Tunstill v. J. T. Fargason Co.

• Decision Date: 22 January 1923
• Docket Number: 101
• Citation: 246 S.W. 856,156 Ark. 513
• Parties: TUNSTILL v. J. T. FARGASON COMPANY
• Court: Arkansas Supreme Court

246 S.W. 856

156 Ark. 513

TUNSTILL v. J. T. FARGASON COMPANY

No. 101

Supreme Court of Arkansas

January 22, 1923

Appeal from Poinsett Chancery Court; Archer Wheatley, Chancellor affirmed.

Decree affirmed.

John W. Scobey, for appellant.

The relation of debtor does not exist until after the goods held by the factor has been disposed of and applied to a payment of advances. 3 A. L. R. 287; 5 L. R. A. (N. S.) 1147; 214 Pa 258; 63 A. 745. Proof of the insolvency of the defendant should have been proved. 66 Ark. 486.

Cooley & Adams, for appellee.

While the lien attaches, he does not have to pursue that remedy; he may maintain an action against the principal before the lien attaches. 60 Ark. 357; 117 Ark. 180; 134 Ark. 580; 11 R. C L. p. 774, § 28. The fact that somebody offered thirty cents for the cotton at Lepanto does not establish its market value in Memphis. By shipping the cotton he tacitly agreed to be bound by the Memphis market. 78 Ark. 402; 11 R. C. L. p 766, sec. 17; 25 C. J. pp. 357-358, § 33. Conveyances made to members of a household and near relatives of an embarrassed debtor are looked upon with suspicion, and scrutinized with care. 74 Ark. 174; 133 Ark. 250; 134 Ark. 241; 136 Ark. 115.

OPINION

WOOD, J.

This action was begun by the appellee in the circuit court against the appellant to recover the sum of $ 1,448 alleged to be due the appellee for money advanced to O. L. Tunstill and to set aside a conveyance executed on January 6, 1921, from Tunstill to his wife, which, it is alleged, was made to defraud the creditors of Tunstill. All of the material allegations of the complaint were denied by the appellant, and they set up that the real estate conveyed was the homestead of appellants, and that the cotton shipped by Tunstill to the appellee was owned by others, and that the credit extended by the appellee to Tunstill was upon the value of the cotton at the time and not to Tunstill. On motion of the appellee, and over the objection of appellants, the cause was transferred to the chancery court.

The testimony adduced by the appellee tended to prove that the appellee is a corporation engaged in the business of cotton factors at Memphis, Tennessee. Tunstill shipped cotton to the appellee for sale, and drew against it. It was the custom of appellee, as factor, to advance money against cotton shipped to it. Tunstill shipped to the appellee nine bales of cotton and drew on the appellee in favor of the First National Bank of Lepanto, during the month of January, 1920, for sums amounting in the aggregate to $ 1,275, which amounts were paid to appellee.

At the time the cotton was shipped and the drafts of Tunstill were paid, the appellee had no knowledge of the fact that the cotton did not belong to Tunstill. Appellee knew, in a general way, that Tunstill was rated as a fair man. "It considered him a reliable, straightforward sort of man, and the cotton that he shipped in at the time was also an additional security." Appellee thought it was safe in making him the advance, whether the cotton paid the account or not. It extended credit both on the security of the cotton and the personal standing and financial responsibility of Tunstill. The manner of dealing with Tunstill was the usual one for cotton factors like the appellee. The appellee sold one bale of the cotton February 2, 1921, for five cents per pound, realizing the sum of $ 20.04, and sent Tunstill notice of the sale. On February 16, 1921, he replied that he did not want any more of the cotton sold at such price. On February 19, 1921, the appellee wrote to Tunstill telling him that his cotton was of a class that it would be almost impossible to dispose of it, calling his attention to the condition of the world market, and suggesting that it would be a better policy "to realize whatever possible on this cotton of extremely low grade, and not to be particular about the price." Tunstill made no reply to this letter. On May 14, 1921, appellee sold three more of the bales of cotton at the sum of $ 54.27. The four bales of cotton brought the sum of $ 74.31. The account of Tunstill with appellee was made up of the advances and interest thereon at the rate of eight per cent. per annum, freight and charges, and the sum of $ 40 advanced to Cooley & Adams as lawyers' fee and court costs, which, after deducting the sum of $ 74.31, left the sum of $ 1,548.99 the amount claimed to be due the appellee. The testimony on behalf of the appellee further tended to prove that this cotton was of such a low grade that there had been demand for it only at five and six cents, and some cotton of such low grade had sold for three cents.

The uncontroverted testimony on behalf of the appellants was to the effect that Tunstill did not own the cotton shipped to appellee and had no interest in it. It was in his name, but was owned by one T. E. Maynard and one E. C. Taylor. They owned the cotton, and Tunstill shipped it in his name to accommodate them. They received from Tunstill the money on the drafts drawn by Tunstill on the appellee in favor of the Bank of Lepanto. The appellant did not get the money. It came in his name, but the owners of the cotton received it. The owners went to the Bank of Lepanto, presented the bill of lading with the draft attached, and the bank paid the money to Tunstill, and Tunstill paid it over to the owners of the cotton. There was testimony on behalf of the appellants tending to prove that the owners of the cotton were offered thirty cents a pound for the cotton in Lepanto before shipping it, which they refused.

The cashier of the First National Bank of Lepanto testified to the effect that the appellee honored drafts drawn by anybody against cotton that was recommended by the First National Bank of Lepanto, and that, if this cotton had been shipped in the name of the owners, drafts would have been paid anywhere from $ 75 to $ 125 each per bale. This witness, on cross-examination, testified that Tunstill was good for any financial obligations he incurred. He had been in Lepanto a long time, and witness would not say that Fargason Company did not know his standing.

There was testimony on behalf of the appellee tending to show that the value of the real estate conveyed by Tunstill to his wife was from $ 1,000 to $ 2,500. The consideration named in the deed conveying the property was $ 1. After the institution of the suit, on the petition of the appellee, the remaining cotton in appellee's hands was sold by order of the court.

The above are substantially the facts from which the court found that Tunstill was indebted to the appellee in the principal sum of $ 1,184.34. The court further found that the conveyance of the real estate from Tunstill to his wife was fraudulent and void. The court rendered a decree in favor of the appellee in the sum of $ 1,184.34, and directed that, unless the same be paid within sixty days from the date of the judgment, the real estate described in the conveyance and set forth in the decree be sold to satisfy the decree. From this decree appellants prosecute this appeal.

1. The appellants contend that the suit was prematurely brought on the ground that the relation of debtor and creditor did not exist between Tunstill and the appellee; that the relation was only that of shipper and factor; and that under such relation no action could be instituted until all the cotton in the hands of the appellee had been disposed of and the proceeds thereof applied as a credit on the amount advanced. To sustain their contention, appellants cite the cases of Newburger-Morris Co. v. Talcott, 219 N.Y 505, 114 N.E. 846, 3 A. L. R. 287, and Re Jos. D. Murphy Co., 214 Pa. 258, 5 L.R.A. (N. S.) 1147, 63 A. 745. In the New York case it is said: "The rule in this State is that, in the absence of some agreement to the contrary, the consigned goods are the primary fund to which a factor must look for...