McKee v. Hendricks
| Decision Date | 14 July 1924 |
| Docket Number | (No. 125.) |
| Citation | 264 S.W. 825 |
| Parties | McKEE, State Bank Com'r, et al. v. HENDRICKS et al. |
| Court | Arkansas Supreme Court |
Appeal from Howard Chancery Court; C. E. Johnson, Chancellor.
Suit by Charles M. McKee, State Bank Commissioner, and others, against John B. Hendricks and others. Decree for defendants, and complainants appeal. Reversed in part, affirmed in part, and remanded, with directions.
DuLaney & Steel, of Ashdown, and Will Steel, of Texarkana, for appellants.
O. A. Graves, of Hope, and W. P. Feazel, of Nashville, for appellees.
This suit was instituted in the chancery court of Howard county by the creditors and heirs of L. H. P. Jones and the administrator of his estate for the benefit of the creditors and the heirs to recover certain lands and the proceeds derived from the mortgage of others alleged to have been conveyed and mortgaged for the purpose of hindering and delaying his creditors in the collection of their just demands. The suit was instituted under section 70, C. & M. Digest. There was an amendment to the complaint, alleging that there was never a completed delivery of the $9,500 hereinafter referred to, and that the possession thereof by appellee Hendricks was that of a mere bailee.
The intestate, Jones, referred to by the witnesses as Lou Jones, owned a farm of 600 acres, and he also owned a 15-acre tract of land and two lots in the town of Mineral Springs. In addition, he owned certain personal property, which the inventory of the administrator of his estate showed to be worth $1,300. Jones had been a stockholder and director of a bank in Mineral Springs, which failed in May, 1921. He owed the bank, at the time it closed its doors, $850, evidenced by a note payable to the bank's order. He owned $850 of the capital stock of the bank, against which a stockholder's liability for that amount was being asserted by the state bank commissioner, who had taken over the bank.
There was some testimony that a suit was threatened by certain of the stockholders against the officers of the bank for mismanagement, and Jones appeared to have consulted a lawyer in regard to his possible liability on that account. This suit was never brought, however. The bank was the depository for a large amount of public funds, consisting principally of money belonging to some road districts; but certain officers of the bank made good this deposit. This was not done, though, until after Lou Jones had mortgaged his farm.
Jones was shown to have felt resentful about the bank's failure, and to have said that he would not pay his stockholder's liability until he was compelled to do so; but he stated that he would pay if the court said that he must. A suit to enforce this liability and one on his note to the bank were pending at the time of his death, but judgments on these demands were not recovered until after his death. Certain demands were probated against Jones' estate, and these, with the judgments in favor of the bank, totaled $2,066.28.
Jones had never been married, and was survived by a brother, who was in impecunious circumstances, a sister, and the widow of a deceased brother, who left surviving him two infant children, and his stepmother. Jones was on the most cordial terms with all these persons, and he spent a portion of the summer, before his death in the fall, with his sister-in-law, who resided in Oklahoma, and discussed with her the question of her accompanying him on his trip West for his health. Jones was suffering from consumption, and had been for about two years before his death, and he finally died from this disease. He lived principally with a Mrs. Hendricks, whose son, a young man 22 years old, named John B. Hendricks, had been very attentive to him, and who had devoted much of his time to nursing and caring for Jones during the last two years of Jones' life.
Jones applied for and obtained a loan on his farm, amounting to $12,000, to secure which he gave a mortgage on the farm, and he also executed a second mortgage on the farm to secure a loan of about $2,000. The testimony is very conflicting as to the value of this land. Certain witnesses testified that the mortgages on the land equaled its value, and that the equity of redemption was worth nothing. According to certain other witnesses the land had not been mortgaged for more than half its value. After considering this testimony, we have concluded that the equity of redemption was worth as much as $5,000. After executing this mortgage, Jones gave John B. Hendricks a deed to the 15 acres of land, and shortly before his death he also gave Hendricks $850 in cash. About the same time he conveyed one of the lots in Mineral Springs to his sister, and the other to his stepmother. He also paid a small mortgage indebtedness due by his brother, Manning S. Jones, and he assigned to his brother's daughter a life insurance policy having a value of about $800.
After securing the $12,000 loan, Jones took a check for $11,982.41, which apparently represented the net proceeds of the $12,000 loan, to the Citizens' Bank at Hope, Ark., where he had never before had any business of any kind. He there took a certificate of deposit payable to John B. Hendricks for $9,500, and deposited $500 to his own credit, and took a cashier's check payable to his own order for the balance. Hendricks accompanied Jones to the bank when this was done. They returned to the home of Mrs. Hendricks, with whom her son, John B. Hendricks, lived. A sister of John B. Hendricks testified that, upon the arrival of Mr. Jones and her brother, Mr. Jones delivered the certificate of deposit to her brother, and stated at the time that he gave it to him. A number of other witnesses testified that Jones had told them that he had given the certificate of deposit to Hendricks, and there appears to be no doubt that he made this statement to a number of persons. The certificate of deposit was dated May 31, 1922.
Judge Feazel testified that Jones' stepmother was his wife's aunt, and that Mrs. Jones had lived with him as a member of his family for 15 years, and in this way he became very intimate with Lou Jones. A business matter called Judge Feazel to Mineral Springs, and after attending to this matter he called on Mr. Jones. This was about 10 days before Mr. Jones died. After a visit of about a half hour's duration Judge Feazel started to leave, when Jones called him to the sickbed and said, "I have given a party some money, and I want to know whether it will stick or not." Judge Feazel advised him that he could not tell unless he knew the manner in which it had been consummated. Jones told him that he had deposited the money in Hendricks' name, and had given Hendricks the certificate of deposit, and that he afterwards had Hendricks convert the certificate into Liberty bonds. Judge Feazel advised Jones that he thought the transaction would be good against everybody except creditors, when Jones expressed his satisfaction by saying, "That is all I wanted to know."
It will be observed that Judge Feazel had not called on Mr. Jones in a professional capacity, and his opinion was not sought until the visit was at an end, and no attempt was made to explain the details of the transaction to Judge Feazel; indeed, Judge Feazel testified that Jones was coughing to such an extent that Jones' conversation was broken and was carried on with difficulty. The testimony is conflicting as to Jones' opinion as to his own condition. His physician had advised him that he was in no condition to go West as he contemplated doing, and while Jones may have despaired of final and complete recovery, we do not think the testimony shows he was anticipating immediate death.
Jones went to Mineral Wells, Tex., and on August 26, 1922, he wrote the following letter:
Jones called a notary public, before whom he subscribed and swore to the letter. After doing this the notary suggested that the matter might be put in better form, and the notary prepared the following statement:
A Mrs. Hood was present when these instruments were signed and sworn to, and she and the notary testified that Jones stated at that time that he had given Hendricks the money referred to because Hendricks had rendered him long and faithful services.
Manning Jones, a brother, and Ola Jones, a sister-in-law, of Lou Jones, testified to substantially the following effect: The relationship between them and their brother was intimate and affectionate. Their brother had never despaired of recovery. He talked with them frequently and freely about his business affairs, and told them about the mortgages on his land, but did not mention the alleged gift to Hendricks. Lou Jones expressed to them the fear that the bank failure might impoverish him, and he stated to them that he derived a fund by mortgaging his farm, which...
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