White v. Smith

• Decision Date: 27 February 1897
• Citation: 39 S.W. 555
• Parties: WHITE v. SMITH et al.
• Court: Arkansas Supreme Court

39 S.W. 555

WHITE v. SMITH et al.

Supreme Court of Arkansas.

February 27, 1897.

Appeal from Pope chancery court; Jeremiah G. Wallace, Chancellor.

Suit by R. H. Smith and another against John W. White and others. Judgment for plaintiffs, and defendant White appeals. Affirmed.

The facts in this case are as follows: One G. W. Lake was the owner of a patent right to make, use, and vend certain roof paint in the state of Texas and other states. The appellant, John W. White, and the appellees, R. H. Smith and C. P. Hall, formed a partnership for the purpose of purchasing said patent right. After the formation of the partnership, they purchased from Lake the right to make, use, and vend this paint in Texas. The consideration which they agreed to pay for this patent covering the state of Texas was $3,000. White paid his portion of this consideration in cash. Smith and Hall, for their part of the consideration, conveyed to Lake a storehouse and lot in the town of Russellville, valued at $2,000. Lake afterwards conveyed this storehouse to White, for an alleged consideration of $1,500. Smith and Hall suspected that White had obtained an unfair advantage in the purchase of the patent right, and brought this suit in equity, alleging that they were induced to enter this partnership, and purchase the patent right, through the fraud of defendants White and Lake; that Lake and White colluded together for that purpose; and that it was agreed between them that White, for his services in inducing Smith and Hall to enter the partnership and purchase the property, should be allowed a secret advantage. They alleged that White received for the $1,000 paid by him not only a one-third interest in the patent right, but also the storehouse and lot conveyed by Smith and Hall to Lake. White denied the allegation of fraud, and testified that he paid the $1,000 in good faith for a one-third interest in the patent right purchased, and, further, that he executed his note for $1,500, as a consideration for the purchase of the lot from Lake. It was stipulated in this note for $1,500 that it was payable out of first money received by White from his interest in the patent right purchased. The circuit court found that the allegations of the complaint were true; that the plaintiffs were fraudulently induced by White and Lake to enter the partnership, and transfer their town lot, for a two-thirds interest in the patent right, under the belief that the price of the patent right was $3,000; that, in fact, Lake secretly agreed with White to accept $1,000 in full payment of the patent right; and that, for this sum paid by White, Lake conveyed to him a one-third share in the patent right, and also the house and lot which he obtained from Smith and Hall. The circuit court found, in effect, that the note for $1,500 given by White to Lake was only a blind, and not intended to be paid. The court therefore dissolved the partnership on account of the fraud of White and Lake, set aside the conveyance of the town lot, and revested the title in Smith and Hall, upon condition that they return to White two-thirds of the $1,000 paid for it and the patent. The court ordered the note for $1,500 canceled, and the patent right sold, and proceeds divided between Smith, Hall, and White. From this decree, White appealed.

Jeff. Davis, for appellant. R. B. Wilson and Dan. B. Granger, for appellees.

RIDDICK, J. (after stating the facts).

We are of the opinion that the decree of the circuit court should be affirmed. The record shows that the case was heard partly on evidence taken orally at the bar of the court, and this oral evidence was not reduced to writing or...