Johnson v. Young Men's Building & Loan Association

• Decision Date: 08 May 1933
• Docket Number: 4-2996
• Citation: 60 S.W.2d 925,187 Ark. 430
• Parties: JOHNSON v. YOUNG MEN'S BUILDING & LOAN ASSOCIATION
• Court: Arkansas Supreme Court

60 S.W.2d 925

187 Ark. 430

JOHNSON v. YOUNG MEN'S BUILDING & LOAN ASSOCIATION

4-2996

Supreme Court of Arkansas

May 8, 1933

Appeal from Craighead Chancery Court, Western District; J. M Futrell, Chancellor; affirmed.

STATEMENT BY THE COURT.

This suit was instituted in the Craighead Chancery Court by R. L Johnson, appellant, against the Young Men's Building & Loan Association and C. W. Claunch and C. L. Claunch appellees, seeking to recover on two promissory notes executed by the building and loan association and indorsed by appellee, C. L. Claunch, and others. One of the notes was originally for the sum of $ 10,000 and the other was for the sum of $ 2,000. Certain payments were made on the notes prior to the filing of the suit, but the aggregate amount of these payments is not in controversy. Another suit was filed by the Chase National Bank and the banking commissioner in charge of the American Trust Company of Jonesboro against the same defendants seeking similar relief. The two suits were consolidated for trial and were determined by the chancellor against the contention of the appellant and the Chase National Bank.

The cases were presented to the chancellor upon the theory that a conveyance made by C. W. Claunch and his wife, Mary A Claunch, to the defendant, C. L. Claunch, under date of January 12, 1923, was fraudulent and void as against the rights of the appellant. The trial court found against the contention of appellant, and this appeal is prosecuted to reverse this decree.

Since the only question presented for review is a determination of a question of fact, it will be necessary to review at some length the testimony.

C. W Claunch testified, in effect, that Mary A. Claunch was his wife, and that she departed this life on January 5, 1931; that C. L. Claunch was their son; that they had one other child, but that she died in infancy; that for a long number of years he and his wife were in the hotel business in the town of Jonesboro; that more than 20 years ago they determined to erect a new hotel building in Jonesboro; that prior to their marriage Mary A. Claunch was a widow and operated the American Hotel in Jonesboro, and that she owned at that time a two-story frame house and a cottage, which two properties were valued at $ 9,000; that this hotel property which was owned by his wife at the time of their marriage was operated by them jointly for some 21 years, and until they erected the Claunch Hotel in Jonesboro; that on April 20, 1909, his wife purchased lots 3 and 8 of Moore's subdivision of lot 2, block 15, Flint's Addition; that in 1910 he purchased lot 4 in the same addition, and they erected their new hotel upon this property; that the value of his wife's property, or about $ 9,000, was paid by her into the new hotel building; that afterwards his wife and he purchased lots 9 and 10 of the same subdivision and paid therefor $ 13,500; that the deed was made to the witness and his wife jointly; that this $ 13,500 was paid by him and his wife out of funds derived from the operation of the new hotel, and that their son, C. L. Claunch, furnished either $ 900 or $ 1,100; that in 1912 his wife purchased lots 6 and 7 of the same subdivision, which was deeded to him and his wife jointly. On this property is a one-story building. In 1917 his wife bought the west half of the southeast quarter of section 16, township 15 south, range 5 east, and took title thereto in her own name. All these properties were conveyed in a deed under date of January 12, 1923, to their son.

Witness further testified that when he purchased lot 4 and part of lot 3, upon which the new hotel was built, he intended to have the conveyance made to him and his wife jointly. When asked why he and his wife had executed the deed of January 12, 1923, to their son, the witness answered: "Well, my wife and I had been talking about our boy a lot, and, like lots of other people, we had all the confidence in the world in him, and we decided that, if either of us died, he would have to step in and be the sole manager of everything, and we made this deed giving him the property."

Witness further testified that at the time this deed was executed he did not owe any debts to any one, neither did his wife owe a dollar; that he had no intention whatever of defeating any creditors, because he had none, and did not expect at that time to ever have any creditors; that sometime during the year 1928 he became an indorser for the building and loan association for certain indebtedness, and this was the first indebtedness that he had created since the execution of the deed to his son in 1923; that Charles, their son, was about 17 years old when the deed was executed; that witness prepared the deed from himself and wife to their son, and they both acknowledged it before Mr. Barnett, a notary public, at the First National Bank in Jonesboro; that, prior to making the deed, he discussed the matter with the late Judge R. H. Dudley, an attorney of Jonesboro, and that he advised him that it was not necessary to record the deed since he and his wife owed no debts; that he and his wife continued to operate the property for their son from the time the deed was executed in 1923 until they leased the same to Mr. Smith several years afterwards.

Witness further testified that, when they executed the deed to their son, "we put it in the safe at the hotel. My wife, son and I all knew the combination, and all had access to the contents of the safe. My son's mother told me she had explained it all to him, but I did not tell him."

Witness further testified that all tracts of land, regardless of who held the nominal title, were purchased with the joint efforts and with the joint money of himself and wife; that nothing was reserved about the title to the property except its management; that witness managed the property during the minority of his son; that his son went off to school in September, 1923; that the son had access to the deed at all times after its execution and could have had actual possession of the deed if he had wanted it; that, after his wife died in March, 1931, he had the deed placed of record that he and his wife attended to all the property for their son up to the time of his wife's death; that he and his wife agreed before the deed was executed in 1923 that if he should die his wife could not look after the property, and if she should die that he could not look after it; that he told no one about this except Judge Dudley; that at the time this deed was executed he had no idea of becoming surety for the building and loan association or any one else; that his and his wife's understanding was that the deed was to be kept off the record until after one or the other of them passed...