Morrilton Cotton Oil Co. v. Frauenthal & Schwarz

McCulloch, O. J. This is an action instituted by appellees in the chan'qery court to foreclose a chattel' mortgage executed, to them by one McNeeley on a crop of cotton. McNeeley was a tenant of Mack Burke, who was to have one-fourth of the crop .as rent, and who furnished supplies to McNeeley to the extent of the sum of $82 to enable the latter to make and gathen the crop. The cotton (about a bale and a half) was gathered by McNeeley, and he and Burke sold it to appehant, Morrilton Cotton Oil Company. McNeeley executed to the First National Bank of Morrilton a chattel mortgage, subsequent to the execution of the mortgage to appellees, conveying his interest in all crops and in certain other personal property, to secure a debt of $192, with interest. ' McNeeley, Burke, Morrilton Cotton Ooil Company and the First National Bank of Morrilton were made defendants in the action. The controversy arises between appellees and Burke concerning the latter’s claim to a superior tlien on the crop, as landlord. It is conceded that Burke is entitled to one-fourth of the cotton as'rent, and that he is entitled to payment of liis debt of $82 for supplier furnished to McNeeley, but, after making these deductions from the price of the cotton, it leaves a balance of $136, which appellees claim under their mortgage, .and which they recovered in the decree rendered by the chancery court. 'Burke claims a lien on this balance of $136 for the debt due the First, National Bank of Morrilton, on the ground that it was for money advanced by the bank to McNeeley for Burke. The proof shows that Burke signed the note to the bank with McNeeley, but he claims that it was money which he furnished to McNeeley, .and obtained it from the bank. This comes down to a question of proof. If Burke was a mere surety for his tenant, and nothing more, he has no lien for the amount obtained from the bank. Kaufman v. Underwood, 83 Ark. 118. On the other hand, if Burke in fact obtained the money from the bank and advanced it to McNeeley, or if lie procured tbe loan for McNeeley from the' bank and the relation of debtor and creditor subsisted primarily between Mc-Neeley and Burke, then the latter is entitled to a lien, regardless of the form in which the debt to the bank is evidenced. Forster v. Bradney, 143 Ark. 319; Walker v. Rose, 153 Ark. 599; Bank of Gillett v. Botts, 157 Ark. 478. The test is, whether or not McNeeley, the tenant, is indebted to Burke, his landlord, for supplies. If there is no debt in existence, but merely the relationship of principal and surety, there is no lien; but if there is a debt, there is a lien, as before stated, regardless of the form employed in obtaining the money from the bank. The evidence is not, we think, sufficient to overturn, the finding of the chancellor as to the character of the relation between McNeeley, Burke and the bank. They both signed the note to the bank, and there is no written evidence of any debt from McNeeley to Burke. Burke testified that he procured the money from the bank and advanced it to McNeeley, but he is contradicted by his own admission to a witness introduced by appellees. This witness, Kuykendall, was the agent of appellees, and he testified that,’ when he went up to the farm where the cotton was raised, to see about hauling and shipping it, he had a conversation with McNeeley and Burke, in which it was stated to him that Burke only claimed $82 for advances in addition to the rent. The cashier of the bank was introduced, but he knew little, if anything, of the transaction, except what was shown on the face of the papers, that is the mortgage and the note. It appears from the testimony that the bank held a mortgage executed by McNeeley on the same property during the preceding year, and their present mortgage was a renewal on the same property, except the crop, which was for a different year, and'it embraced a, lot of stock. McNeeley was not a tenant of Burke during the period of the first year covered by the mortgage to the bank, and he could not, therefore, have had any interest at that time in the transaction between McNeeley and £he bank. This indicates a course of dealing between the bank and McNeeley which excludes the idea that the advances were made by the bank not to McNeeley but to Burke. The inclusion in the mortgage to the bank of the live stock and other chattels, on which Burke had no lien as landlord, tended to show that the loan was made by the bank to McNeeley, and not to Burke. Considering these circumstances, and the admission of Burke, made directly to appellee’s agent, we cannot say that the 'Chancellor erred in finding, from these facts, that the money obtained from the bank was not a loan to Burke, but was a loan direct to McNeeley, secured by the chattel mortgage and by Burke as surety. The decree is therefore affirmed.