Bryan v. Thomas, 5-1008

• Decision Date: 25 June 1956
• Docket Number: No. 5-1008,5-1008
• Citation: 292 S.W.2d 552,226 Ark. 646
• Parties: Vance W. BRYAN et ux., Appellants, v. C. D. THOMAS and Jack Tar of Arkansas, Inc., Appellees.
• Court: Arkansas Supreme Court

Page 552

292 S.W.2d 552

226 Ark. 646

Vance W. BRYAN et ux., Appellants, v. C. D. THOMAS and Jack Tar of Arkansas, Inc., Appellees.

No. 5-1008.

Supreme Court of Arkansas.

June 25, 1956.

Petition for Rehearing Withdrawn Aug. 20, 1956.

Talley & Owen and William L. Blair, Little Rock, for appellant.

Thompson & Stripling, Nacogdoches, Tex., Wootton, Land & Matthews, Hot Springs, for appellee.

WARD, Justice.

A brief general statement of the facts preceding and leading up to this litigation will help to understand the issues involved on this appeal. Appellants, Vance Bryan and his wife Charlene, constructed the elaborate Jack Tar Hotel Courts in Hot Springs in 1947. In 1950 the properties were incorporated under the name of Jack Tar of Arkansas, Inc., with appellants owning practically all if not all of the stock. Some time thereafter appellants conveyed several parcels of real estate to the corporation. Substantially all of the money for the construction of the said hotel courts was financed initially by the Reconstruction Finance Corporation. Prior to the date of the incorporation appellants found themselves in financial difficulty and at different times borrowed large sums of money from Mr. C. D. Thomas, a resident of Texas. Most of appellants' negotiations with Thomas were conducted through Mr. Thomas' attorney, A. J. Thompson who lived at Nacogdoches, Texas. The first loan, in the amount of $100,000, which Thomas made appellants was secured by a bus station in Kilgore, Texas, a drug store located near the hotel courts, and a piece of property on Lake Hamilton near Hot Springs. On November 23, 1951 (after the incorporation) the several loans made by Thomas to appellants were refinanced by a note in the total sum of $293,074.67, signed by appellants. This note was secured by the three properties above mentioned and also other properties.

In the fall of 1953 appellants became delinquent on the R. F. C. payments, and in order to avoid a foreclosure, tried to borrow an additional $22,500 from Thomas. Upon Thomas' refusal Mr. Bryan offered to transfer to Thomas one-half of the capital stock of the Jack Tar Corporation. This offer by Bryan was countered by an offer made by Attorney Thompson that Thomas would accept all of the stock in cancellation of the debt, and an agreement to this effect was prepared. Said agreement was mailed to Bryan on October 22, 1953 and on the following day Thomas and Thompson went to Hot Springs to meet with Bryan and to get the agreement signed.

The testimony regarding what happened at this meeting in the office of the hotel courts on October 24, 1953 has an important bearing upon the issues in this case.

Present at this meeting on October 24 was Thomas, Thompson, Bryan and Arnold Adams. Bryan states that he invited Arnold Adams, an attorney from Harrison, Arkansas, to be present because he knew that Adams had been representing the R. F. C. and he wanted him present for advice. It is admitted by all parties that one of the agreements reached was that the corporation would deed to Bryan all properties on which neither Thomas nor the R. F. C. had a lien. The particular properties involved in this litigation are (a) the drug store located adjacent to other hotel properties; (b) the manager's home which was directly adjacent to the hotel courts, and; (c) certain properties situated on Lake Hamilton, hereafter called the lake property. It is admitted by all parties that Thomas had a lien on the drug store property and the lake property but that neither Thomas nor the R. F. C. had a lien on the manager's home. After whatever agreements were reached at this conference, Arnold Adams was instructed to draw up deeds and papers carrying out said agreements, and pursuant thereto, he prepared a deed conveying the drug store to appellee Bryan and the lake property to appellee Charlene Bryan. These deeds were sent to Thomas for him to affix the corporate seal, which act he did and returned the deeds. It is the contention of appellants that said deeds were prepared in accordance with the agreement reached by the said parties. It is the contention of Thomas that the said two pieces of property were to be left in the corporation pursuant to the original agreement referred to above, since neither piece of property was clear of liens. Appellants contend that this part of the original agreement was changed during the discussion and that the deeds were prepared in accordance with the changed agreement. Thomas brought this suit to have said deeds cancelled.

A third disagreement between the parties arises out of the conference held on October 24, 1953. In that connection Thomas and Thompson give this version of what occurred: Bryan stated in effect that he had no ready cash, that he would therefore probably lose any property conveyed to him, but that he had approximately $15,500 in checks which the corporation owed him, and that he, Bryan, reached into a drawer and held up a large number of checks representing to them to be in the amount of said sum, and; That Thomas thereupon agreed to take care of said checks by reducing liens against other property belonging to Bryan to the extent of said amount. Bryan's version of what occurred is, in effect, that the corporation owed him to the extent of approximately $15,500 and that the checks were evidence of part of that amount only.

On April 14, 1955 appellees, C. D. Thomas and Jack Tar of Arkansas, Inc. filed a complaint, with numerous exhibits attached, setting forth in detail the agreements entered into in the office of the hotel court on October 24, 1953 and describing the circumstances under which the deeds above mentioned were executed. Said complaint, insofar as it pertains to the issues raised on this appeal as above indicated, alleged: (a) A fraudulent scheme on the part of Bryan to induce Thomas to pay off certain debts and satisfy certain liens on certain described property belonging to Bryan and prayed for judgment in the amount of $7,361.93 against Bryan including the right of subrogation as to the liens discharged; (b) That Bryan falsely and fraudulently represented that he individually [and not the corporation] was the owner of the manager's home and thereby induced Thomas to agree to convey to Bryan the lake property in exchange thereof, and the prayer was for the cancellation of the deed by which the corporation conveyed the lake property to Bryan, and; (c) That there was no consideration passing to the corporation or to Thomas for the conveyance, by the corporation, of the drug store to Bryan, and that said purported conveyance was obtained through the fraudulent scheme of Bryan to enrich himself at the expense of Thomas and the corporation, and the prayer was for the cancellation of said deed.

(a) The trial court rendered judgment in favor of C. D. Thomas against appellants in the total sum of $7,361.83 and subrogated Thomas to the rights of the liens which he had satisfied in that amount theretofore existing on a part of Lots 4, 5, 6 and 14 of Block 157 of the United States Hot Springs Reservation (described by metes and bounds in the transcript) and on Lot 8, Block 156 and a part of Lot 9 Block 156 [described by metes and bounds in the transcript] of the United States Hot Spings Reservation. Appellants appeal from a portion of the judgment [$5,361.83] and from the order declaring a lien therefor on specific property. After a careful consideration of all of the testimony bearing on this issue we think the judgment of the trial court should be sustained on this item. Regardless of whether or not Bryan represented, on October 24, 1953, that he had checks against the corporation in the amount of $15,500, it does appear from the record, apparently undisputed by appellants, that the corporation was indebted to him in the amount of $7,513.31 as of date June 30, 1953 and that this amount did not include checks which Bryan was holding against the corporation. It is admitted by appellant that he did cash checks on the corporation in the amount of $4,889.89. These two items together total only $12,403.20. On the other hand there is evidence from which the chancellor was justified in finding that Thomas paid out approximately $15,000 on behalf of Bryan in addition to the checks which Bryan cashed agaisnt the corporation in the amount above stated. Bryan's own testimony shows that he did not have possession of any checks against the corporation other than those which he cashed in the amount of $4,889.89, and he admits that the latter amount was paid to him by the corporation. The testimony justified the trial court also in finding that Thomas paid off liens on specific properties as above set forth and it was correct in subrogating Thomas to all the liens of the former lien holders against Bryan's property.

(b) Some of the testimony and facts relative to the controversy over the manager's home and the lake property are undisputed, and some are in dispute. It is admitted the title to both pieces of property was in the corporation at the time the agreements were reached on October 24, 1953; that neither Thomas nor the R. F. C. had a lien...