Cherry v. Peay

• Decision Date: 14 December 1914
• Docket Number: (No. 64.)
• Citation: 171 S.W. 924
• Parties: CHERRY v. PEAY.
• Court: Arkansas Supreme Court

171 S.W. 924

CHERRY v. PEAY.

(No. 64.)

Supreme Court of Arkansas.

December 14, 1914.

Appeal from Circuit Court, Pulaski County; G. W. Hendricks, Judge.

Action by Nick Peay against L. W. Cherry on a note. Judgment for plaintiff, and defendant appeals. Affirmed.

Appellee was the plaintiff below, and brought suit on a note for $4,595, dated July 26, 1912, and due six months thereafter, payable to his order, and executed by appellant.

Appellant filed an answer and a cross-complaint. In his answer he denied appellee's ownership of the note sued on, and denied being indebted to appellee in any sum, but alleged the fact to be that appellee was indebted to him in the sum of $2,572.52 on account of advances made to appellee to enable him to complete a contract which he had with an improvement district in the city of Little Rock. By way of cross-complaint it was alleged that the State National Bank of Little Rock was the true owner of the note sued on, and that that institution was indebted to appellant in a sum in excess of $30,000, and that its officers had fraudulently transferred the note sued on to appellee. There were a number of allegations in regard to the management of the affairs of the bank, the effect of which was to allege that the bank was attempting to defraud appellant. Judgment was prayed both against the bank and appellee. Attached to the complaint, as an exhibit thereto, was an itemized statement of the transactions between appellant and appellee, beginning with October 4, 1910, and covering large sums of money.

The bank was made a party to this suit on account of the allegations of the cross-complaint, and it filed a demurrer and a motion to strike, both of which were sustained by the court. Appellant now concedes the correctness of the court's action, and further admits that appellee was the owner of the note sued on and also of another note executed at the same time for $1,006.88. An answer was filed to the cross-complaint which denied its allegations.

During the progress of the trial it developed that on August 8, 1911, appellee executed a statement of his account with appellant, in which he admitted owing him $1,795.84. This statement was sworn to by appellee, and appellant thereafter insisted that no account should be taken of any transaction between the parties prior to the date of this statement. The exhibit filed to the answer made no reference whatever to this statement, and in explanation of this failure counsel for appellant say:

"At the time defendant's answer was written, his attorneys were not aware of the affidavit showing an indebtedness of Peay of $1,795.84. If the existence of the affidavit had been known, it would not have been necessary to state the account back of it at all, because there was a settlement of accounts up to and including that date, not only signed, but sworn to, by Peay himself, and it stated the account at that time."

The cause was, by consent of parties, submitted to the court sitting as a jury, and the following facts were disclosed by the evidence: Appellant was the president of the State National Bank, and undertook to furnish appellee the money to do the work required in an improvement district in the city of Little Rock and, in addition, made the bond required by the district guaranteeing the performance of the work, for which he was to be paid the sum of $500. Appellant's bank furnished money to appellee to pay for the work as it progressed, and he received from appellee all money collected on account of the work. These payments on the work were deposited by appellant to the credit of his individual account, and the account of appellee at the bank became overdrawn $5,600. On July 26, 1912, appellant and appellee undertook to settle with each other and with the bank. At that time appellant executed the note here sued on, and appellee executed to the order of appellant the note above mentioned for $1,006.88. These two notes were used in settling the overdraft at the bank. The note for $1,006.88 was a lengthy instrument, covering, with the...