Lilly v. Barron

Hart, J. (after stating the facts). It is claimed that appellant is barred of relief because no appeal was taken from the decree rendered on the 4th day of September, 1918, within the time prescribed by the statute. In that decree the court found that 0. it. Lilly was guilty of fraud practiced upon Barron and was primarily liable to Barron, and that if Barron should pay the amount due the plaintiff, towit, $2,666.72, the said Barron should be entitled to judgment for said amount against 0. B. Lilly. No judgment for that amount, however, was rendered against Lilly in favor of Barron. The finding of the court was for the plaintiff, but there was no judgment on the finding. This being true, there was nothing to appeal from. A finding of fact does not constitute a judgment. The judgment of the court must be pronounced in some form. The finding of the court is not final in its character and does not terminate the litigation between the parties. It does not determine the issues in the case. The effective action of a court is by its decree or judgment, and not 'by its finding. Reynolds v. Craycraft, 26 Ark. 468; State v. Jones, 25 Ark. 375; Moss v. Ashbrook, 15 Ark. 169; Sennett v. Walker, 92 Ark. 607; Chappell v. Chappell, (Md.) 33 Atl. 650; Green v. Probate Judge, 40 Mich. 244; Baum v. Currituck Shooting Club, 94 N. C. 217; Kilmer v. Bradley, 80 N. Y. 630; and Judge v. Powers, Ann. Cas. 1915 B (Iowa) 280. The case, therefore, remained within the jurisdiction of the chancery court. Subsequently the chancellor, on motion of appellee, rendered a decree in his favor against the appellant.- In apt time appellant prosecuted an appeal from that decree. One of the grounds relied upon by counsel for appellant for a reversal of the decree is that Lilly was adjudged a bankrupt and a discharge in bankruptcy granted him in January, 1916, and that appellee Barron failed to prove his claim against Lilly in the bankruptcy proceedings. Barron did not prove his claim in the bankruptcy proceedings. He now contends that his claim was not discharged by the bankruptcy proceedings because it was a contingent one and therefore not provable under the bankrupt act. The claim was not a contingent one. All the facts necessary to fix liability upon Lilly in the matter had already occurred. Rodgers had executed a note to Lilly for $1,650 for the purchase price of certain town lots, and Lilly had a vendor’s lien upon the lots. Rodgers sold his interest to Barron, and Barron assumed the purchase price which Rodgers owed to Lilly. It was agreed between Lilly and Barron that the latter should execute his note to the former for $1,600 in lieu of the $1,650 note. The $1,650 note could not be found at the time the transaction occurred, but it was understood that it should be canceled and delivered to Barron. Consequently Lilly’s liability to Barron existed at the time the bankruptcy proceedings were had, and the liability of Lilly to Barron was a provable debt under the bankruptcy laws. Remington on Bankruptcy (8 ed.), vol. 1, sec. 641. See also Williams v. United States Fidelity & Guaranty Co., 236 U. S. 549. Again, it is contended that the liability was not a provable claim in the bankruptcy proceedings because of the fraud of Lilly, and that this was not known by Barron at the time of the bankruptcy proceeding. The fraud contended for is that Lilly deposited the $1,650 note as collateral security for a debt of his own, and that he had told 'Barron that it could not be delivered to him because he had lost or mislaid it. It is true that Barron testified that Lilly told him that the $1,650 note had not been deposited with anyone as collateral security; but it must be remembered that this conversation occurred after the transaction had been completed. At the time of the transaction it does not appear that Lilly represented to Barron that the note had not been deposited by him as collateral security to any of his creditors. Indeed, when Lilly’s whole testimony is read and considered together, it is fairly inferable from it that the note was not deposited as collateral security until sometime after his transaction with Barron. His testimony in this regard is not disputed by Barron. Indeed, Barron frankly admits that he has not yet suffered any loss by reason of the transaction. In other words, the payment of the balance of the original purchase money note of $1,650 and the accrued interest was made by the various purchasers of the town lots. As a general rule, in order for false representations to be the basis of fraud, such representations must be relative to existing facts. An exception to the general rule is, that if the promise is accompanied with an intention not to perform it, and is made for the purpose of deceiving the person to whom it was made and inducing him to act in the premise's, the same constitutes fraud. No such state of facts exists here however, and the liability of Lilly to Barron does not accrue on account of fraud or false representations, but because Lilly converted the note to his own use at some period of time after the transaction with Barron had been completed. Therefore he should have proved his claim in the bankruptcy court. See Crawford v. Burk, 195 U. S. 176. It follows that the decree must be reversed and the cause will be remanded for further proceedings according to the principles of equity and not inconsistent with this opinion.