Johnson v. Wynne

• Decision Date: 21 October 1905
• Citation: 89 S.W. 1049,76 Ark. 563
• Parties: JOHNSON v. WYNNE
• Court: Arkansas Supreme Court

89 S.W. 1049

76 Ark. 563

JOHNSON v. WYNNE

Supreme Court of Arkansas

October 21, 1905

Appeal from Clay Circuit Court, Western District ALLEN HUGHES Judge.

Reversed.

STATEMENT BY THE COURT.

James Johnson and James H. Davidson were the owners of a saloon business at Poplar Bluff, Missouri. They were also engaged in operating a sawmill near Corning, Ark. Johnson resided at Corning, and looked after the business there, while Davidson had charge of the saloon business at Poplar Bluff. About the time Johnson and Davidson engaged in the saloon business they borrowed one thousand dollars from the Bank of Corning and W. R. Wynne signed the note that they executed for the loan. He had no interest in the loan, and was only a surety. Johnson and Davidson paid about $ 200 on the note, and the balance, about $ 850, remained unpaid, and was eventually paid by Wynne, the surety. About the time Wynne paid the balance due on the note, one Philo Powell made an agreement with Johnson to buy his interests in the saloon business at Poplar Bluff. Johnson offered to sell if Powell would pay $ 50 cash and take Johnson's place in assuming the debts of the firm, and specially to make some arrangement by which Johnson could be released from liability to Wynne for the sum he had paid the bank for Johnson and Davidson. Powell accepted the offer, though the evidence as to whether he did so unconditionally or not is conflicting. In pursuance of this agreement, he went to see Wynne, who offered to turn over to him his claim against Johnson and Davidson, provided Powell would give his own note for the amount of the claim and secure it by a mortgage on his land. Powell executed the note and mortgage, and left the same with an attorney to be delivered to Wynne if Powell consummated the purchase of the saloon. To enable Powell to convince Johnson that Powell could take up Johnson and Davidson's note and release him from liability to Wynne, Wynne turned over to Powell the note to the bank which he had paid as surety. Powell carried this note to Johnson, and Johnson testified that Wynne told him that any trade he made with Powell would be all right, as Powell had secured him by a mortgage; that he (Johnson) then sold his interests in the saloon to Powell; that Powell paid him $ 50 in cash, and indorsed on the note that Johnson was released from liability thereon, and agreed to assume Johnson's part of the other saloon debts; that he then delivered Powell a writing, addressed to Davidson at Poplar Bluff, stating that he (Johnson) had sold his interest in the business to Powell. Johnson further testified that this was an absolute sale of his interest in the saloon, and that it was understood that in part consideration thereof he was discharged from liability to Wynne on the bank note.

On the other hand, there was evidence tending to show that this discharge of Johnson was on condition that Powell, after invoice of the saloon stock, should accept Johnson's interest and also deliver his note and mortgage to Wynne in settlement of the amount paid by Wynne to the bank for Johnson and Davidson; that Powell ascertained that the debts of Johnson and Davidson in the saloon business equalled the assets, and refused to accept them; that thereupon Davidson paid him back the money he had paid Johnson, and Powell took up the note and mortgage which he had executed to Wynne and placed in the hands of a lawyer, and the trade between him and Wynne was rescinded.

Soon after this Davidson sold out the saloon business at Poplar Bluff to a third party. The consideration was $ 2,800, which was paid in two notes of $ 1,000 each, payable to Johnson and Davidson, one note for $ 300, and a sight draft for $ 500. The $ 500 draft and one of the notes for $ 1,000 were deposited in the bank of Corning by Davidson, and so much as was collected thereon placed to the credit of Johnson and Davidson. The other note for $ 1,000 was used to pay off debts of Johnson and Davidson in St. Louis.

As to whether any of the proceeds of this sale came to the hands of Johnson, the evidence was conflicting, but it was not disputed that a part of it was used to pay debts of Johnson and Davidson.

The court, among other instructions to the jury, gave the following instruction, at the request of plaintiff, over the objection of the defendants:

"If you find from the evidence that the defendant Johnson was released from his liability on the note sued on in this case and that the consideration for said release was the sale by Johnson to one Philo Powell of Johnson's interest in a saloon that belonged to Johnson and Davidson, and that Davidson afterwards sold the whole saloon, and took in part payment notes of J. D. Morris, payable to Johnson and Davidson, and that Davidson afterwards indorsed one of said notes to the Bank of Corning as collateral to secure the indebtedness of Johnson and Davidson to the Bank of Corning, then, if you find from a preponderance of the evidence that Johnson afterwards, knowing of the transfer, urged the collection of said note when it came due, or if you find that any of the proceeds of the sale was paid on the debts of Johnson and Davidson, and that Johnson knew of it and consented thereto, you will find for the plaintiff."

There was a verdict in favor of plaintiff. Defendant filed a motion for a new trial, and, the same being overruled, the defendant appealed.

Judgment reversed and cause remanded.

J. N. Moore, J. L. Taylor and F. G. Taylor, for appellants.

Instruction 1 was erroneous in placing appellee in inconsistent positions. Instruction 3 was erroneous in recognizing a rescission made without authority from Johnson. 64 Ark. 213; Bishop on Contracts, § 812; Ib. (2 Ed.) § 823. In order to rescind, it is necessary first, within reasonable time, to give notice of the intention, second to make, or offer, restitution of anything of value received under contract. 24 Am. & Eng. Enc. Law, pp. 645-6. Release of one of several jointly, or jointly and severally bound, is a release of all. 16 Ark. 331; 44 Ark. 349; 45 Ark. 290; Daniel, Neg. Inst., § 1294.

D. Hopson, for appellee.

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