Houser v. Burchart & Levy

• Decision Date: 02 July 1917
• Docket Number: 84
• Citation: 197 S.W. 28,130 Ark. 178
• Parties: HOUSER v. BURCHART & LEVY
• Court: Arkansas Supreme Court

197 S.W. 28

130 Ark. 178

HOUSER v. BURCHART & LEVY

No. 84

Supreme Court of Arkansas

July 2, 1917

Appeal from Cross Chancery Court; Edward D. Robertson, Chancellor affirmed.

Decree affirmed.

L. C Going, for appellant.

1. The payments should be credited on the mortgage debt. The debtor has the primary right to direct the application of payments. 91 Ark. 458; 38 Id. 285. The mortgage notes were the oldest item and all credits, even in the absence of direction, should have been credited thereon. 70 Ark. 516; 51 Id. 198.

2. The matter was compromised and settled. A completed sale was made. The contract was never abrogated nor new one made. An accord was made and executed and never rescinded. It was a bar to an action on the original claim. Corp. Jur. 1-523-B 524 note, 13.

Killough Lines & Killough, by T. E. Lines, for appellees.

1. There are no payments that should be applied on the note by operation of law. The rule as to application of payments is fully stated in 91 Ark. 465, overruling 38 Ark. 285, and 57 Id. 595, relied on by appellant. A settlement and final closing of the original transaction was had. From then the mortgage notes were treated as a separate transaction from the running account. The payments were made to cover specific purchases and were so applied at the time and could not be credited on the notes. 70 Ark. 516 has no application.

The maturity of the note fixes the time for the application. 91 Ark. 466.

2. Only the balance of the account current was paid or settled by the compromise.

3. The contemplated purchase of the Houser stock was not complete and the title did not pass.

4. If there was an agreement of accord and satisfaction, it was rescinded; but there was none. 1 R. C. L. 178, and art. 2; 1 Corp. Jur. 523-4, art. 2; 38 S.W. 446; 58 N.W. 982; 36 L. R A. 335.

STATEMENT BY THE COURT.

A. Houser instituted this action in the chancery court against Burchart & Levy to restrain them from foreclosing a mortgage which he had given them on certain lots in the town of Wynne, Arkansas, to secure the sum of $ 2,000. In his complaint he alleges that Burchart & Levy are threatening to foreclose their mortgage and that the same has been satisfied; that if a sale of the lots is made under the mortgage a cloud will be cast upon his title. The facts are as follows:

A. Houser resided at Wynne, Arkansas, and wished to enter the mercantile business there. Burchart & Levy were wholesale merchants at Memphis, Tennessee. For the purpose of establishing a line of credit with them to enable him to purchase goods from them, A. Houser executed to them two promissory notes for one thousand dollars each, dated December 11, 1906, and due respectively one and two years after date. To secure the payment of these notes, he executed to Burchart & Levy a mortgage on certain lots in the town of Wynne. He purchased goods from Burchart & Levy to the amount of several thousand dollars. It is conceded that he made the following payments on the notes:

December 24, 1907, cash

$ 500.00

February 15, 1912

100.00

February 15, 1912

100.00

February 15, 1912, discount 2 per cent

40.00

Total

$ 740.00

In addition to this, it is claimed by Houser that in March 1909, he made an additional payment of $ 700 and that this, with the other payments made by him, paid in full the notes. A. Houser's wife, in the main, conducted the business for him, and they both testified that on the 4th day of March, 1909, they were in Memphis and went into the store of Burchart & Levy, when Mr. Houser handed to a member of the firm his check for $ 700 and asked that it be credited on the mortgage indebtedness. At this time Mr. Houser owed Burchart & Levy an account for merchandise sold them, but Mrs. Houser stated that the payment was applied to the mortgage debt in order that their property might be released from the mortgage. She stated that her husband had borrowed $ 1,000 and made the payment out of the money so borrowed and that the remaining $ 300 was used in replenishing their stock of goods. On the other hand, Leo J. Levy, the cashier of the firm, and the son of one of the partners, testified that it was a part of his duties to receive payment of all moneys paid the firm, and that the $ 700 check was applied in payment of the account of Mr. Houser. He first stated that the check was brought in by Mr. Houser and handed to him already written out. Upon the check being exhibited to him, he admitted that it had been filled out by himself and then signed by Mr. Houser. He stated positively, however, that the check was to be credited upon the account of Mr. Houser. He testified that during the preceding year Mr. Houser had purchased about $ 1,500 worth of goods and had only paid about $ 100; that in March, 1909, he owed the firm a balance of over $ 1,300 and had not bought any goods or paid any sum on account for some time prior to the payment of the $ 700 check on his account; that this payment was made because the firm refused to let him have any more goods until he made a payment on his account; that the $ 500 payment on the note had a notation on the check that it was to be credited on the note. No such notation appears on the $ 700 check. The bookkeeper of the firm of Burchart & Levy corroborated the testimony of Leo Levy to the effect that it was agreed that the check for $ 700 should be credited on the account and that it was so credited. Mr. Burchart, a member of the firm, corroborated the testimony of Leo Levy, and stated further that Mr. and Mrs. Houser afterwards admitted to him that the mortgage indebtedness had not been paid.

On the first day of November, 1910, Burchart & Levy entered into a written agreement with Houser in which it was stated that in consideration of the release of certain indebtedness to various firms by Houser, and Burchart & Levy obtaining a release in full for same, that Houser sold and delivered to Burchart & Levy his entire stock of goods to be sold by Burchart & Levy for the benefit of his creditors. Mr. and Mrs. Houser testified that a part of the consideration for the execution of this instrument was that Houser should pay certain local debts in the town of Wynne to the amount of between five and six hundred dollars and that she should release her claim...