Cooper v. Sparrow

• Decision Date: 29 June 1953
• Docket Number: No. 5-146,5-146
• Citation: 259 S.W.2d 496,222 Ark. 385
• Parties: COOPER et al. v. SPARROW et al.
• Court: Arkansas Supreme Court

Page 496

259 S.W.2d 496

222 Ark. 385

COOPER et al. v. SPARROW et al.

No. 5-146.

Supreme Court of Arkansas.

June 29, 1953.

Dissenting Opinion July 6, 1953.

Digby & Tanner, North Little Rock, for appellants.

Mary Margot Biddulph, Virgil R. Moncrief and John W. Moncrief, Stuttgart, for appellees.

ROBINSON, Justice.

Appellant, J. G. Cooper, doing business as Cooper Lumber Company, filed this suit against appellee Chester Sparrow and others, contending that Sparrow as the prime contractor in the construction of certain dwellings is indebted to Cooper in the sum of $150 for cash advanced by Cooper to one H. W. Kennedy, a painting subcontractor, and used by Kennedy in meeting payrolls; and also prayed for judgment against Sparrow in the sum of $894.68 for materials furnished by Cooper and used on the job. The other defendants in the case are the owners of the property on which Cooper seeks to establish a materialman's lien. There was a decree in favor of Sparrow and the property owners. Cooper has appealed.

The subcontractor Kennedy made arrangements with Cooper to furnish materials for the paint job, and Cooper also agreed to advance Kennedy money to meet his payroll. The contract between Sparrow and Kennedy was prepared at Cooper's office; however, Cooper is not a party to the contract; but the contract provides that all payments made by Sparrow on the contract with Kennedy be made to H. W. Kennedy and Cooper Lumber Company. A preponderance of the evidence shows that Sparrow did not know and had no reason to believe that Cooper had agreed to advance payroll money to Kennedy. After the job had been in progress for some time, Sparrow made a check to Kennedy and Cooper jointly in the sum of $800 at which time Kennedy owned Cooper $507.80 for materials and also owed for cash advanced to meet the payroll; but Sparrow did not know of the advances for payroll purposes. Later Sparrow learned of such advances and in order to protect himself made no further checks to Kennedy and Cooper but saw to it that the employees of Kennedy who were working on the job were paid, and also withheld an amount he thought sufficient to pay for the materials. Sparrow contends the entire $800 paid to Kennedy and Cooper jointly should be credited on the materials account; but only $506.80 was owed on that account at the time of the $800 payment. When Cooper cashed the $800 check he could not credit to the materials account more than was owed on that account. As a matter of fact, Cooper credited the entire $800 to the account for cash advanced for payroll purposes. He claims that he had a right to credit the amount paid in such manner and that Sparrow as the prime contractor still owes the entire materials account and $150 balance on the cash account, and that he, Cooper, should have a lien on the property to secure the payment of both accounts.

Cooper contends that the principle of promissory estoppel applies and relies on Peoples National Bank of Little Rock v. Linebarger Construction Co., 219 Ark. 11, 240 S.W.2d 12. However, the facts in that case were altogether different from those in the case at bar. There Linebarger was the principal contractor and it was shown that the bank advanced money to a plastering contractor to meet his payroll on reports from Linebarger to the bank as to the amount of money the plastering contractor had earned on his contract for that particular payroll period. Linebarger knew the bank was advancing the money to meet the payroll on the strength of his reports. But here a preponderance of the evidence shows that Sparrow did not know Cooper was to advance money for payroll purposes, and in fact had no reason to suspect that Cooper contemplated making such advancements to Kennedy at the time Kennedy and Sparrow entered into the contract. It is true that Sparrow had every reason to believe that Cooper was going to furnish the materials to Kennedy, but Cooper was in the materials business and not in the banking business, and Sparrow had no reason to believe that Cooper was going to furnish money. While Cooper was entitled to a lien on the property for the materials furnished, he was not entitled to a lien for cash advanced. Long-Bell Lumber Co. v. Auxer, Ark., 255 S.W.2d 163. Bank of Commerce v. Lawrence County Bank, 80 Ark. 197, 96 S.W. 749.

As between debtor and creditor, where the debtor fails to designate the debt and there are several debts to which the payment can be applied, the creditor may apply it as he chooses. Hawkins v. Hawkins, 200 Ark. 38, 137 S.W.2d 904. However, there is an exception to this rule and that is where the materialman knows the source of the money is a third party whose property would be subject to materialman's lien. Long-Bell Lumber Co. v. Auxer, supra.

Cooper knew the $800 check came from Sparrow; in fact Cooper was one of the payees named on the check. In these circumstances it was Cooper's duty to apply the payment to the account for which Sparrow was liable and for which the property was subject to a lien. Long-Bell Lumber Co. v. Auxer, supra; Farr v. Weaver, 84 W.Va. 182, 99 S.E. 395; Webb v. Crane Co., 52 Ariz. 299, 80 P.2d 698. If the law were otherwise a materialman might knowingly use...