Wolf & Bro. v. Erwin & Wood Co.

• Decision Date: 20 June 1903
• Citation: 75 S.W. 722
• Parties: WOLF & BRO. v. ERWIN & WOOD CO. et al.
• Court: Arkansas Supreme Court

Page 722

75 S.W. 722

WOLF & BRO. v. ERWIN & WOOD CO. et al.

Supreme Court of Arkansas.

June 20, 1903.

Appeal from Circuit Court, Union County, in Chancery; Charles W. Smith, Judge.

Bill by Wolf & Bro. against the Erwin & Wood Company and others. Decree for defendants, and plaintiff appeals. Affirmed.

W. D. Jamison, Jesse B. Moore, and Morris M. Cohn, for appellant. Smeade & Powell, for appellees.

BUNN, C. J.

At the October term, 1896, the plaintiff Wolf & Bro., a mercantile firm doing business in the city of Little Rock, filed a creditors' bill in the Union circuit court in chancery against the Erwin & Wood Company, C. M. Cook, trustee, W. T. and J. M. Parnell, as garnishees. Subsequently E. W. Albie, intervener in certain prior attachment suits, was made defendant also. The defendants filed their answers, taking issue on all the controverted allegations of the bill. We gather from statement of counsel in the "case" that the only ground for the attachment upon which the bill is based was that the defendant company was a foreign corporation, and a nonresident of the state; and such, as we understand it, was the only ground for previous attachments, which had been dismissed on compromise some time before the later attachments were sued out, as will appear further on.

Having established a sawmill plant at Norphlet, in Union county of this state, the Erwin & Wood Company on the 18th June, 1894, borrowed of E. W. Albie the sum of $5,000, for which it gave him its notes, due in 12 months thereafter, and secured the same by its mortgage of even date on all its property in that vicinity situated. The company was then, and still is, a corporation organized under the laws of the state of Iowa, with its principal office at the city of Dubuque, in that state, and doing business at the time at Norphlet, as aforesaid. Albie was then the vice president of the company, and afterwards became its treasurer, as he is still, so far as the record shows. The money thus borrowed was for the purpose of buying iron rails to be laid on the company's tramways from the mill at Norphlet, and was so used, according to the testimony of N. P. Wood, one of the plaintiffs, who had been secretary part of the time, and all the time an employé of the company from the beginning. Wood also testified that the company had borrowed other money in 1895 from Albie and from the First National Bank of Dubuque, giving a note therefor with Albie as surety. Witness does not state the amount of these loans, or whether Albie paid the surety debt. In other respects his testimony is in corroboration of Albie's and other witnesses connected with the business of the company. The mortgage is, in a general and indefinite way, alleged to have been a fraud upon the rights of the plaintiffs, whose claims, however, did not exist prior to September, 1895, about 15 months after its execution.

There can scarcely be any question as to the bona fides of the debt secured by this mortgage; nor is there any contention that it was executed without authority. It is contended, however, that the property, or portions of it — part of the lumber — was disposed of by the mortgagor company, which was permitted to remain in possession and dispose of the lumber, but required to replace the same by lumber then to be manufactured, and that the proceeds of this lumber were not appropriated to the mortgage debt, due in June, 1895, as aforesaid. There is meager testimony as to the facts, but on the face of the mortgage the provision referred to above appeared, and this, under the rulings of this court in Fink v. Ehrman, 44 Ark. 310, and Gauss & Sons v. Doyle et al., 46 Ark. 122, made the mortgage technically void, but only pro tanto; that is, as to the property permitted to be disposed of in this way by its terms. The mortgage is valid in other respects. As the same lumber and that substituted for it is embraced in the later deed of trust, attachment as to that is not available. The lumber included in the mortgage and that substituted for it was included in the deed of trust dated February 28, 1896. In the latter part of January, 1896, the plaintiffs, or most of them, sued the company on their several debts against it in justice of the peace courts in El Dorado township of Union county, and at the same time sued out the several writs of attachment on the ground that defendant company was a nonresident. In commencing its business at Norphlet the company had appointed, under the requirements of the statute of the state, one H. P. Graham, as its agent at Norphlet, upon whom service of legal process might be made. Early in the month of February, 1896, while these suits in attachment were pending at various stages, the company dispatched their attorney, one Dohs, to Norphlet, to undertake some kind of settlement of the matter. After much negotiation between Dohs and the attorneys for the plaintiffs, acting for their respective clients, an agreement was finally reached, by which the company agreed to pay one half of the several claims of plaintiffs and the costs of the attachments cash, and to give its promissory notes, due in 90 days, for the other half of the plaintiffs' several claims. This agreement was carried out, the half of the claims was paid in cash, the costs were paid, and the notes for the other half of the several debts were given, and the pending attachment...