Jones v. National Bank of Commerce of El Dorado

• Decision Date: 03 July 1944
• Docket Number: 4-7402
• Citation: 182 S.W.2d 377,207 Ark. 613
• Parties: Jones v. The National Bank of Commerce of El Dorado
• Court: Arkansas Supreme Court

182 S.W.2d 377

207 Ark. 613

Jones v. The National Bank of Commerce of El Dorado

No. 4-7402

Supreme Court of Arkansas

July 3, 1944

Appeal from Union Chancery Court, Second Division; W. A. Speer Chancellor.

Affirmed.

G E. Snuggs, for appellant.

C B. Crumpler and Neill C. Marsh, for appellee.

OPINION

Robins, Justice.

Appellant, D. L. Jones, by this appeal, seeks to reverse a decree of the lower court dismissing for want of equity his complaint against appellees, The National Bank of Commerce of El Dorado, Arkansas, Oliver Graydon Harris and W. H. Hines.

In his complaint appellant prayed for cancellation of foreclosure decrees of the Union chancery court rendered against appellant and others in favor of appellee, The National Bank of Commerce of El Dorado, the cancellation of deed executed by commissioner in pursuance of said decrees by which certain lands mortgaged by appellant to said bank were conveyed to the bank, and the cancellation of deeds executed by the bank to appellees, Harris and Hines, for these lands; and appellant also prayed for the return of certain personal property owned by appellant and sold under the foreclosure proceeding, and for judgment against the appellee bank for $ 5,064.38.

On November 4, 1933, appellee bank filed suit against appellant and others in the First Division of the Union chancery court to recover judgment against appellant for debt and to foreclose certain mortgages executed by appellant to the bank.

On June 4, 1934, the chancery court rendered decree by which it was adjudged that said appellee recover of appellant the sum of $ 706.45 with interest at the rate of ten per cent. per annum from date of decree for the balance due on a certain promissory note, which amount was declared a first lien by virtue of a real estate mortgage on one hundred and twenty acres, and by which it was also adjudged that appellee bank recover of appellant the further sum of $ 1,054.37 with interest at the rate of ten per cent. per annum on another promissory note, which amount was declared a lien on said lands and also on certain personal property, by reason of another mortgage given by appellant thereon. The decree ordered foreclosure of the mortgages and sale of the land and personal property. On September 3, 1934, another decree, making the foreclosure effective as to certain other parties, and fixing the sale on November 3, 1934, was rendered.

The property was sold by the commissioner on November 3, 1934, the sale was reported to the court by the commissioner on November 5, 1934, and on September 3, 1935, the commissioner's report of sale and deed conveying the property to appellee bank were presented to the court and approved. In the early part of 1936, appellant surrendered all the property to appellee bank and moved to Louisiana. Appellee bank, on January 14, 1937, sold and conveyed to appellee Harris forty acres of the one hundred twenty-acre tract obtained by it in the foreclosure proceeding, and appellee Harris thereafter spent a considerable amount in improving the land bought by him. Subsequently appellee bank sold and conveyed the remaining eighty acres to appellee, W. H. Hines.

On October 26, 1934, after the foreclosure decrees had been rendered, appellant filed in the United States District Court a petition asking for the benefit of the provisions of § 75 of the Bankruptcy Law, 11 U.S.C.A., § 203, commonly known as the Frazier-Lemke Act, and on November 3, 1934, this petition was referred to the Conciliation Commissioner. On June 25, 1935, the Conciliation Commissioner filed his report in the United States District Court, and on July 1, 1935, that court entered an order dismissing appellant's Farmer-Debtor petition. For some reason not disclosed by the record appellee bank, on July 17, 1935, filed in the federal court a motion asking for dismissal of appellant's Farmer-Debtor petition which had already been dismissed, and on November 1, 1935, this motion was granted by the court, and the case was again dismissed.

On November 1, 1941, a second "Farmer-Debtor Petition" was filed in the united States District Court for the Western District of Arkansas. In his schedule to this petition appellant set forth that his sole indebtedness was to appellee bank in the sum of $ 2,435.62, and that his assets included the land which had been taken from him in the foreclosure proceeding, valued at $ 4,000, an unliquidated claim against appellee bank for rents and proceeds of oil amounting to an aggregate of $ 7,500 and the foreclosed personal property and ungathered crops of the value of $ 1,240. In other words, appellant in this petition asking for the benefit of the Bankruptcy Act alleged that he owed $ 2,435.62 and owned property of the total value of $ 12,750. This second "Farmer-Debtor" petition filed by appellant was not a renewal or an attempt to reinstate his former petition. On the contrary, appellant himself asserted, in a response filed by him to a motion to dismiss his petition, that the subject-matter of the second petition was not the same as that of the first. The substance of appellee's motion to dismiss was a plea of former adjudication and an averment that petitioner did not show grounds for relief.

Appellant's second petition was referred to the Conciliation Commissioner who, on March 2, 1942, filed with the United States District Court his report in which he recited that appellant alleged in his petition that appellee bank was indebted to appellant in an amount in excess of $ 7,500, and that appellant owed only the sum of $ 2,435.62, from all of which the Commissioner concluded as a matter of law, and so reported to the court, that appellant's petition did not show that he was insolvent within the meaning of § 75 of the Bankruptcy Act, and therefore his petition did not state facts entitling appellant to relief in the Bankruptcy Court.

On March 30, 1942, this report was heard by the district court and an order was entered by it approving the report and dismissing appellant's petition for relief under the Bankruptcy Law. Appellant prayed, but did not perfect, and appeal from this order.

In his complaint in the instant case, which was filed on September 12, 1942, in the Second Division of the Union chancery court, appellant stated that he "bases this action and his right of immediate possession of all of the properties . . . his right of recovery of money judgment against National Bank of Commerce in the sum of $ 5,064.38, and the relief prayed, on the findings and judgment of the District Court of the United States for the Western District of Arkansas, . . . entered on March 30, 1942."

In other words, the basis of appellant's claim in the proceeding at bar was the order of the district court dismissing his second petition in bankruptcy. Plainly stated, appellant's contention in the court below was that, because he alleged in his bankruptcy petition that appellees were wrongfully withholding his property and that appellee bank owed him $ 5,064.38 in excess of his debt to the bank, and because the district court dismissed his petition for the reason that it failed to show insolvency of appellant, or his inability to pay his debts as they matured, this amounted to a judicial ascertainment and declaration that the allegations of his petition were true, that appellees, Harris and Hines, were wrongfully in possession of his property, and that appellee bank owed appellant $ 5,064.38.

Appellant misconstrued the meaning and effect of the district court's order. The order simply meant that appellant's petition, if true, failed to show that he was an insolvent debtor, or was unable to pay his debts as they matured, so as to be entitled to the benefits of the Bankruptcy Act.

In support of his contention appellant argues that appellee bank's motions to dismiss appellant's Farmer-Debtor petitions amounted to admissions by appellee bank of the truth of the allegations of said petitions. These motions contained averments that appellant's petitions did not contain allegations necessary to entitle appellant to the relief sought by him, and in reality amounted to demurrers to the Farmer-Debtor petitions. While it is said that, for the purpose of testing the legal sufficiency of a pleading, a demurrer admits the allegations of the pleading, it has never been held that by filing a demurrer to a pleading a party is thereby precluded from ever disputing the allegations of the pleading to which the demurre...