Tenny v. Porter

• Decision Date: 30 November 1895
• Citation: 33 S.W. 211,61 Ark. 329
• Parties: TENNY v. PORTER
• Court: Arkansas Supreme Court

33 S.W. 211

61 Ark. 329

TENNY v. PORTER

Supreme Court of Arkansas

November 30, 1895

Appeal from St. Francis Circuit Court in Chancery MATTHEW T SANDERS, Judge.

Decree affirmed.

W. G Weatherford for appellant.

1. In 36 Ark. 591, 606, this court expressed an opinion regarding the construction of the writing called the assignment, but it was clearly obiter dictum. It does not bind appellants, and with all deference, the views expressed therein were erroneous. A power to sell, coupled with an interest in the thing to be sold, survives the grantor; otherwise, where the interest is in the proceeds only of the thing. To constitute a power coupled with an interest, the interest must be in the subject matter, not in that which is produced by the exercise of the power. 8 Wheat. 174-5; 70 Cal. 296; 45 Ind. 183; 6 Conn. 559; 53 Pa. 214; 28 Ga. 511; 59 Tex. 397; 5 Howard 233.

2. Appellees are barred by the statute of limitation. Mansf. Dig. sec. 4474; 53 Ark. 400, 410; 52 id. 171.

3. The courts of this state will not enforce usurious contracts made in another state. It is against the public policy of the lex fori. 4 Pet. 230; Ib. 376; 3 Dall. 374; 111 U.S. 252; 101 id. 108; 54 Ark. 187; 47 id. 378; 46 id. 420; 41 Ark. 340.

4. Even in Tennessee, the surety is entitled to have the usury abated. 9 Heisk. 491; 6 Lea, 351.

5. Appellees, holding the equitable title, are seeking to establish their claim against the holders of the legal title. They should be required to do equity, and restore the money appropriated by them to the payment of a past due indebtedness of their father. They should do equity. 57 Ark. 536; 53 id. 69; 9 Lea, 415; 2 Head, 85; 10 Yerg. 105; 6 Cold. 509; 6 Humph. 438; Story, Eq. Jur. sec. 64; 4 Dall. 284; 5 How. 192; 46 N.Y. 615; 50 Mo. 603; 79 N.Y. 183; 54 Iowa 86. An antecedent debt does not constitute a valuable consideration, so as to make the creditor a bona fide purchaser. 2 Pom. Eq. sec. 1048 and note, and sec. 1047.

N. W. Norton, for appellees.

1. The assignment passed on in 36 Ark. 576 was an equitable mortgage to appellees. 6 Am. & Eng. Enc. Law, 680, 681; 2 Dessaussure, 552; 2 Am. Dec. 696; 1 Jones, Mortg. sec. 162. This question is now res judicata. 1 Black. Judgm. sec. 148; 2 id. sec. 524.

2. The cross-bill by appellees was not an action "for recovery of lands," and was not barred by the five years' statute. 31 Ark. 272; 56 id. 485; 43 id. 569; Ib. 504.

3. This was a Tennessee contract, and is governed by the usury laws of that state. 35 Ark. 52.

4. The insurance money was deposited by J. M. Farrow and withdrawn by him, and appellees had no notice of any trust.

5. J. M. Farrow assumed for a consideration the J. J. Farrow debt, and cannot plead usury. Tyler on Usury, p. 403; 32 Ark. 362.

OPINION

BATTLE, J.

This is the second time this action has been in this court on appeal. It appears the first time as Porter, Taylor & Co. v. Hanson, 36 Ark. 591.

J. M. Farrow brought an action in the St. Francis circuit court against John Parham to foreclose a vendor's lien on certain lands, and obtained a decree against him for $ 6,037, which was declared a lien on the lands, and they were sold by a commissioner of the court, and purchased by Farrow at the price of $ 4,800. The court confirmed the sale, but postponed the execution of the deed, holding that Parham was entitled to one year in which to redeem.

Farrow, being indebted to Porter, Taylor & Co. in the sum of $ 3,188, and to Newton, Ford & Co. in the sum of $ 3,050.20, and thinking that Parham might redeem the lands, executed to them an instrument of writing, empowering them to collect and receive the redemption money from Parham, and apply it to the payment of their debts pro rata, and providing that, if Parham failed to redeem, one John B. Cummins should, as trustee, sell the lands, and appropriate the proceeds to the payment of the debts.

Before the expiration of one year after the sale under the decree of the court, Farrow died, and the lands, not having been redeemed, were conveyed by a commissioner, under an order of the court, to his heirs.

In August, 1877, Hanson, Weatherford & Estes, a firm of lawyers, instituted an action in the St. Francis circuit court against the heirs of Farrow, and D. T. Porter, W. F. Taylor and G. W. McCrae, as partners composing the firm of Porter, Taylor & Co. and the first two as surviving partners of the late firm of Newton, Ford & Co., to enforce a lien upon the lands for professional services rendered by them in the suit instituted by Farrow against Parham. The lands were again sold, the last time under a decree rendered in the last mentioned suit, and were purchased by the creditors, who were parties thereto. But they refused to comply with their bid, and tendered an answer and cross-bill instead, in which they asserted rights in the lands, or the proceeds of the last sale, under the instrument of writing executed to them by Farrow, superior to all others, and appealed from an adverse decree.

This court held that they were bound by their purchase, and that Hanson, Weatherford & Estes had the superior lien, but expressed the opinion that the instrument of writing created a lien in their favor, and remanded the cause with the direction that the heirs of Farrow be brought in by new service "for all matters connected with the cross bill, and have day in court."

The attorney's lien was subsequently discharged, and the creditors, Porter, Taylor & Co. (now Porter & McCrae), and the Farrow heirs, the appellants, were left to litigate.

At the October term, 1881, the St. Francis circuit court directed a warning order to be published, requiring the Farrow heirs to answer Porter, Taylor & Co.'s cross-bill. On the 18th of February, 1882, they filed an answer, and alleged that, within the year allowed for the redemption of the lands from the first sale, J. M. Farrow died, and the St. Francis circuit court, at its October term, 1876, vested the title to the lands in them, and that more than five years had elapsed before the cross action was commenced against them.

They denied that the creditors were entitled to any relief under the instrument of writing executed by J. M. Farrow, and averred that the debts secured thereby were illegal and usurious; that, on the 1st of April, 1871, J. J. Farrow executed to said creditors a note for $ 3,951.94, which was due on the 1st of December, 1871, and on the 19th of December, 1871, together with J. M. Farrow, their father, executed a note in renewal of the first, which was due on the 1st of January, 1873, for $ 4,428.72, including $ 474.52 interest for thirteen months,--more than 12 per cent. per annum,--and this was part of the note secured by the instrument of writing sued on.

By the way of counter claim, they alleged that their father, J. M. Farrow, had, on the 20th of June, 1871, in his possession, as their trustee, $ 9,500, belonging to them, which he, on that day, delivered to said creditors, he being individually indebted to them as Newton, Ford & Co. in the sum of $ 1,838.69, which they retained out of the $ 9,500, and appropriated the remainder, according to his directions, to the payment of his individual account with them.

And they filed with their answer interrogatories which they propounded to the cross-complainants, and asked that they be required to answer them, which was done.

Upon a final hearing upon the merits the court found that the cross-action was not barred by the statutes of limitation; that J. M. Farrow, the father of the defendants in the cross-complaint, collected in 1871 $ 10,000 of the St. Louis Mutual Life Insurance Company, which was a trust fund in his hands for them; that on the 20th of June, 1871, he deposited of this fund $ 9,500 with Porter, Taylor & Co., which they received, and credited him therewith as his fund, and on the same day appropriated $ 1,838.69 thereof to the payment of an indebtedness of J. M. Farrow to them, but that it does not appear that they had notice of the trust at the time of the deposit and appropriation; that the indebtedness of J. M. Farrow to the cross-complainants, as evidenced by his notes to them, was contracted in Tennessee, and was usurious, but that in Tennessee a usurious contract may be purged of usury, and the principal and six per cent. per annum interest thereon can be collected; that the note executed by J. M. Farrow in payment of the indebtedness of J. J. Farrow was based on a valuable consideration received by the former from the latter, and was, therefore, valid as to principal and interest; and that, purging the indebtedness of J. M. Farrow, except the last mentioned note, of usury, he was indebted to cross-complainants in a sum larger than the amount of the proceeds of the second sale under the decree of the St. Francis circuit court and interest thereon; and decreed that they retain in their hands such proceeds, they having purchased the lands at the second sale, and still owing for the purchase money at the rendition of the decree.

The finding of the court as to the statute of limitation is correct. The cross-action of Porter & McCrae was not an action to recover lands within the meaning of the five years' statute pleaded by the defendants; and the plaintiffs and defendants therein claimed under the same judicial sale. Duke v. State, 56 Ark. 485, 20 S.W. 600; and Phelps v. Jackson, 31 Ark. 272.

The allegations of the Farrow heirs as to the $ 9,500 were denied by the plaintiffs in the cross-action. No evidence as to their truth or falsity appears in the record, except an answer filed by them in an action instituted by the Farrow heirs, or a part of them, against the plaintiffs in this action in a Tennessee court. In that answer they admitted...