Hockaday v. Warmack

• Decision Date: 03 January 1916
• Docket Number: (No. 82.)
• Citation: 182 S.W. 263
• Parties: HOCKADAY v. WARMACK.
• Court: Arkansas Supreme Court

182 S.W. 263

HOCKADAY v. WARMACK.

(No. 82.)

Supreme Court of Arkansas.

January 3, 1916.

Appeal from Chancery Court, Miller County; Jas. D. Shaver, Chancellor.

Action by L. M. Warmack against Ed Hockaday. From a decree in part for plaintiff, and for the defendant on his cross-complaint, the defendant appeals, and the plaintiff enters a cross-appeal. Decree affirmed.

On November 17, 1913, appellant exchanged with appellee a hotel in Kingfisher, Okl., for a plantation containing 883 acres of land and certain personal property in Miller county, Ark. There was a mortgage on the land for $18,000, which, with interest, amounted to over $19,000, which the appellant assumed. Each party was to pay the taxes for the year 1913 on the property received by them, respectively, in the exchange. On December 22, 1913, appellee sold the hotel, which he had received in exchange for his land, back to appellant for $15,000, for which appellant was to execute his note due January 1, 1915, bearing interest at 8 per cent. from date until paid, and to be secured by a mortgage on the hotel. On December 23, 1913, before the mortgage and note were executed, appellant was garnished in a suit brought by one Spearman against the appellee for the sum of $2,500. Appellant also learned that other liens existed against certain of the property for which he had traded. Appellant declined to execute the note and mortgage for the purchase of the hotel, but, instead, he sent to the State National Bank, at Texarkana, his check for $5,000 and his note for $10,000, due January 1, 1915, and wrote a letter to the bank, specifying certain conditions under which the bank should deliver to the appellee the $5,000, or any part of it, and also under which it should deliver the $10,000 note. Appellee demanded that appellant carry out his agreement as to the purchase of the hotel by executing his note and mortgage as provided by the written contract between them. Appellant, after taking possession of the plantation, claimed that he discovered, in February, 1914, that there was a large shortage in the personal property he had bought of appellee. On the 30th of June, 1914, appellee and Spearman adjusted the garnishment proceedings between them, and appellee then requested appellant to carry out his contract, but appellant still refused. After some negotiations toward an adjustment of the differences between them, the parties met on June 30, 1914, and entered into a written agreement, whereby appellant was to pay to appellee the sum of $12,000 and appellant was to retain in his hands the sum of $3,000, to indemnify him against certain probable losses therein specified, and appellee was to institute suit to determine whether or not appellant was due him interest on the $5,000 at 8 per cent. from December 22, 1913, until June 30, 1914, and whether or not, under the original contract of exchange of properties, it was incumbent on the appellee to pay the levee taxes, and to settle other differences between the parties, but it was stipulated that nothing contained in the agreement entered into on that day should be construed as annulling, setting aside, or affecting any contract of settlement theretofore entered into by the parties.

Accordingly appellee instituted this suit, and the issues raised, as shown by the pleadings, were substantially as follows: Appellee claimed that appellant was indebted to him for interest on $5,000 at 8 per cent. per annum from December 22, 1913, until June 30, 1914. Appellant denied that this interest was due, setting up that the $5,000, remainder of the purchase money, on which appellee claimed interest, was deposited in the bank for the special benefit of appellee, to which he tacitly agreed, and that by reason of the levy of the garnishment against him (appellant) he was precluded from complying with the letter of his agreement to execute his note and mortgage; that appellant deposited $5,000 January 20, 1914, after appellee had written to him that he needed the money; that appellee partially complied with the conditions upon which the deposit was made by surrendering to the bank what he claimed to be a memorandum of sale, but appellee never repudiated the deposit until June 30, 1914, the date of the final agreement as to the settlement, and appellant therefore claimed that the $5,000 was subject to the appellee's control, and that appellant was therefore not chargeable with interest thereon. Appellee further contended that appellant was indebted to him in the sum of $250, the earnings of the hotel property from the date of the exchange of the properties, November 17, 1913, until the date when appellee sold the hotel to appellant, to wit, December 22, 1913. Appellant denied that there were any earnings from the hotel during this period. Appellant set up, by way of cross-complaint, that appellee was indebted to him in the sum of $488 for levee taxes for the year 1913, which were a lien on the land and which appellant had to pay to prevent the sale of the land for such taxes. He contended, also, that there was a shortage in the personal property amounting in value to $2,729.40, which he claimed was included in their agreement to exchange properties. Appellee denied that under the agreement he was to pay levee taxes for 1913, and also denied that he was indebted to the appellant in the sum claimed as shortage in personal property, and contended that whatever shortage there was in the personal property contemplated by their original agreement for exchange of properties was included and settled and went in as part of the consideration for the sale of the hotel property by the appellee back to the appellant on December 22, 1913. The court found that the appellee should recover of the appellant interest on the sum of $5,000 at 8 per cent. per annum from December 22, 1913, until June 30, 1914, amounting to the sum of $208.89, and interest on that sum from June 30, 1914, at 8 per cent. per annum. The court further found that appellee was not entitled to recover earnings on account of the operation of the hotel property. The court further found that the appellant was not entitled to recover for any alleged shortage of personal property under the contract of November 17, 1913, but that he was entitled to recover the sum of $488 on account of levee tax on the land, with interest at 6 per cent. per annum from August 31, 1914, until paid. On these findings the court entered a decree in favor of the appellee against the appellant in the sum of $208.89, with interest from June 30, 1914, until paid, at the rate of 8 per cent. per annum, and entered a decree in favor of the appellant against the appellee for the sum of $488, with interest from August 31, 1914, until paid for at 6 per cent. per annum. The appellant appealed, and the appellee entered a cross-appeal. The facts as set forth in the first part of the statement are undisputed, and such other facts as may be necessary, bearing on the issues, will be stated in the opinion.

Webber & Webber, of Texarkana, for appellant. D. B. Sain, of Nashville, for appellee.

WOOD, J. (after stating the facts as above).

The evidence is voluminous and we will not undertake to set out and discuss in detail all the evidence bearing upon the issues as it could serve no useful purpose and would unnecessarily extend the opinion.

1. The appellant contends that the garnishment proceedings prevented him from complying with his contract to execute the note and mortgage for the hotel property purchased of the appellee, and that he is therefore not liable for the interest on the $5,000 deposited in the bank. It is a well-settled rule that a garnishee, after service of the writ upon him, must retain possession of all property and effects of the principal debtor in his hands, and if he fails to do so, he is liable for the value of the same to the plaintiff in the principal action. Such was the holding of this court in Adams v. Penzell, 40 Ark. 531. See, also, 20 A. & E. Ency. 1068, 1069.

Appellant cites and relies upon the above case. But in that case the garnishee had in his possession funds belonging to the debtor defendant in the original suit, which he paid out after a lien was fixed upon same by the service of a writ of garnishment upon him, and, of course, it was held that he paid at his peril the proceeds belonging to the debtor in the original suit. Bergman v. Sells & Co., 39 Ark. 97-101. But the facts of this record differentiate the case at bar from Adams v. Penzell, supra, and the rule there announced has no application here.

The debt from appellant to appellee, which should have been evidenced by the note and mortgage, under the contract between them, was not due until January 1, 1915. If, therefore, appellant had answered the garnishment to the effect that he had executed the note to the appellee in accordance with his contract, and that he would be due the appellee on the 1st of January, 1915, the amount evidenced by the note and mortgage, and if judgment had been rendered against the original debtor in favor of the plaintiff, and also against the appellant as garnishee, appellant could not have been made to pay the judgment until his note to appellee was due. The record discloses, therefore, that appellant was not, and could not have been, injured by the service of the writ of garnishment. He had no assets in his hands at that time belonging to the appellee. He had paid nothing to the appellee, and was not bound to pay him anything until January 1, 1915. The service of this writ on appellant was no legal justification for his failure to execute the note and mortgage in accordance with his contract with appellee.

While the $5,000 was deposited in the bank, yet the deposit was made upon certain conditions not bottomed upon the contract between appellee and appellant for the sale of the hotel property. Appellant himself testified, in part, as follows:

"I learned before I got home that I had been...