Rice Growers' Credit Corp. v. Walker
| Decision Date | 02 May 1932 |
| Docket Number | 273 |
| Citation | 50 S.W.2d 619,185 Ark. 896 |
| Parties | RICE GROWERS' CREDIT CORPORATION v. WALKER |
| Court | Arkansas Supreme Court |
Appeal from Arkansas Chancery Court, Northern District; Harvey R Lucas, Chancellor; reversed.
STATEMENT BY THE COURT
Appellant brought this suit in equity against appellee to obtain judgment for an amount alleged to be due it and to foreclose a mortgage on a rice crop and on certain chattels to secure said debt. Appellee claimed that he had paid the indebtedness, and did not owe appellant anything at all. Appellee was a rice farmer, and on the 11th day of March 1930, obtained a loan of $ 4,300 from appellant to raise a rice crop. On the same day he executed a promissory note for the amount borrowed, and gave a mortgage to appellant on his rice crop and other chattels to secure the indebtedness. On the 8th day of August, 1930, appellant advanced to appellee under said mortgage the additional sum of $ 700 evidenced by a promissory note. Appellee made a payment to appellant on said indebtedness, so that on June 10, 1931, the indebtedness amounted to $ 4,443.83. According to the evidence for appellant on the 11th day of April, 1931, appellee delivered to it a draft drawn by McGill Brothers for $ 4,920.29. Appellant did not agree to receive said draft as payment, but was to hold it until due, and, if collection could be made to credit appellee's account with the amount of the draft. The first appellant knew that the rice on which it had a mortgage had been sold to McGill Brothers was when the draft was brought to it. The draft or trade acceptance is as follows:
On the face of the draft the acceptance of McGill Brothers appears. On the back of it appears the indorsement of appellee and appellant. When the draft or trade acceptance became due, it was presented for collection through banks and was duly protested because in the meantime McGill Brothers had become insolvent. Notice of protest was made in due course. Appellant has not been paid the amount due it. There was a finding in favor of appellee, and appellant's complaint was dismissed. To reverse that decree this appeal has been prosecuted.
Decree reversed and cause remanded.
M F. Elms and W. A. Leach, for appellant.
Ingram & Moher, for appellee.
OPINIONHART, C. J., (after stating the facts).
The chancery court erred in its finding and decree. The law is well settled that, where a creditor receives from his debtor the note or bill of a third person, the presumption is that he takes it by way of security. Bank of Hatfield v. Bruce, 164 Ark. 576, 262 S.W. 665; Hume v. Indiana Nat. Life Ins. Co., 155 Ark. 466, 245 S.W. 19.
The record shows that appellant had made advances to appellee with which to make a rice crop and took a mortgage on the crop to secure the payment of the indebtedness. Appellee sold the crop and delivered to appellant an instrument called a trade acceptance on McGill Brothers for $ 4,920.89. The acceptance appears on the face of the instrument, but the amount was not paid because, before it became due, McGill Brothers, on whom it was drawn, became insolvent. According to the evidence of appellant, the draft or trade acceptance upon McGill Brothers was not received by it as an absolute payment. The source of payment provided having proved unproductive, appellant had the same recourse upon appellee as it had in the beginning. There is no evidence that appellant intended to release appellee. The draft or trade acceptance upon McGill Brothers and their acceptance were equivalent in legal effect to the receipt by appellant of a bill or note of McGill Brothers drawn to the order of appellant.
In Akin & Company v. Peters, 45 Ark. 313, it was held that the acceptance by a creditor of the note or bill of a third party for his debtor's debt does not discharge the debtor, unless so specially...
To continue reading
Request your trial