Jones v. Jones

CourtCourt of Appeals of Kentucky
Citation254 Ky. 475,71 S.W.2d 999
PartiesJONES et al. v. JONES.
Decision Date15 May 1934

Rehearing Denied June 26, 1934.

Appeal from Circuit Court, Livingston County.

Suit by Dr. F. A. Jones against D. F. Jones and others. From the judgment, D. F. Jones and O. W. Jones appeal.

Reversed and remanded, with directions.

Charles Ferguson, of Smithland, for appellants.

C. H Wilson, of Smithland, and J. D. Mocquot, of Paducah, for appellee.

STANLEY Commissioner.

The record in this case is not a chapter or a book. It is a work of twenty volumes, recording a bitter conflict among three brothers arising from the operation of and an effort to settle a farm partnership venture. In the main two of the brothers are on the same side of the battle alignment. A fourth brother, who essayed to act as peacemaker in the role of an agreed arbitrator, became involved in the quarrel also although not in a financial way. The attorneys have stood loyally by their respective clients and have employed every legitimate weapon of legal warfare and exhausted all available ammunition. There is presented a voluminous and confusing record, containing much concerning the private quarrels that has no place in it. We have already written one chapter in the case in sustaining the appointment of a receiver for the property. Jones v. Jones, 229 Ky 71, 16 S.W.2d 503.

In 1924 or 1925 the partnership was formed by Dr. F. A. Jones, D. F. Jones, and their brother-in-law, W. S. Watson, to farm and raise stock on a tract of 344 acres of an island in the Tennessee river, lying in both Livingston and Lyon counties. Not long thereafter O. W. Jones purchased Watson's interest, and the firm became known as Jones Brothers. D. F. Jones was a farmer living eight or ten miles from the property. Dr. F. A. Jones was a practicing physician residing in Paducah, which is about twenty-five miles from the island. O. W. Jones was a school teacher and lived in Florida. It seems to have been agreed that D. F. Jones should have active management of the firm. Dr. Jones personally advanced money to the partnership and made loans to his brothers. After a brief period the venture became unprofitable, due to high water flooding the property, and perhaps other causes, so there was a loss of approximately $12,000. Distrust arose among the partners, and on June 10, 1927, it was agreed in writing that a fourth brother, Charles M. Jones, who was a school superintendent in Florida, should wind up the affairs and settle the difficulties. It was contemplated that this would be done promptly, but there was great delay, and, as indicated in the former opinion, considerable acrimony developed, particularly between Dr. Jones and the arbitrator, whom he accused of unfairness and prejudice. A partial report was made by the arbitrator, which was unsatisfactory to Dr. Jones, and he filed this suit for a receiver and to have the court settle the partnership. The receiver was appointed several months later. In the meantime the arbitrator proceeded with his work, and a few days after the appointment of the receiver he made what he deemed a "final audit," which showed that O. W. Jones owed F. A. Jones $355.08, and that Dr. F. A. Jones owed D. F. Jones $160.14. But we affirmed the chancellor's action in appointing the receiver and putting him in charge of the property. This was upon the ground that an arbitration agreement is revocable before a final award and that the bringing of the suit was a revocation. Finally, the case was referred to a special commissioner, who was also the receiver.

The commissioner's report set forth in detail the various charges and credits against and in favor of the parties. Numerous specific exceptions were filed to that report by all parties. The judgment dissolved the partnership and declared a settlement. All demurrers, motions, and exceptions were overruled and the commissioner's report was substantially confirmed.

Dr. F. A. Jones was awarded judgment against D. F. Jones in the following amounts: For one-third of the vendor's lien notes aggregating $3,810.15, i. e., for $1,270.05, and his undivided one-third interest in the property was ordered sold in satisfaction; for $3,999.10 on account of twelve certain unsecured notes; for one-half of three notes aggregating $2,960.60, i. e., $1,480.30, which had been executed by D. F. Jones and W. S. Watson, jointly; and for $169.05 as the net sum due in the settlement of the partnership account. F. A. Jones was awarded judgment against O. W. Jones for one-third of the vendor's lien notes, i. e., $1,270.05, and his interest in the land was ordered sold in satisfaction; for $1,370.13, the aggregate of three individual unsecured notes; for $1,076.39 on account of the partnership. Judgment was awarded D. F. Jones against O. W. Jones for $907.34 on that account. These sums represent the principal of the debts, the interest from various dates being in addition.

N. D. Washburn, who had been a tenant in the partnership, was adjudged to own an undivided half interest in certain personal property on the farm. It was held that he owed the firm $126.77, and this property was ordered sold in satisfaction thereof. About the time of the breaking up of the partnership D. F. Jones had conveyed his interest in the land to C. W. Cothron. This conveyance was set aside as fraudulent. A fee of $1,000 was allowed the attorneys of Dr. Jones for legal services rendered him as plaintiff in this action which was ordered taxed as part of the court costs. The special commissioner was allowed $750 for his services up to the time of the judgment. He was ordered to reduce to cash the personal property reported to be in his possession at the time and to make a report at the next term of the court. Condemning the record as far too large and holding that Dr. F. A. Jones and D. F. Jones were responsible for it, the court ordered that each should bear two-fifths of the cost and O. W. Jones one-fifth.

The correctness of that judgment, both in what it allows and disallows by ignoring the claims submitted, is now before us. Dr. F. A. Jones has no cross-appeal and his affirmative claims are not to be considered. The case presents but few questions of law. The indefiniteness or lack of organization and of any system of accounting, the confusion of private relations of two of the parties with the business of the partnership, together with a mass of conflicting evidence on all of the items, have rendered it impossible for the special commissioner, the trial court, or this court to ascertain with exactness the status of the affairs. The parties cannot reasonably expect it when they have conducted their business in as loose a manner as is disclosed here. Cf. Hume v. McNees, 10 S.W. 384, 10 Ky. Law Rep. 947. The record is filled with conflicting evidence and its recitation would serve no purpose. So, we shall merely state our ultimate conclusions on the respective disputed claims of the appellants as presented in the briefs. Technical questions of practice may be passed by as unsubstantial or nonprejudicial.

The judgment in favor of F. A. Jones against D. F. Jones for $3,999.10 on account of the principal of the unsecured personal notes includes $2,960.60, the amount of joint notes of D. F. Jones and W. S. Watson. This was an erroneous duplication, for the judgment for one-half of that sum was also rendered against D. F. Jones in a subsequent paragraph. The judgment on the individual personal notes should be for $1,038.50 and interest, instead of $3,999.10.

The item of $2,960.60 is made up of a joint note of D. F. Jones and W. S. Watson for $2,597.31 executed November 15, 1924 their note for $200 executed January 22, 1925, and a third note for $163.29, which is not questioned. D. F. Jones pleaded, and he has insisted, that these two notes were made void by the fact that after their execution and delivery F. A. Jones changed the rate of interest on each of them from 6 per cent. to 8 per cent. without the consent of the makers. The commissioner found that the notes had been so altered, but as they were given in good faith and for value he reported that the makers ought not to be released from their liability under them. The judgment gave effect to that report. Dr. Jones claimed that the change in the interest rate was made with the consent of the payors. The evidence convinces us that they did not consent and that the alterations were made without right or authority. Section 3720b-124 of the Statutes provides: "Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration and subsequent endorsers." The next section defines or declares what are material alterations and specifically says that any alteration which changes "the sum payable, either for principal or interest," and "any other change or addition which alters the effect of the instrument in any respect, is a material alteration." We cannot escape the conclusion, therefore, that these two notes were rendered void by this alteration and discharged the makers from liability thereunder. It will not do to say that since 8 per cent. is usurious and the payee could not under the law collect more than 6 per cent., the change is not material, or that it worked no detriment to the parties. Mitchell v. Reed, 106 S.W. 833, 32 Ky. Law Rep. 683; Kimberley v. Penix, 230 Ky. 91, 18 S.W.2d 858; Annotations, 44 A.L.R. 1249; Idaho State Bank v. Hooper Sugar Co., 74 Utah 24, 276 P. 659, 68 A.L.R. 969; 1 R.C.L. 977; 2 C.J. 1178; Brannan's Negotiable Instruments Law, § 125, p. 805. While it may be said that the voiding of a note under these provisions of the Negotiable Instrument Act does...

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