Hill v. Draper

• Decision Date: 31 October 1896
• Citation: 37 S.W. 574
• Parties: HILL et al. v. DRAPER et al.
• Court: Arkansas Supreme Court

37 S.W. 574

HILL et al. v. DRAPER et al.

Supreme Court of Arkansas.

October 31, 1896.

Appeal from circuit court, Sevier county; W. H. Collins, Special Judge.

Action by Hill, Fontaine & Co. against M. M. Draper and others. There was a judgment for defendants, and plaintiffs appeal. Reversed.

Rose, Hemingway & Rose and A. C. Steel, for appellants. W. C. Rodgers, for appellees.

BATTLE, J.

This is the third time this case has been in this court. The first time it came on an appeal from the judgment of the circuit court sustaining a demurrer to the complaint in the action. The allegations in that complaint, as stated in Hill v. Draper, 54 Ark. 396 (15 S. W. 1025), are as follows:

"Draper, McElroy, and Rhyne composed the mercantile firm of Draper, McElroy & Co. After Rhyne's death, the firm being insolvent, the surviving partners conveyed the stock of goods in satisfaction of an individual indebtedness of McElroy to John and Kelly Cowling, who had full knowledge of the firm's insolvency. Hill, Fontaine & Co., creditors of the firm, brought suit in equity to subject the property in the hands of the Cowlings to the payment of their debt against the firm, alleging the foregoing facts."

The court held that the complaint stated a good cause of action, on the ground that surviving partners could not dispose of the partnership assets in payment of the private debt of one of the survivors.

Upon the case being remanded, the defendants W. K. and J. P. Cowling (John and Kelly Cowling) filed an answer in which they allege: "The Cowlings had been in partnership with Draper and Rhyne under the firm name of Cowling, Draper & Co. McElroy purchased their one-third interest in the property of the firm, giving them a note for $1,600, the price agreed to be paid. Afterwards Draper, McElroy & Co., the new firm, procured an indorsement from the Cowlings upon $3,500 of commercial paper due Hill, Fontaine & Co., and the new firm promised that, if any misfortune should happen, it would protect them, not only for the amount for which they had indorsed, but for the $1,600; and that afterwards Draper and McElroy, the surviving partners of the new firm, sold the goods, wares, and merchandise held by them as such partners in payment of the note for $1,600."

Upon this answer the circuit court heard evidence and rendered a decree in favor of the defendants, and Hill, Fontaine & Co. and Rhyne's administrator appealed.

This court (24 S. W. 1075), upon the evidence adduced, set the sale to the Cowlings aside, and remanded the cause for further proceedings consistent with the opinion delivered in Hill v. Draper, 54 Ark. 395, 15 S. W. 1025.

Upon the return of the case to the circuit court, the defendants were permitted to file an amendment to their answer in these words:

"That plaintiffs led and induced these defendants to believe that they would not extend any credit to the firm of Draper, McElroy & Co. in addition to the amount these defendants became responsible for. The defendants could and would have realized all that was due them for their one-third interest in the old firm of Cowling, Draper & Co. at the time plaintiffs...