Jones v. Gregg

• Court: Arkansas Supreme Court
• Writing for the Court: MARK E. WOOLSEY; In the same case; SEAMSTER
• Citation: Jones v. Gregg, 226 Ark. 595, 293 S.W.2d 545 (Ark. 1956)
• Decision Date: 18 June 1956
• Docket Number: No. 5-890,5-890
• Parties: J. Hal JONES and Anah Alden Jones, Appellants, v. Paul E. GREGG et al., Appellees.

Page 545

293 S.W.2d 545

226 Ark. 595

J. Hal JONES and Anah Alden Jones, Appellants, v. Paul E. GREGG et al., Appellees.

No. 5-890.

Supreme Court of Arkansas.

June 18, 1956.

Rehearing Denied Oct. 8, 1956.

James R. Hale, Fayetteville, for appellants.

Price Dickson and W. B. Putnam, Fayetteville, for appellees.

MARK E. WOOLSEY, Special Justice.

This is an action by appellees, as plaintiffs, for the rescission and cancellation of a written contract of sale and purchase and escrow agreement made and entered into on the 23rd day of August, 1952, by and between appellants, who are husband and wife, as sellers, and appellees as buyers. The relevant facts may be summarized as follows:

On the 23rd day of August, 1952, appellant, J. Hal Jones, was engaged in the general produce business at Lincoln, Arkansas, under the name 'Hal Jones Produce Company', his general business being the selling of standard brands of poultry feed to the poultry growers of that area, in which business he had been engaged for a period of approximately three or four years. He and his wife were the owners, as tenants by the entirety, of his place of business in Lincoln, which consisted of a tract of land containing approximately one and one-seventh acres on which were located the buildings used in connection with his business and also a dwelling house. They had purchased this property on the 27th day of May, 1950, from Mae E. Norwood, who, on said date, executed to them, a warranty deed to said property, which deed contained the following provision: 'A vendor's lien is retained for the sum of $5,000.00 purchase price balance, evidenced by a promissory note of even date, bearing no interest, due on or before one year from date'.

This deed was filed for record August 21, 1952, two days before the date of the contract forming the basis of this litigation. The vendor's lien retained in said deed from Mae E. Norwood to appellants had not been released of record, although appellants had paid the sum of $5,000 named therein. This payment of $5,000, however, was not made on the maturity date of the note, but shortly thereafter. Appellants' grantor, Mrs. Norwood, contended that since they had not paid the note at the time of the maturity thereof, she was entitled to the sum of $22.17 interest, which she demanded of them before she would satisfy of record the vendor's lien. Appellants, apparently relying on the words 'bearing no interest', had refused to pay the sum of $22.17 being demanded of them as interest.

In addition to the above real estate, appellants were also, at the time of entering into the contract herein, the owners of a G.M.C. truck and a stock of goods and merchandise held by them for sale, which merchandise was contained in the store or place of business located on the above property.

After certain preliminary negotiations, the parties on the 23rd day of August, 1952, entered into the written contract aforesaid, in which appellants, as sellers, and appellees, as buyers, agreed that appellants would sell to appellees for a total purchase price of $17,500, said real estate 'and the business known as the Hal Jones Produce Company, including its fixtures and equipment, at Lincoln, Arkansas'. In this contract appellants agreed to furnish buyers an abstract showing a good merchantable title to said lands; and the parties further agreed that upon approval of title by appellees, appellees would pay appellants $5,000 of the purchase price and would execute and deliver to appellants their promissory note for the balance of $12,500, bearing interest at 6% per annum, interest payable annually, said sum of $12,500 to be paid on or before two years from the date of said note. The contract further provided that appellees would deposit with the escrow agent named in said contract said down payment of $5,000 and said note for $12,500, and that appellants would leave with said escrow agent their warranty deed retaining a vendor's lien for the unpaid balance of the purchase price, 'which deed, check and note will be delivered to the respective parties upon approval of the title'. Miss Suzanne Chalfant Lighton, a practicing attorney at law in Fayetteville, was named as escrow agent in said contract.

In addition to the above real estate and business, it was also further agreed by said parties in said contract that appellants would sell to the appellees the stock of goods and merchandise of said business at a price to be determined by an inventory to be taken as of August 23, 1952, and would also sell to appellees the 1952 G.M.C. truck at an agreed purchase price of $2,000.

The contract concludes with a paragraph providing that 'all accounts receivable as of the close of business on August 23, 1952, will be due the sellers, and thereafter will be due the buyers, it being further agreed that the division of the accounts receivable between the parties will be made when collection is made'.

Appellees retained Miss Lighton, the escrow agent, as their attorney to examine the abstruct and approve title for them. She had already examined the abstract a few days prior to the execution of the above contract, and all parties to the transaction understood that the vendor's lien aforesaid retained by Mrs. Norwood in her deed to appellants yet remained unsatisfied, and that the only point of contention between appellants and Mrs. Norwood was the item of $22.17 claimed by Mrs. Norwood as interest.

By agreement of the parties, the $5,000 check given as down payment on the purchase price of the lands and business was delivered by the escrow agent to appellant, J. Hal Jones, on the day the contract was executed upon his promise that he would have the vendor's lien satisfied upon his return from a vacation trip. The $12,500 note executed as a balance of the purchase price, together with the warranty deed from appellants to appellees, remained in the hands of the escrow agent until the trial of this cause, and were never by her actually delivered to the respective parties.

Upon the execution of the contract aforesaid, all the property including the real estate, stock of goods and merchandise and truck, was delivered to appellees, who thereupon engaged in the same business as appellant Jones had been engaged in, and for a while carried on the business under his trade name, Hal Jones Produce Company. All parties agree that the full purchase price of the truck and the stock of goods and merchandise was paid by appellees prior to the commencement of this action.

After his return from his vacation trip, which was made shortly after entering into the contract in 1952, appellant Jones still refused to pay to Mrs. Norwood the sum of $22.17 demanded of her as a condition to satisfying the vendor's lien; but on the 8th day of September, 1952, Mrs. Norwood executed a release deed releasing the vendor's lien and delivered same to the escrow agent with instructions to deliver it to appellants only upon the payment of said disputed item of $22.17. The next day, September 9, 1952, the escrow agent wrote Mr. Jones advising him that the release deed had been left with her to be delivered to him upon the payment of said sum of $22.17, and advising him that title to the lands could not be approved until the vendor's lien was released. She suggested that he get in touch with her about the matter as soon as possible. Mr. Jones apparently ignored this letter; and on September 29, 1952, the escrow agent again wrote Mr. Jones urging that the matter be cleared up in order that she could approve title and deliver the escrow instruments to the proper parties. On January 6, 1953, she wrote appellees advising them that she had heard nothing from Mr. Jones and that 'The title is in the same condition it was when I last talked with you'.

Nothing further was done by appellants toward having the vendor's lien satisfied of record until after the commencement of this action, it being the contention of appellants that they did not owe Mrs. Norwood the $22.17 but that they told appellees that they would pay same when appellees' note or any part thereof (apparently meaning principal) had been paid. Appellees, however, stated that appellant Jones kept promising them that he would take care of the matter.

On September 24, 1953, appellees, who were still engaged in business on said property, paid appellants the sum of $750 as the interest on their note for the first year; and on August 23, 1954, they paid the further sum of $750 as the interest on said note for the second year, although the note still remained in the hands of the escrow agent. Appellees were also trying to borrow money on the property with which to pay their note, which was now due according to its terms, but were unsuccessful in their efforts. It further appears that appellant Jones had agreed to give them further time within which to pay the principal of the note.

It does not appear, however, but their failure to borrow the money on the property with which to pay the note was due to the defect of the title, the reason being that the prospective lenders contacted by them were not willing to loan on this type of property at that time. There is no evidence that any loan was refused because of the unsatisfied vendor's lien retained by Mrs. Norwood in her deed to appellants; although, obviously, this lien would have to be cleared before any responsible person would make the loan on the property as security. The point is that appellees, in their negotiations for a loan on the property with which to pay the note, never reached the point where the vendor's lien entered into the matter.

Shortly after their note became due, appellees purchased from Mrs. Norwood other business property across the street from the property involved in this action, on which to carry on and conduct their business.

On October 8, 1954, appellees, without prior notice to appellants, filed their complaint in equity for the rescission and cancellation of...