Loewer v. Lonoke Rice Milling Co.

• Decision Date: 15 December 1913
• Citation: 161 S.W. 1042,111 Ark. 62
• Parties: LOEWER v. LONOKE RICE MILLING COMPANY
• Court: Arkansas Supreme Court

161 S.W. 1042

111 Ark. 62

LOEWER v. LONOKE RICE MILLING COMPANY

Supreme Court of Arkansas

December 15, 1913

Appeal from Lonoke Chancery Court; John E. Martineau, Chancellor decree modified.

STATEMENT BY THE COURT.

Appellee is a corporation engaged in the business of rice milling at Lonoke. On May 21, 1909, appellant "was employed as rough rice buyer, and to render such other assistance as would be necessary during the period beginning July 1, 1909 and ending April 1, 1910, at a salary of $ 1,000 for said time." The contract further provided "that he be allowed 25 per cent of the net profits on seed rice, the amount of seed rice handled to be left to the manager and the directors." The contract further provided as follows "That he (Loewer) be paid one-half of the profits on twine sold to this date, the mill to get all profit from twine sold after this date." And, further, "Mr Loewer's time is extended beyond April 1 on to the end of the milling season, if necessary. The amount due him is to be paid at the end of the season, except he is to be allowed to pay one-half on his assessment for stock in cash and credit him with balance out of amount due him on salary. Mr. Loewer is to pay his own expenses while in our employ, except when out of our district. The quantity of rice to be bought and price to be fixed by the directors."

The appellee brought this suit against the appellant on an itemized account which it made an exhibit to its complaint and, after setting up the contract, appellee alleged that on the 1st day of December, 1909, appellant quit appellee's employment, and went to work for other parties at a salary of $ 200 per month; that during the time of the employment, appellant was a director of the plaintiff corporation, and that while so employed, and without the knowledge of the appellee and for the purpose of defrauding it, he directed its bookkeeper to credit him with divers and sundry amounts to which he was not justly entitled, among the items there being $ 798 rebate on the Leroy rice crop, $ 407.36 on the Schenebeck rice crop, and $ 1,000 on his salary, and $ 80 on binder twine, when he was only entitled to a credit on the binder twine account of $ 19.29.

Appellee alleged that it was not aware of such false entries until it had its books audited, and that it was entitled to the sum of $ 3,920.06, as shown by the itemized statement, which it claims shows the correct amount due appellee, and for which it prayed judgment.

The appellant, after filing a motion to make the complaint more specific, which was overruled, answered, denying that his employment was to extend longer than the rice season, which he alleged would expire January 1. He denied the allegations of fraud, set up that all the items credited to him on the books were correct, and that the same were acquiesced in and approved by appellee and its authorized agents; alleged that the officers and directors made daily visits to the office where the books were kept, and made personal investigation of the books, and had full knowledge of the condition of appellant's account and each item thereof. Alleged that he purchased the rice crop of Schenebeck in gross for the sum of $ 3,500, and reported that fact to the appellee, and that appellee refused to ratify the contract, and that appellant personally assumed the same and afterward sold same to appellee for $ 1 per bushel, which amounted to about $ 3,900. He denied that he ordered the bookkeeper to enter the credits on appellee's books, and alleged that the credits of which appellee complains were made at the direction of the appellee, and that he was entitled to such credits.

By way of cross complaint, appellant alleged that he continued to work for appellee under the contract from July 1, 1909, until he had fully complied with his contract, although appellee ordered him to discontinue buying rice December 1, 1909. He alleged that he was entitled to the full amount of the salary named. Alleged that on December 11, 1909, the account between him and appellee showed a balance due appellant of $ 223.78, and that appellee gave him a check for that amount, and that this was a full and complete settlement, except that there was not included in this settlement the amounts due appellant for salary or profits on seed rice. He alleged that appellee paid him on his salary $ 500 on March 1, 1910, and $ 500 on April 26, 1910, and that at each time he requested an itemized statement, and appellee failed to furnish it to him. He specified that there was due him from appellee the following sums: On Leroy rice crop, one-half profit, $ 798; on Schenebeck rice crop, $ 316; advanced by him on Schenebeck rice crop, $ 2,544.90; one-half profits on binder twine, $ 80; one-fourth profits on seed rice, $ 1,694.37, making a total of $ 5,333, for which amount he prayed judgment.

The matters at issue between the parties on the pleadings and the testimony presented by this somewhat complicated record could have been more easily and correctly determined, perhaps, had the matters and issues been referred to a master to state an account, but the chancery court did not see proper to do that, but considered the testimony at first hand and rendered a written opinion in which he took up various contested items between the parties, and made his findings thereon, and after entering the debits and credits as same were determined from the testimony, rendered a judgment in favor of the appellee in the sum of $ 2,109.86, with interest thereon from July 1, 1910, at the rate of 6 per cent per annum, which amounted, at the time of the rendition of the decree, to the aggregate sum (including interest and principal), of $ 2,457.88, and from this decree appellant duly prosecutes this appeal. Other facts stated in opinion.

Decree modified.

C. F. Greenlee, G. Otis Bogle and Manning, Emerson & Morris, for appellant.

Thos. C. Trimble, Sr., and Thos. C. Trimble, Jr., for appellee.

OPINION

WOOD, J., (after stating the facts).

Appellant urges that the judgment should be reversed for the following reasons: First, because the court erred in not sustaining the motion to make the complaint more specific; second, because the settlement and payment made December 11, 1909, was conclusive of all claims prior thereto; third, because the court erred in its finding on the binder twine account; fourth, the Leroy rice account; fifth, the Schenebeck rice account; sixth, appellant's salary; seventh, the seed rice account; and eighth, error on rice sold Edmonds of $ 12.50. We will consider these in the order named.

1. Appellant asked that the complaint be made more specific "by specifically stating each item which it claimed appellant had converted to his own use, and by specifying the divers and sundry amounts which it alleged appellant had caused to be credited to himself to which he was not entitled, and specifically stating the amount for which appellee claimed judgment."

The account exhibited with the amended complaint showed the amount for which appellant asked judgment. Among the "divers and sundry amounts" which appellee alleged that appellant had procured to be credited upon his account with appellee were the following items: "$ 798 rebate on Leroy rice crop, $ 407.36 rebate on Schenebeck rice crop, $ 1,000 on salary, and $ 80 on binder twine."

The above items, in connection with the itemized statement of account, made an exhibit to the amended complaint, were sufficient to advise appellant of the specific items which he is alleged to have had credited to himself on the books of appellee. The court did not err in overruling the motion to make more specific.

2. An account in which items have been entered or omitted through fraud, mistake, accident, or undue advantage, may be falsified or surcharged even after there has been a settlement and payment of the balance found due. But one who seeks to falsify or surcharge an account for fraud, etc., must proceed within a reasonable time after the fraud has been discovered, and the onus is upon him to establish the fraud by clear and convincing evidence. Roberts v. Totten, 13 Ark. 609; Lawrence v. Ellsworth, 41 Ark. 502; Weed v. Dyer, 53 Ark. 155, 13 S.W. 592; Lanier v. Union Mortgage Banking & Tr. Co., 64 Ark. 39, 40 S.W. 466; Fletcher v. Whitlow, 72 Ark. 234 at 234-240, 79 S.W. 773; 1 Cyc. pp. 460-467.

The facts concerning the alleged settlement by the payment made December 11, 1909, are substantially as follows: W. B. Hudson was the bookkeeper of appellee at that time. He testifies: "We gave Mr. Loewer $ 223.78 to balance his account, including that stock; also credits for the Leroy Planting Company, and for the Schenebeck business. Up to that time (December 11, 1900), Loewer owed the mill nothing. Mr. Loewer and I had a settlement on that day." And further on, he says: "We balanced off on January 5, 1910, and he was credited for the Leroy Planting Company, and also for the Schenebeck business."

The appellant testified concerning this alleged settlement, as follows: "I had a settlement with the company December 11, 1909. The mill was then indebted to me in the sum of $ 223.78, which was paid by check. I asked for a statement when we settled December 11, 1909. Hudson promised he would make it out, but he never did."

If the above were all the testimony, the appellant would be correct in his contention that the payment of December 11, 1909, was a complete and final settlement to that date. But Hudson, the bookkeeper, testified further, as follows: "I was directed by Loewer to make these entries on the books. He went over the account with me when we made the settlement. He was superintendent of the mill and the rough rice buyer. He was supposed to tell me all trades made in buying rough...