Wilks v. Vaughan

• Decision Date: 03 December 1904
• Citation: 83 S.W. 913
• Parties: WILKS et al. v. VAUGHAN et al.
• Court: Arkansas Supreme Court

83 S.W. 913

WILKS et al. v. VAUGHAN et al.

Supreme Court of Arkansas.

December 3, 1904.

Appeal from Circuit Court, Madison County, in Chancery; Jno. N. Tillman, Judge.

Suit by G. W. Vaughan and others against one Wilks and others. From the decree rendered, defendant Wilks and plaintiffs Vaughan and another appeal. Reversed in part, and otherwise affirmed.

W. J. Sanders, a brother-in-law of appellee G. W. Vaughan and son-in-law of appellee A. Sanders, was engaged in running a gristmill, blacksmith shop, and mercantile business in Madison county about 1895 or 1896. He secured his father-in-law and brother-in-law and appellant Wilks to become his sureties upon a note. He suffered a heavy loss by fire, and, being unable to meet his indebtedness, turned over to his sureties his property. They took up his note with their own, and ran the gristmill under the style of Sanders, Wilks & Co. Wilks was entitled to an equal voice in the management of and the disposal of the property, and whether he exercised it or not was discretionary with him. The evidence shows that, while not assuming a controlling part, he did exercise acts of control and authority continually, signed checks, and participated freely in the running of the business. The indebtedness assumed for W. J. Sanders and an additional indebtedness to the Farmers' & Merchants' Bank of Springdale passed into judgment against them for the sum of $7,054.85, on the 10th of September, 1898, and was paid by G. W. Vaughan and A. Sanders on the 7th of September, 1899, then amounting to $7,821.

On the 30th of June, 1898, Wilks conveyed to his brother-in-law, Lane, two tracts of land, one known as the "Samuel Lane place," containing 58¼ acres, and the other, known as the "Zimri Vaughan Place," containing 75 acres, and on the 5th of July, 1898, Lane conveyed these tracts to Wilks' wife. On the 8th of September, 1898, Wilks conveyed to his wife's nephew, James Bettis, a tract of 80 acres of land for an expressed consideration of $500, and on the 3d of December, 1898, Bettis conveyed it to Moore for an expressed consideration of $300, part of which, it subsequently developed, was for a debt of Wilks to Moore. On the 14th of July, 1898, Wilks exchanged with Southerland a store, storehouse, and dwelling at Whitener for residence property in Hindsville, taking Southerland's notes for the difference in value. Part of these notes were transferred to Lane, a brother-in-law, and one for $300 was transferred to Mrs. Wilks, and she subsequently transferred it to Emily Kenyon. The residence property acquired by Wilks of Southerland was conveyed to Wilks' wife, and she conveyed it to his mother. In August, 1893, Wilks purchased of his sister-in-law, Emily Kenyon, a tract of 69 acres, a part of the original Samuel Lane place. It adjoined the other two tracts (the Samuel Lane place and the Zimri Vaughan place), and became part of the Wilks farm, which then embraced the three tracts and contained 202 acres and a fraction over. This farm, as then constituted, was of irregular shape, but compact and all in one body. It is not clear whether the purchase money was all paid to Mrs. Kenyon or not. It seems to have been deeded to Wilks, but the deed not recorded. It was claimed that the purchase price or part thereof was unpaid, and Mrs. Wilks gave Mrs. Kenyon the $300 note of Southerland, and Mrs. Kenyon then deeded the land to Mrs. Wilks on the 8th of July, 1898.

The Samuel Lane 58 acres was conveyed to Wilks and wife jointly by Samuel Lane, the father of Mrs. Wilks, in 1887. Wilks bought the Zimri Vaughan place of 75 acres adjoining this tract in 1890. He occupied these two tracts, containing 133 acres, as his home, and farmed thereon from the time of the acquisition of each until about 1891. He then went into business at Hindsville, and later at Whitener, and owned a residence at Whitener and lived there several years attending to his business. He controlled the farm all the time; purchased the Emily Kenyon tract after he moved away, but made it part of the farm. He claimed that he always intended returning to his place, and that his absence was temporary for business purposes.

After paying the judgment to the bank, Vaughan and Sanders brought this suit against Wilks for one-third of the amount thereof, and to set aside the various conveyances aforementioned, and to subject the Southerland note and the real estate conveyed to the payment of the judgment. It is apparent that after these various transfers Wilks had no other property remaining in his own name upon which execution could be levied. Wilks denied that he was liable to contribution on the judgment; alleged that he was surety for W. J. Sanders at the request of Vaughan and A. Sanders; that property more than sufficient to pay the W. J. Sanders debt was turned over to them, and they still had it, or the proceeds thereof sufficient to satisfy the judgment; and denied all allegations of fraud in the various transfers. The chancellor rendered judgment for one-third of the bank judgment against Wilks, set aside all the conveyances except as to the Samuel Lane and Zimri Vaughan tract, and ordered the land sold to satisfy the decree, and rendered judgment against Southerland for the $300 note, and directed Mrs. Kenyon to turn it over to the clerk of the court, and by him to be delivered to Southerland upon his paying the judgment against him. All parties to the various transfers were parties to the suit. Wilks appealed from all of the decree except setting aside his homestead in the two tracts aforesaid, and appealed from the refusal to set apart the selected part of the Kenyon tract going to make up 160 acres. The evidence showed the entire tract of 202 acres was less in value than $2,500. Vaughan and Sanders appealed from so much of the decree as refused to set aside the conveyances as to the 133 acres set apart as a homestead.

Geo. B. Pugh and R. E. Wiley, for appellants. J. D. Walker and J. Wythe Walker, for appellees.

HILL, C. J. (after stating the facts).

1. The facts fairly established that Vaughan, Sanders, and Wilks were jointly in control of the property turned over to them by W. J. Sanders, that Wilks joined in and approved of the conveyances disposing of it, and that in the management of the mill Wilks was an active participant. The positive testimony of Vaughan and A. Sanders that every dollar received from the W. J. Sanders property and business went to pay the W. J. Sanders debt, and not a cent to themselves, together with the showing they made of the accounts between the parties, was sufficient to overcome the vague and uncertain testimony introduced by Wilks tending to prove that they had used the proceeds of this property for their own benefit. This state of facts lifts the case entirely from the principle of the case of Bank v. Judkins, 66 Ark. 486, 51 S. W. 632, which is invoked in behalf of Wilks. It is insisted that the relation of sureties to W. J. Sanders still existed, notwithstanding the direct note to the bank. It can make no difference to Wilks which way it is treated. If treated as a joint debtor, this doctrine is applicable. "It is true that for the purpose of contribution each joint debtor is regarded as the principal debtor for that part of the debt which he ought to pay, and as surety for his co-debtor as to that part of the debt which ought to be discharged by him." McGee v. Russell, 49 Ark. 105, 4 S. W. 284. If treated as sureties for W. J. Sanders, then his condition is not bettered, for section 7314, Sand. & H. Dig., would be directly applicable. The judgment for contribution was right.

2. Having paid the judgment to the bank, appellees became subrogated to all its rights against Wilks. "The right of subrogation does not arise from contract, though it may be defeated by it. It is the machinery adopted by the courts of justice to enforce fair dealings towards those secondarily bound for a debt, not only as against principals and creditors, but amongst co-sureties themselves. The latter must share with each other every plank in the shipwreck." Fishback v. Weaver, 34 Ark. 569. Vaughan and Anderson Sanders having become...