Turney v. Roberts

• Decision Date: 13 November 1973
• Docket Number: No. 73--116,73--116
• Citation: 255 Ark. 503,501 S.W.2d 601
• Parties: , 74 A.L.R.3d 1231 R. B. TURNEY, Appellant, v. Wayne ROBERTS et al., Appellees and Cross-Appellants, v. Leonard E. RICHARDSON, Intervenor and Cross-Appellee.
• Court: Arkansas Supreme Court

Page 601

501 S.W.2d 601

255 Ark. 503, 74 A.L.R.3d 1231

R. B. TURNEY, Appellant, v. Wayne ROBERTS et al., Appellees and Cross-Appellants, v. Leonard E. RICHARDSON, Intervenor and Cross-Appellee.

No. 73--116.

Supreme Court of Arkansas.

Nov. 13, 1973.

Rehearing Denied Dec. 17, 1973.

Charles W. Atkinson, Fayetteville, for appellant.

Jeff Duty, Rogers, for cross-appellants.

Wommack & Lineberger, by John Lineberger, Fayetteville, for cross-appellee.

Jeff Duty, Rogers, for appellees.

HOLT, Justice.

The appellant, a Florida resident, brought this action to reform a $20,000 note and mortgage given to him by the appellees, Wayne Roberts and his wife, Hazel Bishop Roberts. Reformation was sought upon the allegations of fraud and other inequitable conduct on the part of the Robertses. Appellant Turney also sought foreclosure and subrogation as to a previous incumbrance (Denham) on the real property. The Robertses admitted execution of the note and mortgage and interposed usury as a defense. Subsequently, cross-appellee Richardson filed an intervention alleging that the Robertses were indebted to him for $3,000. He also sought subrogation. The Robertses invoked, inter alia, the statute of frauds to avoid payment of the Richardson loan. The chancellor sustained the Robertses' defense of usury and cancelled their note and mortgage to Turney who brings this direct appeal. The chancellor upheld the contentions of intervenor Richardson. The Robertses cross-appeal from that part of the decree favorable to Richardson.

Appellant Turney and cross-appellee Richardson had loaned $17,000 and $3,000 respectively to the Robertses to redeem their property (bid in for $33,250) before the actual sale in a foreclosure proceeding instituted by Edward Denham and his wife. After receipt of the alleged loans, the appellees paid into the court registry the sum of $19,424.21 to redeem their property.

We review the pertinent evidence with reference to both loans. For approximately a year preceding the Turney loan, the Robertses and the Richardsons had lived in Texas as neighbors and frequently visited each other. Richardson and the Robertses were employed at a Mexican Baptist children's home. During this time and before the $3,000 loan, it appears that the Robertses had borrowed money occasionally from the Richardsons and $862.62 of these loans remains unpaid. When the Denhams' foreclosure proceeding was instituted against the Robertses' Arkansas property, they endeavored to secure a $20,000 loan from the Richardsons. Roberts represented to them that the value of their Arkansas home and property was approximately $250,000 and, by the foreclosure proceeding, they would lose everything including opening a children's home, which they were planning to do. Roberts 'bothered us all the time' about loaning him funds to pay off the Denham note. Roberts himself persisted to the extent he actually drafted a note and mortgage for $20,000, saying lhe would like to make it $25,000 in order to meet his needs for living capital. Richardson told Roberts that he and his wife were unable to raise the money for the requested loan. About a month later the Richardsons loaned $3,000 to Roberts when he exhibited to him a $17,000 cashier's check which represented a loan recently made to him by appellant Turney. Roberts insisted in his renewed plea for assistance he was in desperate need of another $3,000 and told the Richardsons their name would be on the $20,000 Turney mortgage. He gave them a receipt (check) indicating that the loan was part of a mortgage payment. No rate of interest was discussed. Roberts had shown them an abstract, deed and an appraisal of the property when he told them it was worth $250,000. He persuaded them to believe that he wanted to sell it and use the proceeds for building a children's home and the property had increased in value because an organization was going to build a shopping center on the Arkansas property. He assured them the loan would be needed no longer than three weeks. Through a minister friend, Arnold Lawrence Robertson, the Richardsons understood that appellant Turney was a very religious man who devoted much of his time and effort to Christian work and projects.

Robertson, the minister, testified he had known appellant Turney and his Christian endeavors for almost twenty years. The minister further testified that he had known the Robertses for about seven years. He was in Texas and present when a discussion arose between the Robertses and the Richardsons about building a children's home. Roberts, however, mentioned that his Arkansas property was being foreclosed and Mrs. Roberts was upset and weeping about it. The possibility of getting money from foundations that build children's homes was discussed as a source of a loan. Robertson told the Robertses that he had no contacts in Texas and if he found anybody in Greensboro, North Carolina, where he was going he would let him know. Shortly thereafter, the minister was surprised when he received a call from Roberts who was in Greensboro. Roberts wanted to see a local individual which he was unable to do that day. The minister then called appellant Turney, a friend of his, in Orlando, Florida, and told Turney in Roberts' presence that Roberts, also a friend, was in Greensboro; that it would be necessary for him, Roberts, to borrow approximately $17,000 to pay off a mortgage on his home in order for him to be able to sell it and invest the proceeds in a children's home. Then he heard Roberts talk with appellant Turney on the phone telling him he would pay 10% interest on the requested loan and would give him a bonus if he, Roberts, could sell his property within a short time. He heard Roberts assure Turney that his home was valuable property which included fifty or sixty acres. As previously indicated, the minister and appellant Turney had been friends for several years. They had worked together in children's projects and each assisted in the Christian Missionary Movement called Transworld Radio.

Appellant Turney verified the minister's testimony about his introduction to Roberts by telephone from North Carolina. This conversation lasted about one hour. Roberts was in urgent need of $17,000 to pay off a mortgage on his home. He was so desperate he cried during the conversation. Thereafter, Roberts persisted in calling Turney from different locations in Texas and said he would like to come to Florida. On September 3, 1971, after calling Turney, Roberts flew to Orlando where Turney picked him up at the airport. Roberts did not know whether Turney had funds for a loan; however, Turney and his wife went to a bank and raised $17,000 by pledging their son's college funds, a life insurance policy, and by cashing their savings bonds and checking accounts. Roberts had told Turney before he arrived that he would have a note and mortgage made to them on his Arkansas property which was worth $275,000. Roberts had with him one note for $20,000 dated September 1, 1971, drawing 10% interest, secured by a mortgage of even date payable in forty-five days. The length of the loan was determined at the bank. He also left his deed to the property. He was in Orlando about three hours during this transaction at the bank. Roberts again assured him that the property was worth between $250,000 and $275,000. Roberts 'broke down and cried' at the bank when he received the $17,000 loan. At that time Roberts voluntarily, to Turney's surprise, acquired a blank note and completed it in the face amount of $5,000, without interest, and tearfully presented it as a gratuity or bonus to Turney. Roberts showed Turney some papers involving the sale of two pieces of property at $70,000 to $800,000. He assured Turney that within a month and a half that the large real estate transaction would be completed.

Turney testified that Roberts 'assured me at the bank that he was well aware of all legal implications, and that's the reason why he had everything fixed up ($20,000 note and mortgage) before he came; and he assured me, gave me assurance that everything was right, and everything was above board. That's the reason why he had taken care of it so well. I was amazed with the experience that h...