, one of the defendants, closely about the title, and he said there was not a dollar's incumbrance on it. His wife said the same thing. They told me the same thing when they delivered the deed. We have offered to sell the property for $ 2500 Some months after buying the property we found there was a $ 1000 mortgage on it, given to Mrs. Loftin by Wright and wife, and we paid this in self protection and had it transferred to us. We got a warranty deed signed by both defendants. I herewith exhibit it. He had purchased this land from J. P. Baird. Wright was poor, and had no other property, I think, unless it was a little place near Tyler which was not paid for."

John A. Brown, the other plaintiff, testified substantially the same as J. H. Brown.

William Wright testified: "My wife owned forty-seven acres of land near Tyler. She sold it and invested the money in the property known as Wright's hotel at Tyler. The deed to that was taken in my name, but was paid for with her money obtained from the sale of her land. When this hotel was sold, the money was invested in a hotel bought at Pine Bluff from D. L. Ringlet, and the deed taken to my wife, as it was her money. When the Ringler property was sold, the proceeds were invested in land in Arkansas county, which was exchanged for the property now in suit. I did not make the statement to Ringlet which he testified to in his deposition. When I sold the hotel to plaintiffs, I was not insolvent; I afterwards sold a piece of land for $ 1200."

Annie Wright testified: "My husband and I went to Tyler about eleven years ago. I bought forty-seven acres of land in my own name and with my own money. When I sold this I gave the money to my husband to buy the lots in Tyler (afterwards known as the Wright hotel), and without my knowledge he took the deed in his own name. I did not know for some time that he had done this, and when I discovered it I was very much dissatisfied. My husband worked in the railroad shops; I was a boarding house keeper, and bought the lots in Tyler to build a boarding house, which I kept for one year and managed myself. I refused to sign the deed to Brown until he gave the check for the price to me and in my name. When the Wright hotel was sold I invested the proceeds in a hotel at Pine Bluff, bought from D. L. Ringlet, and when the latter was sold I invested the proceeds in land in Arkansas county, which I exchanged for the land in suit. I did not know my husband was insolvent."

By stipulation of counsel it was agreed that defendants would each deny that they had ever made any statement to anybody, to the effect that the Wright hotel at Tyler was unincumbered, and this denial was to be taken as if deposed to in a deposition.

Upon this testimony the chancellor found in favor of the wife and dismissed the complaint as to her, but rendered judgment against the husband for $ 1000 and interest.

Plaintiffs have appealed.

Affirmed.

W. S. McCain and T. J. Ormsby for appellant.

1. Where a vendor falsely represents that his title is perfect when he knows it is incumbered, he is liable for deceit. If he gives an express covenant of warranty, the vendee has the option to sue for deceit or on the broken warranty. 15 Ark. 114; 4 id. 467; 11 id. 58; 40 id. 422. The reply should be treated as an amendment to the complaint, and thus state a count upon the covenant. The proof sustains both counts.

2. The proof shows that the property bought was bought with the husband's money. 50 Ark. 237; 30 id. 124; 37 id. 22; 42 id. 503. Under the common law the money became the husband's. 68 Ill. 119; 50 Ind. 288; 41 Tex. 422 and cases supra. See also 42 Ark. 503. What the law of Texas is, in the absence of proof, is difficult of solution. 52 Ark. 385; 51 id. 459. This case is similar to 50 Ark. 42. See also 30 Ark. 79. The trust seems to be an afterthought to defeat creditors. 48 Ark. 169; 34 id. 467.

3. By enjoying the benefits of her husband's fraud, she must be held to have ratified his acts. Mechem on Ag. sec. 743, note 1; 28 Ark. 59; 54 id. 220; 29 id. 131; 111 U.S. 395; 12 Wall, 360; Story, Agency, sec. 139 and notes. An action of deceit lies against one who keeps money after he knows it was obtained by deceit. 1 Wharton, Cont. 267-70; Tiedeman on Sales, sec. 173. If defendants obtained money by fraud and invested it in other property, equity will follow it up as long as it can be traced. 51 Ark. 351.

OPINION

MANSFIELD, J.

1. It is suggested by counsel for the appellants that the complaint was treated in the court below as if it were so amended as to claim damages for a breach...