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the statement as a basis for credit had been made. The claim is that the conveyances conveyed to Elizabeth C. Herring.

were made in satisfaction of a pre-existing When the renewal note matured, appellee indebtedness of about $8,000 from appellee and his son were unable to pay it, and a to his wife. Appellee and his wife testified foreclosure suit was instituted and prose- that she had advanced him various sums of cuted to a conclusion in the chancery court money, covering a period of 5 or 6 years, to of Johnson county. In that suit the indebt- use in his business. It is not claimed that edness was reduced to a judgment, and the the amounts advanced were charged by approceeds from the foreclosure sale of the pellee's wife to him, or that accounts were Mayes place, together with a small collection kept between them. No evidences of indebton the mule notes, were applied as a pay-edness were issued by appellee and delivered ment thereon, leaving a balance of $4,377.81. to his wife, and there was no promise on his . It is sought by the instant suit to collect this part to pay her any definite amount at any balance out of the real estate conveyed by certain time. Mrs. Herring produced checks appellee to his wife; the insolvency of appel- for small amounts, totaling $600, covering a lee and his son being alleged in the bill and long period of time, which she had drawn in not specifically denied in the answer thereto. favor of her husband, and which were cashed The deeds are attacked upon the ground that by him. Some of these checks were used the transfer of the lands contained therein by him in his business, and others were used rendered appellee insolvent and was without for her personal benefit. Appellee made a consideration. The chancery court found written statement, at the time he procured this issue against appellant, and dismissed the loan from appellant, that he did not owe its bill for want of equity, from which is this any one except appellant bank. He did not appeal. intimate that he owed his wife anything.

We think the testimony insufficient to show that appellee and his wife dealt with each other as debtor and creditor. The manner of making such advances as were made indicated very clearly that they were intended as gifts. They were not treated by the parties as loans. This court said, in the case of Davis v. Yonge, 74 Ark. 166, 85 S. W. 92,

that:

"When a wife allows her husband to use her money as his own for a long period of time, and thus to purchase property with it in his own name, and to obtain credit on the faith of his being the owner of it, she will not be allowed to claim such property as against his creditors."

[1] Appellant contends that the findings of the trial court are against the weight of the evidence. Appellee conveyed all his property, both real and personal, to his wife, except the Mayes place and the mule notes. According to his testimony, this did not affect his solvency. He testified that about the time he conveyed the lands to his wife he was offered $8,000 for the Mayes place, which he refused, holding same for $10,000. A. N. Ragon, the president of appellant bank, testified that appellee tried to sell the place, but was unable to do so. Appellee purchased it for $7,000, and at the foreclosure sale it brought only $5,000. The mule notes proved to be worthless. Appellant succeeded in collecting only $81 out of them. A. N. Ragon and the cashier of appellant bank, R. D. Dunlap, testified that the loan was greater than the value of the Mayes place. A careful reading of the testimony bearing upon this point has convinced us that the mule notes and the Mayes place were insufficient in value to pay the indebtedness at the time ap-leged and not denied. pellee conveyed his other lands to his wife. For the error indicated, the decree is reWe are also of the opinion, after reading versed, and the cause remanded, with inthe testimony, that the circuitous conveyanc-structions to cancel the conveyances, and to es of the real estate by appellee to his wife subject the real estate conveyed in them, as were without consideration. No present con- far as may be necessary, to the payment of sideration passed when the conveyances were appellant's deficiency judgment.

The same doctrine was announced in the later cases of Harris v. Smith, 133 Ark. 260, 202 S. W. 244, and Bunch v. Crowe, 134 Ark. 242, 203 S. W. 584.

[2] It was unnecessary to prove the insolvency of V. I. Herring as a prerequisite to recovery herein, as his insolvency was al

(252 S.W.)

KELLEY TRUST CO. v. ZENOR et al. (No. 49.)

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(Supreme Court of Arkansas. June 18, '1923.)

Vendor and purchaser

254(4)-Vendor's lien held reserved for performance of condition.

Where landowner sold a factory site to a manufacturer for $7,000, of which $3,000 was a cash payment, and the remaining $4,000 was to be liquidated by complying with the conditions expressed in the deed that a factory should be built and operated on the site, and such conditions were not complied with, held, that there was a vendor's lien for the $4,000, which the vendor could enforce on such failure to perform.

less than 150 men, or in the event that, C. P. Zenor, Sr., his heirs and assigns, after erecting and putting such glass factory in operation, should be or become, at any time during the period aforesaid, unable to continue operating the same, or should suspend operation thereof for 4 months at any time during said period, or should for 4 months at any time during said period fail to operate such factory on a scale requiring a daily pay roll of not less than $600 and the employment of not less than 150 men, then, in any such event, said C. P. Zenor, Sr., his heirs and assigns, shall became and be considered indebted to the said Kelley Trust Company, its successors and assigns, in said sum of $7,000, four sevenths for said company, and three sevenths for said Business Men's Club,, and the lien herein reserved on said real estate may be foreclosed for such indebtedness. And in the event said

Appeal from Sebastian Chancery Court; Kelley Trust Company should become the pur

J. V. Bourland, Chancellor.

Suit by the Kelley Trust Company against C. P. Zenor and others. From decree of dismissal, plaintiff appeals. Reversed and remanded, with directions.

Geo. F. Youmans and Pryor & Miles, all of Ft. Smith, for appellant.

Joseph R. Brown and Jas. B. McDonough, both of Ft. Smith, for appellees.

chaser of said real estate in said foreclosure proceedings, it shall hold the title thereto in trust, four sevenths for said company, and three sevenths for said Business Men's Club."

This action was instituted by the appellant to foreclose its vendor's lien. It set up in its complaint the deed, and alleged in substance that Zenor had failed to comply with the conditions above set forth, and that by reason of such default he was indebted to the appellant in the sum of $7,000, fourWOOD, J. The Kelley Trust Company sevenths for the appellant, and three-sevenths (hereafter for convenience called appellant) for the Business Men's Club. It prayed for is an Arkansas corporation with its princi-judgment for $7,000, and that a lien be depal place of business in Ft. Smith, Ark. Har-clared upon the lot described in the comry E. Kelley is its president and owns a ma-plaint, and that the same be subjected to jority of its stock. On the 1st of May, 1917, the satisfaction of the judgment. the appellant executed to one C. P. Zenor, Sr., his heirs and assigns, a warranty deed to block 38, Midland Heights addition to the city of Ft. Smith, Ark. The consideration named in the deed was $7,000. The deed contained the usual clauses and covenants, and in addition the following:

a decree dismissing the complaint for want of equity from which is this appeal.

The Model Window Glass Company appeared and made itself a party defendant to the action, and it and Zenor and his wife answered, alleging in substance that the obligations of the contract under which the deed was executed to Zenor had been fully complied with. The trial court, after hear"Three thousand dollars of the above-ing the testimony in the cause, found the ismentioned consideration is paid in cash by the sues in favor of the defendants, and entered Business Men's Club of Ft. Smith, Ark., and the receipt thereof is hereby acknowledged. The remaining $4,000 is to be paid by the said C. P. Zenor, Sr., by the erection, maintenance, The facts are substantially as follows: and operation, on said real estate, until Jan- Zenor, who had been interested in the opuary 1, 1921, of a glass factory, having a daily eration of a glass factory outside of the state, pay roll of not less than $600, and employ- came to Ft. Smith to locate a glass factory. ing not less than 150 men; the meaning and One R. S. Robinson and his associates had intent hereof being that said real estate is donated to said C. P. Zenor, Sr., his heirs and developed what is known as the Kibler gas field in Crawford county, near Ft. Smith. assigns, upon condition that said C. P. Zenor, Sr., his heirs and assigns, erect, maintain, and Harry Kelley and the appellant were large operate, on said real estate, during the period landowners in the city of Ft. Smith, and had above indicated, a glass factory having a daily about 300 acres of land in what is known as pay roll of not less than $600, and employing Midland Heights addition to the city of Ft. not less than 150 men, a lien being hereby re- Smith, in which was situated block 38, contained on said real estate to secure perform-taining 35 city lots, 50x140 feet located on ance of said conditions. And in the event both the lines of the Frisco and the Missouri said C. P. Zenor, Sr., his heirs and assigns, Pacific Railways, on the highest point of should fail to erect and put in operation on said real estate, within eight months from ground between the cities of Ft. Smith and this date, a glass factory having a daily pay Van Buren; and only a short distance from roll of not less than $600 and employing not the interurban line connecting the two cit

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

that he was going to double the men and double the payroll; that he was going to operate the plant practically the whole year. Kelley told Robinson that he was mistaken about the benefits that the glass company would be to the town, and was reluctant to sell the property, but finally said:

"I will sell the property to the Business Men's Club for $3,000, provided certain conditions are put in that deed as to how this plant is to be operated."

ies. The Business Men's Club, as its name | tal in bringing about the negotiations beimplies, was a civic organization in the city tween the club and Zenor, and between the of Ft. Smith for the promotion of the pros- club and Kelley, told Kelley what Zenor had perity of the city. Its president was B. D. | said—that he would build a plant a great Crane, and its secretary was Ray Gill. When deal bigger than they had agreed upon, and Zenor came to Ft. Smith, the club offered him a free site for his glass factory, and sites were shown him by Robinson; but he was not pleased with these. Whereupon Robinson showed him other sites, and among them block 38, which he selected. This block was on the market for $7,000. The club had the sum of $3,000, which it desired to donate towards securing a free factory site for Zenor's glass plant. Kelley owned about 200 acres of land adjoining block 38 which he proposed to sell for homes to employees who worked permanently in some factory located on block 38. Robinson asked Kelley if he would not donate $4,000, the balance of the market price of block 38. Kelley had already contributed 5 per cent. of $20,000, which had been raised by the club for the purpose of locating factories in the city, and had pledged himself to pay 5 per cent. of $20,000 more. This donation and pledge had been made just before Robinson approached him, and therefore he declined to contribute the $4,000 more to the club. However, he informed Robinson of the terms on which he would sell block 38, which terms are as already set forth in the deed. Before this deed was executed, on the 31st day of March, 1917, Zenor and the club had entered into the following contract, to wit:

"C. P. Zenor, Sr., and associates, agree, whether as individuals or as stockholders, or through the medium of a corporation to be organized, to erect a plant at Ft. Smith, Ark., on the property hereinafter described, for the purpose of making window glass and kindred products, said plant to cost not less than $75,000, and to be in operation and employ at least 125 laborers. by the 15th day of December, 1917. The Business Men's Club, of Ft. Smith, Ark., agrees that, when said C. P. Zenor and associates have complied with the terms of the agreement on their part to be performed, it will convey by proper warranty deed, to such person or persons as the said C. P. Zenor may designate, block 38, Midland Heights addition to the city of Ft. Smith, Ark., provided that said deed shall recite that, if the said C. P. Zenor and associates, or a corporation to be organized, does not continue to operate said plant for a period of 3 years, employing during operating periods an average of 125 laborers, the title to the property above mentioned shall revert to the grantor, who conveys said property by means of the aforesaid deed."

The appellant executed the deed as already mentioned on the 1st of May, 1917, and delivered the same to the secretary of the business Men's Club. In the meantime, after the execution of the agreement between the club and Zenor the construction of the glass plant had been carried on, and the factory began operation before the 15th of December, 1917. It was some time after the deed was delivered to the secretary of the club before he succeeded in delivering the deed to Zenor. After the deed had been delivered to Zenor, he returned it once or twice. The deed was in the office of the club until about the day it was recorded, which was the latter part of 1919. Zenor said to the secretary of the club that, if he would add to the agreement a note at the bottom reciting that the deed should read "125," instead of "150," and, instead of "all times" "during operating period an average of," he would accept the deed and record it. The original contract called for 150 men. The interlineations were made in the contract in 1919, and Zenor'stated that he would accept it, if the secretary of the club would put that in, which he did. No member of the appellant was there at the time and the secretary of the club did not notify any member of the appellant that he was going to make the changes in the contract. There was never any resolution of the board of directors authorizing the secretary of the club to make the interlineations in the agree ment that he did make after the same had been signed by Zenor and the president of the club. Zenor simply stated to the secretary that, if he would make the changes in the contract as indicated, he (Zenor) would accept the deed as written.

Harry Kelley testified, among other things, that he had given land to other factories and donated money to them, and they had failed to comply with the representations with refThis agreement was signed by Zenor and erence to continuous operation. He could by Crane as president of the club. Zenor not definitely ascertain the amount to which organized the Model Window Glass Com- he had been damaged, and if such a factory pany, a corporation, of which he was the gen- as was represented to him by Gill and Roberal manager. Robinson, who was a director inson would be built and operated by Zenor of the Business Men's Club and present at were not in fact built and operated as speciits meeting, and who was largely instrumen-fied in his deed, he figured from his past

(252 S. W.)

experiences that his damages would be the | erated just 52 weeks in 3 years. In 1918 his amount of $4,000 that he was donating, which operations were interfered with by the gov he placed in the deed as liquidated damages | ernment, and this interference ended on Dein case the conditions of the deed were not complied with by the grantee. During the year 1918 he did not pay any attention to whether the factory was complying with the terms of the deed because the country was at war. After the World War was over, he began to look into the question as to whether or not Zenor and the Model Window Glass Company were going to comply with the terms of the deed. He did not keep close track of them in 1919. In 1920 the factory operated until the 17th of May, and never again operated that year. He had tenant houses close to the glass plant and found no tenants. The plant had been shut down through long periods. Since the execution of the deed he had sold only two lots out of approximately 200 acres. He had never seen the contract be

tween the club and Zenor until he called Zenor's attention to the fact that he had not complied with the terms of the deed. This was after January 1, 1921. He was not a member of the board of directors of the club and knew nothing of its transaction with Zenor. The deed was executed by him in accordance with the understanding with Robinson and delivered to the secretary of the club.

Leigh Kelley, vice president of the appellant, testified that he was not a director of

the club at the time the agreement between

the club and Zenor was executed.

He was

familiar with the terms of the deed but did not know that there was any agreement be

tween the club and Zenor.

Zenor testified that they began the construction of the plant about the 1st of May, 1917, and began to operate it in December, 1917. In the construction of the plant they hired about 145 men daily. He and his as sociates had invested about $228,000 at the time his testimony was taken. During the years 1917, 1918, 1919, and 1920 the appellant did not complain that he and his associates had not complied with the terms of the deed. The appellant did complain in 1921. Zenor made the contract with the club, and never at any time had any conversation with any representative of the appellant, until after it raised objection. Witness did not know that the appellant was associated with the transaction in any way until he went to get the deed and contract. After he read the deed, he returned it to the secretary of the club, and refused to accept it, because it did not conform to the contract he had entered into with the club. The secretary assured him that everything would be satisfactory, and he then accepted the deed and placed it on record. They started operating the plant in December, 1917, and finished in 1918, operating 18 weeks. In 1918-1919 they operated 12 weeks-had op

cember 7, 1918. They did not operate the
plant at all in 1920, because they did not
have any labor, and could not get it. They
did not operate from 1920 to January 15,
1921, because the union labor organization
would not let them. The plant was closed
down from May 22, 1920, and did not start
up again for a period of 18 months. Dur-
ing the period when the plant was closed
down in 1918, he did not employ 125 men
or 150 men either, and did not have a pay
roll amounting to $600. The most men he
ever employed at any time was 146. Ordi-
narily 128 men would be employed in his
plant. During all the period that he was
closed down he was trying to get a working
scale from the union. Operating periods
were fixed by the union. There was testi-
mony tending to prove that prior to 1917 it
was customary to run glass plants about 8
or 9 months in each year-sometimes 10.
1. The consideration of the appellant's deed
to Zenor was $7,000, $3,000 of which was
to be paid in cash, which was paid, and the
remaining $4,000 was to be liquidated by
complying with the conditions expressed in
the deed. The undisputed testimony shows
that these conditions have not been complied
with. The testimony of Zenor himself con-
have not been fulfilled by him or his asso-
clusively proves that the conditions specified
ciates. In Stanley v. Schwalby, 162 U. S. 256-
257, 16 Sup. Ct. 763, 40 L. Ed. 960, it is said:

"A valuable consideration may be other than the actual payment of money, and may consist of acts to be done after the conveyance."

The testimony of Kelley shows clearly that the acts specified by appellant to be done by the grantee in its deed, in lieu of the $4,000 which was the balance of the consideration named, were estimated by him to be worth at least that sum and that in designating these acts it was his intent that, upon a failure upon the part of the grantee to perform them, the grantee should pay to him the sum of $4,000. It occurs to us that the testimony of Kelley and the recitals set forth in the deed prove that a failure to perform the conditions would result in damages to appellant in the balance of the purchase money unpaid, fixed as the liquidated sum of such damages. The damages in their nature were uncertain and not easily estimated, but nevertheless would at least be equal to the sum of $4,000, and that sum was specifically named by him to cover his damages in addition to the cash consideration of $3,000, making the whole purchase money $7,000, for which sum the appellant reserved a lien on the land conveyed. See Nevada County Bank v. Sullivan, 122 Ark. 235, 183 S. W. 169, Ann. Cas. 1917D, 736.

Since we have concluded that this should

This court has several times ruled that a if the note is not delivered or the services vendor's lien will not arise to secure the per- rendered." formance of an act, the nonperformance of which would make a claim for unliquidated damages. Harris v. Hanie, 37 Ark. 348; Bell be treated as an action to enforce a vendor's v. Pelt, 51 Ark. 433, 11 S. W. 684, 4 L. R. A. lfen for the purchase money, what we have 247, 14 Am. St. Rep. 57; Salyers v. Smith, already said disposes of all the contentions 67 Ark. 526, 55 S. W. 936; Cox v. Smith, 93 made by learned counsel for the appellees Ark. 371, 125 S. W. 437, 137 Am. St. Rep. to sustain the decree of the trial court, ex89. But this is not that sort of an action. cept that the appellees were excused from On the contrary, it is an action to recover complying with the conditions expressed in a liquidated sum, which the deed specifies the deed, requiring certain acts to be permay be recovered in case certain acts are formed in lieu of the payment of the unnot performed, which sum was named and paid purchase money, by reason of untoward clearly considered and intended by the par- circumstances over which they had no conties to the deed as part of the purchase trol, caused by the World War and labor money. The case at bar, under the allega- unions. The proof shows that the appellant tions of the complaint and the testimony waived the performance of the terms of the adduced in support thereof, is brought clear-contract which were made impossible by the ly within the doctrine announced in Cox v. Smith, supra, where we said:

*

war.

The other hardships alleged as excuses for nonperformance cannot avail the appellees, according to the doctrine announced by this court in Ingham Lbr. Co. v. Ingersoll, 93 Ark. 447, 125 S. W. 139, 20 Ann. Cas. 1002. The appellees hold the title and But possession to this land under the deed of appellant, and they must pay the purchase price.

"If this sum stipulated to be paid in the event of the nonperformance of the contract on his part shall be considered in the nature of damages, then it must be held to be liquidated damages for which he is liable. this is not a claim for unliquidated damages; it is a debt for unpaid purchase money, the amount of which is definitely fixed. And No issue is made in this record between where such debt for the purchase money may the appellees and the Business Men's Club be paid in work or services, the vendor's lien of Ft. Smith, and hence it would not be therefor does exist, and may be enforced if germane here to discuss the effect of the such work is not done or the services rendered"-citing Young v. Harris, 36 Ark. 162, agreement between the club and Zenor. It and Nix v. Draughon, 54 Ark. 340, 15 S. W. follows, from what we have said, that the 893. court erred in dismissing the appellant's complaint for want of equity. For this error the judgment is reversed, and the cause is remanded, with directions to enter a decree in appellant's favor for the sum of $4,

See, also, Winters v. Fain, 47 Ark. 493, 1 S. W. 711; Tupy v. Kocourek, 66 Ark. 433, 51 S. W. 69.

In Jarratt v. Langston, 99 Ark. 438, 138 000, with interest from the date of the inS. W. 1003, we said:

"It has been held by this court that, if land is sold for a price or consideration in money, which it is agreed may be paid in the note of a third party or in personal services, the vendor's lien therefor exists, and may be enforced,

stitution of this suit, and that the same be

declared a lien upon the real estate described in its complaint, and for such other proceedings, according to law and not inconsistent with this opinion, as may be necessary to enforce such decree.

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