Dunbar v. Cazort & McGehee Co.

McCueeoch, C. J. The plaintiff, the Cazort-McGehee Company, a domestic corporation, together with one W. R. Bolling, became the surety of John Sharp and Ella Sharp on a supersedeas bond on appeal to the Supreme Court from a judgment against the latter in the chancery court of Crawford County, wherein Henry L. Eitzhugh, trustee in bankruptcy, was plaintiff, and said John Sharp and Ella Sharp were defendants. Ella Sharp owned lands in Crawford Comity, Arkansas, and at the time of the execution of said bond she executed and delivered to the plaintiff a mortgage on one of said tracts of land for the following purpose recited therein: “Whereas, the Cazort & McGehee Company have become sureties on a supersedeas bond given by John Sharp and Ella Sharp to supersede a judgment in favor of Henry E. Eitzhugh in .the sum of four thousand dollars. Now, if the said John Sharp and Ella R. Sharp shall satisfy said judgment if affirmed or any judgment rendered against them .by the Supreme Court in this cause, then this bond shall be void; but if they fail to do so, then the said grantees or their assignee, agent or attorney in fact, shall have power to sell said property at public sale to the highest bidder .for cash, * * * and the proceeds of said sale shall be applied, first, .to .all costs and expenses attending said sale, second, to the payment of said debt and interest, .and the remainder, if any, shall be paid to said grantor.” Subsequently the judgment appealed from was in part affirmed, and Fitzhugh, the judgment creditor, instituted an action against the sureties on the bond, and recovered the sum of $2,500, which amount the plaintiff was compelled to pay in satisfaction of the judgment. The present action was instituted i-n the chancery court of Crawford County by the plaintiff, Cazort & McGehee Company, to foreclose the mortgage, and W. T. Dunbar, subsequent purchaser from Mrs. Sharp, was made a party defendant. From .a decree foreclosing the mortgage Dunbar has appealed. The principal contention of the appellant is that the corporation exceeded its charter powers in becoming surety, and that the contract of suretyship, and the mortgage as well, is void. At least trwo reasons may be stated, without searching for others, why this contention is unsound, or at least why the infirmity of the contract can not be pleaded. In the first place, Mrs. Sharp, one of the parties, received the benefit of the -contract, -and she and appellant, who derived his rights to the mortgaged property from her, are estopped from -setting up the invalidity of the contract. In .the second place, appellee has fully performed the contract -on its part by paying the amount of the liability thereunder. Therefore it is an executed contract on one side, 'and neither Mrs. Sharp, nor her grantee, who succeeded to her rights, can set up the fact that the execution of the contract was beyond the power of the corporation. Minneapolis F. & M. Mut. Ins. Co. v. Norman, 74 Ark. 190; Arkadelphia Lbr. Co. v. Posey, 74 Ark. 377; 3 Thompson on Corporations (2 ed.), § § 2787, 2788, 2789. The judgment on the bond rendered in favor of Ritzhugh against the appellee, though a consent judgment, is prima facie evidence of liability for the amount recovered; and the proof introduced by the appellant was not sufficient to overcome this presumption, Cazort & McGehee Company v. Dunbar, 91 Ark. 400. Other questions are raised which are not of sufficient importance to discuss. Decree affirmed.